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The growing importance of customer loyalty programs in grocery retail

The growing importance of loyalty programs in grocery retail

Grocery loyalty programs have been around for years, but with the changing landscape as well as customer shopping behavior, it is now more important than ever. The goal for loyalty programs is to be relevant and timely to shoppers and their preferences and to create a continuous dialogue between the customer and the brand or retailer.

The benefit retailers get utilizing loyalty programs is the access to customer data, shopping patterns and behavior with direct engagement with the shopper, elevating the communication and optimizing the offers to meet their needs. This ultimately leads to help drive sales for the retailers.

The current scenario

Customer loyalty programs build large customer databases and retailers can leverage this information to create more personalized and targeted promotions tailor-made for every customer. A successful loyalty program is a well-crafted blend of rewards and recognition features that change shopper behaviors. However, grocery loyalty programs are challenged not only by the economics of the industry but also the limited opportunities to differentiate the customer experiences for each customer.

However, compared to other industries, the grocery retail industry today still does not have a completely organized, leveraged and utilized customer data to deliver the optimum level of personalization and relevance to the customer, unlike in industries such as travel or banking.

Limited impact on shoppers

The grocery retail industry operates at small margins, which limit the rewards grocers can offer to the program members. Furthermore, compared to other retail loyalty programs, grocers depend on subsidizing their programs with discounts provided by the CPG manufacturers they are partnered with. Most loyalty programs have followed suit and use the same strategy, enabling shoppers to spread their loyalty across different brands.

Digital coupons - a primary feature of most grocery loyalty programs are offered by most of the retailers in an equal capacity. Another perk is the member pricing feature is an attractive way to entice shoppers into joining the program, but this feature too is replicated across all of the programs, limiting the impact these programs can create.

One feature of the grocery program that does create an opportunity cost and loyalty is reward points. Some shoppers even consolidate their shopping to a single brand in order to maximize the points earned and get a chance to get more discounts with every purchase. While most grocery programs prefer CPG subsidies, retailers should not limit the programs only to create more loyal customers. With e-commerce retail giants like Walmart and Amazon leaving no stones unturned to engage with shoppers, grocers need to double up on creating successful customer loyalty.

Looking ahead


Grocery retailers are facing several options today, they must decide among differing formats, both online and in-store, and seek the best combination of program features available to them.

A growing demographic - Millennials, in particular, seek immediate gratification, support, rewards, and recognition. Moreover, they do not invest a lot of time while planning grocery lists as they center their grocery visits around recipes more than replenishing a set stock. They are also far less price-sensitive in their menu planning as compared to previous generations. Additionally, as shoppers are increasingly opting for healthier lifestyles, produce as well as non-processed foods have become important aspects for grocers to drive retention and loyalty.

With the rising popularity of Walmart and Amazon among shoppers, grocers must foresee the future from both physical stores as well as digital capabilities. A well-managed loyalty program uses analytics and insights to enhance customer experience and elevate shopper journeys. Another major trend is the development of artificial intelligence. Leveraging AI, grocers can use unused retailer data and create additional value from it and tailor more relevant communication and improved personalized pricing and promotions.

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How is AI shaping the future of B2B E-commerce?

How is AI shaping the future of B2B E-commerce?

Most people have experienced AI in one form or another via interactions with websites such as Amazon or Netflix with their personalized recommendations or with AI assistants like Alexa, Siri, or Google Home. This trend of using AI and machine learning is no longer limited only to B2C. The growing popularity of AI is influencing B2B buyer expectations and B2B companies are increasingly leveraging AI and machine learning to improve search, personalization, reordering, and ultimately streamline business processes.

The application of AI and machine learning needs to be refined and fine-tuned as the process followed by B2B companies is completely different than the B2C company processes.

How can AI change the following aspects of B2B ecommerce?

Product search

person searching for products online

AI is enabling the next generation set of search tools. Buyers no longer need to depend on catalogs to search for products. Using image recognition, a mobile app can enable buyers to search for an app using a picture captured by their smartphone. The app can deliver relevant results based on the image along with the buyer's purchase history.

Another method used by buyers include voice - and find it convenient to send voice prompts to Siri, Google Home or Alexa as search queries. Combining traditional text-based search and text-to-speech along with image recognition allows the buyer to search according to his/her individual preference.

