Loyalty in 2012 has gone far beyond the loyalty card. In a great post by Tom Fishburne, Trader Joes is shown as a company with no loyalty card that simply makes itself so valuable to its customers that they come back without any discounts.
Sure, enticing customers to your store by loyalty discounts has the benefit of allowing a retailer to entice people to give up personal information and allows tracking of buying patterns. Fair enough. But why offer price cuts to those willing to pay full price for the product? Why not create loyalty in ways that doesn’t hurt profitability?
With grocery retailers as an extreme example, a 2% margin is already threatened before the discounts begin.
Spray and pray
Old school advertising was about ‘spamming’ your potential fans with offers. Those days are rapidly drawing to a close and the US Postal Service is heading south with it (well, that and email).
There are two approaches that work without discounts. The first is great products and service (Trader Joes), and the second is to offer something unique and valuable. For one major retailer, its the ability to build a ‘meal list’ and then have the key ingredients automatically populate a starter set of purchase. Shared shopping lists that let family members ‘build’ required purchases and different shoppers to buy or skip suggestions. Prompts that show manufacturer’s discounts that come as a service to the shopper with no hit on margin.
Getting there means infrastructure that includes analytics, connectivity, fast sensing/decision making and speed. Not everyone’s ready.
Loyalty is a changing game. That game is no longer played with simple discounts.