Loyalty and Rewards Come of Age

Gaining and retaining loyal customers in 2011 is crucial. According to Chicago-based research firm Mintel International, 35% of customers in the U.S. say their choice of store is determined by special offers or discounts. This means convenience stores need to find new and innovative ways to stand out from the crowd.

This is one reason why loyalty trends in 2011 are evolving greatly. One big trend from 2010 that is expected to be a focal point in 2011 is c-stores partnering with other channels to better reward customers, said Kelly Hlavinka, managing partner with Colloquy, a loyalty research and consultancy.

Examples of such recent partnerships include those between Kroger and Shell, as well as between Speedway and Remke bigg’s grocery—where grocery customers gain cents off on fuel at the gas station through a combined rewards program between the two chains.

Credit card and debit card loyalty programs are going to be under a lot more pressure going into 2011 due to new legislative activity, which will likely cause the economics of rewarding customers to change. “Whether it’s rethinking how the co-brand relationship works between banks and stores or finding new types of partnership opportunities, the relationship between c-stores and issuers of co-branded credit cards for c-stores will continue to evolve,” Hlavinka said, pointing to Speedway Speedy Rewards aligning with the National Payment Card Association to allow customers to link loyalty cards to a checking account.

Taking Up a Cause
Manufacturers are also getting in on the loyalty action setting up their own rewards programs and launching social networking campaigns to tap into customer loyalty. “C-store retailers can think about how to make sure those efforts CPGs are investing in can be used to their advantage to drive traffic,” Hlavinka said. “CPGs are more open to those collaborations so broaden that conversation.”

Cause-related marketing is also expected to be a growing loyalty trend in 2011, as stores woo customers by supporting sustainability or donating a portion of coffee sales to local charities.

Seen late in 2010 and sure to skyrocket in 2011 is the “gamification” trend, where retailers engage customers in contests, games, contests or trivia, to convey a spirit of fun—a trend made easier thanks to the growth of social media platforms.
Shell is using gamification to drive loyalty at its stores. If NASCAR driver Kurt Busch wins a points race during the 2011 season, Shell Saver Card holders will receive a savings of 22 cents per gallon when they use their card to buy Shell-branded gasolines or diesel the Wednesday following the victory, now known as “WINsday”.

Shell is enticing customers to sign up for the card, offering new cardholders 10 cents per gallon savings on all grades of fuel and diesel through April 30.

Advantages of Rewarding Loyalty Customers

—Approximately 52% of consumers polled said they opted in to loyalty programs in 2010, compared with 45% in 2009. The percentage of consumers who stayed with their loyalty program climbed to 54% from 49%. (SOURCE: ACCENTURE GLOBAL CONSUMER SURVEY)

—Participation in loyalty programs is up to 19% since 2007. (COLLOQUY)

—32.3% of consumers said the recession has made their participation in retail rewards programs more important. (COLLOQUY)

—An estimated 54% of shoppers have multiple loyalty cards from competing retailers. (C-METRIX SOLUTIONS)

—Loyalty program members are more likely to be one or more of the following: female, young, living with children under the age of 18 in the household, or from the Northeast. (COLLOQUY)

—Nearly 90% of grocery purchases are made with a loyalty card. (C-METRIX SOLUTIONS)

—Less than 30% of shoppers surveyed said reward programs have a major impact on their shopping decisions. (C-METRIX SOLUTIONS)

—40% of long-term reward program members never redeem their rewards. (C-METRIX SOLUTIONS)

—Shoppers with emotional ties to a store or chain tend to shop there even if they have to go further or pay more. (C-METRIX SOLUTIONS)

Top Five Loyalty Trends to Watch In  2011

—Loyalty partnerships between channels, such as grocery stores and convenience stores will increase.
—The economics of rewarding customers will continue to evolve, especially when it comes to debit/credit loyalty card partnerships.
—Manufacturers of consumer packaged goods will get in on loyalty rewards, offering new opportunity for retailers to form partnerships that can drive customers looking for those products to their stores.
—Cause marketing, focused on a charity, etc., will become more prevalent.
—“Gamification” will become a new trend as retailers look to entice and reward customers with contests, trivia and other fun campaigns.

  • Seth Mills

    Really makes you wonder where the gamification model is going to be in a couple of years. I remember when UPS started using games to train employees a few years ago. Now loyalty programs are evolving, companies are moving towards online status rewards etc. Great article Gamification: Game Design In The Real World for an overview http://bit.ly/fFE4FR

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