Chatbots are greatly improving interactions with buyers through conversations that mimic real-life dialogues exchanged by people in real-life.

Crafting recommendations

As B2B buyers, the expectation is fast and relevant search results. Leveraging AI, businesses can anticipate buyer needs by analyzing their past purchases to predict what they may need next. This process further enables automated marketing campaigns which, makes reordering easier.

It can also be leveraged to recommend complementary products or services. For instance, if a buyer has previously purchased a set of cutlery, the recommendation engine would show a variety of cutlery organizers that would complement the set. AI can also personalize and optimize promotions and sales offers based on comparing purchase history of clients with business-wide patterns.

This provides an enhanced experience for the buyer, which helps build brand loyalty.

person holding a tablet with data stats

Real-time data collection

Procuring usable information from the data generated by an e-commerce business can be an extremely difficult task. With AI, extracting relevant and usable information becomes easy, which further enables the business to identify new patterns of buyer behavior to improve product offers, and speed up decision-making.
Administrative processes such as stock control can also be optimized with automated tracking and reordering, saving valuable time for businesses.

Though B2B e-commerce trends differ from B2C, B2B businesses expect the same user-friendly online buying experience that they get from consumer websites. With more companies adopting AI-based applications into their business models, it becomes imperative for B2B businesses to evolve with the changing technology trends. This further helps them to get an edge over their competitors and stay ahead.

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E-commerce is moving towards social commerce – How to get it right

E-commerce is moving towards social commerce - How to get it right?

Social commerce is often described as the intersection between social media and e-commerce. While this holds value, there is a lot of traffic with no direction. There’s no doubt that social selling is a powerful and an increasingly influential sales tool.

According to recent BI Intelligence, the top 500 retailers earned an estimated $6.5 billion from social shopping in 2017, up 24% from 2016.

There are various forms that social commerce adorns, from group buying to social shopping; from mobile apps to retailers adding social features, or shopping integrated into social media. All of these forms have one thing in common - the use of social technology to replicate age-old buying models in the digital sphere.

Whether it is girls going shopping together in a store or asking a friend for advice on power tools, moving them to online would result in them having a social commerce experience. Taking another instance of bartering, here, instead of the traditional method of trading goods or services, shoppers are trading personal data such as buying habits and preferences for access to easy shopping portals.

There are social platforms like Pinterest, Snapchat and Instagram which have incorporated a “Buy now” button that can turn a static image into a product with a click. However, since the story came about how social platforms are using and monetizing user data, there was a certain amount of wariness among the users about sharing their data on these networks.

The key here is to find a model of social commerce that would work the world over. Some of the things to keep in mind -

  • Provide the shoppers the ability to earn credit for sharing their own data and of their social network.
  • Enable retailers to own the relationship with their customers while also providing access to insights and goodwill from happy customers. 
  • Provide every individual the ability to turn into an influencer. 
  • Star
    Using the existing social media networks as a channel to interact with the brand itself.
person using laptop that is showing a webpage of images

How to make it work

Say a user wants to purchase a mobile phone. The ideal route would be to go the website of the retailer of their choice (assuming if the retailer provides a social commerce experience). They can then choose the selection of the models of their favorite mobile phones.

They now post a picture of the phones on their social networks and ask friends to vote on which phone they think the user should buy.

By setting up this vote, the user can then earn shop credits. Their friends who voted for the products can also earn shop credits by that action. In this scenario, there is no prerequisite of having a large social media presence to be valuable for the business. This action inadvertently turns the user into a micro-influencer.

The information gathered during the voting helps the retailer sell more effectively. They learn which of the products is most appealing and have the potential to become hot sellers, and then accordingly manage stock or change how they display their products. They also gain access to an expanded audience. This eventually, helps them to build a relationship with their customers which can help them build brand loyalty.

Summary

Social channels have a major role to play. Besides influencing purchase decisions, social media is a larger part of the product discovery and research phase in the shopping journey.

The next few years will see social commerce expand its influence if it efficiently benefits the consumers and businesses. The world of commerce is on the verge of disruption, thanks to technological innovations, data collection, and social media. If social commerce is achieved correctly, the future of retailers and shoppers will widen.

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