Grocers have almost universally equated customer loyalty programs with discount shopping clubs. Most of us have the evidence on our key chain, with the slim plastic card carrying a bar code residing next to our ignition key.

The concept is simple enough – scan the bar code on the back of the card at check out and receive discounted prices on select items. This two-tier price program could be successful if executed properly, but most grocers fail to exercise the discipline needed to accurately match customers with items purchased.

Grocery loyalty programs are ostensibly designed to influence consumer choice. Instead of opting for the most convenient store or parsing our purchases by who we think has the best butcher or wine selection, a successful program should be the magnet that draws us back to one chain significantly more than others.

In Western New York, the two dominant grocery chains battle daily on many fronts, their “savings card” programs being one key point of attack. Tops has its BonusCard program (http://www.topsmarkets.com) and Wegmans has its Shoppers Club (www.wegmans.com).

I shopped in both stores recently and the contrast in data collection practices was stunning. Checking out at Wegmans, I told the cashier that I was a Shoppers Club member but did not have my card with me. In previous visits, this triggered the cashier to volunteer their own card or ask the person next in line to swipe their card to enable the discounted pricing.

This time around, the cashier told us politely that they are no longer allowed to accept cards in this manner. We missed our discount that day, but I was pleased to see that Wegmans was working harder to improve the integrity of its data.

Making a purchase at Tops the next day, the cashier readily volunteered her card when I said that I had forgotten my own. “Don’t worry honey, this will save you a few bucks” she said. Actually it saved me $.38 on my measly purchase but I appreciated the sentiment.

Reading my receipt as I walked to my car, I noticed that “2007 Bonuscard Savings” on this card were $6,969,58! My cashier was friendly indeed and obviously was routinely offering her card to store customers to help them out.

Lesson Learned

A Customer Loyalty program is only going to work if customers themselves value the program and what it represents to them. With discounted pricing available to anyone, regardless of their enrollment status, why have a program at all?

If the items purchased are not matched to the individual consumer for analysis and formulation of subsequent promotions, the grocer is missing out on a golden opportunity to glean preferences from all that data.

In short, execution is everything. Well thought out data warehousing plans must be supported by training of store associates and the value of the program should be communicated to each customer. Every store visit should add value to the customer’s perception of the store brand and influence the decision of which store to visit next.

There are a number of ways that grocers can improve execution of their discount savings clubs and turn them into true Customer Loyalty programs which drive incremental revenue and return handsomely on marketing investment.

If you want answers to those questions, please drop me an email……Bill Hanifin