eveloping a loyal following from your customers is a critical step in building a successful brand in the convenience store industry. One of the best ways to capture the consumers awareness of the brand is through a customer loyalty program. These programs, which are fairly inexpensive to implement, can boost growth and help build strong relationships with customers.
Loyalty programs are not a new concept. For some brands, this strategy has been in play for decades. Currently, US consumers have 3.8 billion memberships in customer loyalty programs. That’s an average of 14 per adult!
What’s different is that the consumer demand has shifted from simply earning points in exchange for rewards to loyalty programs that are customized to their individual needs and preferences.
“Loyalty programs are important because 80% of revenue comes from just 20% of customers.” Zach Goldstein, CEO, Thanx
Drivers Affecting C-Store Loyalty Programs
In recent years, the lines between c-stores, grocery chains, and quick service restaurants have become blurred. This is especially true due to the COVID-19 pandemic which leveled the convenience playing field with most of these businesses offering similar home delivery and curbside pickup services.
While convenience is a major factor in deciding to go with a certain brand, people care more about being rewarded for their loyalty and product choices. This trend has been confirmed by the increasing number of customers who participate in customer loyalty programs. In 2018, only 6 percent of consumers participated in loyalty programs. By the following year, this jumped to over 42 percent. Most industry experts expect this trend to continue.
According to one study, 43 percent of customers visit a c-store because they are a member or a loyalty program. Another 53 percent admitted to visiting a retailer more often because they participate in the loyalty program. This new mindset is forcing c-store operators to rethink the way they approach brand awareness and loyalty.
Current Situation with C-Store Loyalty Programs
People want to be treated special when they shop at a retailer. Increases in technology have allowed many companies to tailor the loyalty program and shopping experience to the individual’s needs and preferences. This approach is now expected of convenient stores.
- Improved Technology – Gone are the days of simple punch cards that granted free or discounted products after so many purchases. Today, technology-based platforms such as mobile apps, digital mailing lists, and social media following have taken over. Of the various platforms, mobile applications are currently the most popular option.
- Data-Driven Personalization – Many brands are using consumer data to deliver customized and personalized rewards programs. The vast majority of consumers (87 percent) were ok with companies tracking their data if it meant that the loyalty program could be customized to their buying habits.
- Loyalty vs. Frequency – Some brands confuse the difference between loyalty programs and frequent buyer programs. Frequent buyer programs focus more on rewarding the number of purchases or visits. Loyalty programs on the other hand focus on bringing customers additional value for their business. Customers respond better to value-add programs, so this is a great opportunity for c-store to stand out from the competition.
- Fuel Savings – The highest demand is for loyalty programs that provide savings on fuel. In fact, 70 percent of consumers desired this type of reward. This can be an advantage for c-stores that also sell gasoline or diesel.
- Special Offerings – In addition to the traditional reward program elements, c-store chains are beginning to think outside the box when it comes to helping their brand stand out from the crowd. Some retailers are offering unique experiences such as community seating areas, electric car charging, and gaming terminals (where legal).
Challenges with C-Store Loyalty Programs
There are a lot of benefits that can come with creating a loyalty program including brand awareness, increased sales, and repeat visits. While setting up a loyalty program seems easy, there are some challenges that c-store operations should keep in mind.
- Overwhelming Options – One challenge with loyalty programs is the number of options available. Each brand seems to have their own program that utilizes different platforms or technologies. Customers don’t want to have to juggle multiple mobile apps, rewards cards, or members-only email lists. Once a customer has chosen one brand’s loyalty program, it may be difficult to persuade them to join another. For this reason, c-store operators should make participation and sign-up as easy as possible.
- Program Costs – Loyalty programs are relatively inexpensive to operate. However, this could be difficult especially for small retailers who only have a limited number of locations. It’s important for c-store operators to confirm that the benefits will outweigh the cost to implement and administer the program.
- Data Security – Running a successful loyalty program requires companies to collect a lot of data on their customers. This could leave companies vulnerable to data security breaches if their systems are not secured properly. Major data breaches can result in lawsuits or negative PR.
- Complacency – Customers can become bored with the same old offerings over time. To keep customers engaged, brands need to constantly think of new, different, and exciting promotions and rewards. This is critical since it is significantly more expensive to attract new customers than it is to keep existing ones.
- Omnichannel Communication– Older loyalty programs typically communicated with customer through one channel such as a mailing list. With a wide range of options available, customers now expect brands to engaging them through multiple platforms simultaneously including email, text, and social media. This can make the administration of the program more difficult across multiple platforms.
What the Future Holds for C-Store Loyalty Programs
Loyalty programs will continue to evolve in the future. It’s highly likely that c-store brands will offer more specialized service for loyal customers such as in-store pick up or exclusive items.
Technology will also have a huge part to play. C-stores may use tools like artificial intelligence (AI) to help anticipate customer needs. This will allow the brand to appeal to the customer’s emotional side by offering the right products at just the right time. There may also be new technologies that are just emerging such as a metaverse-based store that allows loyalty program customers to browse a virtual environment and have products automatically delivered to their front door.
Another factor will probably be sustainability. More consumers are becoming eco-conscious so c-stores will need to find ways to provide zero-waste and anti-plastic options. These feel-good brands stand to gain a loyal cult following.
No matter what options c-store operators choose in the future, its clear that the companies with the highest levels of brand loyalty will come out on top.