Market View

Market View: Grocery Loyalty Cards Don’t Buy Loyalty

Processors, too, take note: Besides discounts, what do you do for your frequent buyers?

By John Stanton, Contributing Editor

I think there is no word more misused in food marketing than loyalty. It seems retailers and suppliers alike are looking for loyalty. I am reminded of the song a few years back with the lyrics, “looking for love in all the wrong places.” There is no question food marketers are looking for loyalty “in all the wrong places” too.

Take a look at food retailers’ “loyalty cards.” First, most shoppers have multiple cards. In some cases, consumers have a card for every store in the market. I don’t know how retailers define loyalty but I know how my wife defines loyalty. To her it means one and only one person, not three or four.

Don’t confuse loyalty and continuous purchase. Loyalty is not the share of purchases at one store or the percentage of total shopping trips to one store. This is continuity of purchase. It is often not having a better choice -- and if another, better choice comes along, those customers are gone! Where’s the love there?

The nonsensical approach to loyalty is just as real for suppliers as for retailers but let’s first look at the retailer.

In virtually every case I’ve seen, the only advantage to the shopper for “being loyal,” a.k.a. using the card, is to get a discount. But if they are so interested in price that they would go anywhere for a lower price, these may be the least loyal of your customers. It sounds more like the retailer is buying their love. “Shop in my store and I’ll pay you for your love (loyalty).” Occasionally, shoppers are rewarded with a frozen turkey or some portion of their sale goes to a charity, but in general it is only about price.

I am amazed virtually everyone in the industry thinks this type of program has anything to do with loyalty. It is just an electronic version of what has been going on for years. Let me be clear, I’m not against “loyalty” cards, I just don’t think they have anything to do with loyalty.

Consider how the most successful airline loyalty programs work. They have defined a series of problems that frequent flyers have and they solve those problems for them. What do I hate about flying? Long lines to check in, no seating preference over non-frequent flyers, not getting upgrades, no use of lounges in foreign countries, etc.

As a 1K flyer, United Airlines has solved all those travel problems for me, so flying on another airline would be unthinkable. But as a “loyal” United flyer, guess how much discount I get? NONE. They know if they have a loyal customer they don’t need to give him a discount.

This is exactly the opposite of what food retailers do. Think of the problems that a frequent shopper would have: long checkout lines, parking, bag carrying, heavy packages such as pet food, custom cut meat, etc. None of these is solved by the retailer with a “loyalty card.” Why can someone make a reservation for a restaurant, haircut, tee time, doctor, manicure, etc., but you cannot make a reservation to check out of your supermarket?

Supermarkets do not have lanes for frequent shoppers, do not have privileged parking for frequent shoppers, etc. They do virtually nothing special for the frequent shopper except give discounts. If my supermarket eliminated all of my shopping problems they wouldn’t have to give me discounts to shop that store. I would be loyal.

Food processors are no better. They continue to just pass on deals to the supermarkets to be included in the card program. This is like an enabler to a heroin addict. Although your goods still need to pass through a retailer’s store, food manufacturers should be building their own loyalty with consumers.

I’ll ask the same question of food processors as I do retailers. How do you make shopping and cooking easier for your very best customers? Again, the answer is not very well! I have bought the same brand of pasta sauce for the past 15 years, and I get the same exact treatment as people who buy it for the first time. Most food processors don’t work with their retailers to solve my problems.

Wouldn’t it be great to have a Kraft customer checkout lane? If you buy any Kraft products in that shopping trip or if you have a Kraft Card you can check out in a special “super fast” Kraft lane. I bet the cost of having that lane pales in comparison to what is paid for other “retail services.” Only a company with a wide assortment of products could undertake such a venture, but it would be great to hear customers say “I buy Kraft products because they make my shopping better.”

You can’t buy loyalty; you earn loyalty by taking care of your customer.