How do you implement a loyalty program for a grocery business with nearly 1,000 outlets using Loyalty Drive Enterprise?
The market for consumer loyalty programs, especially in the retail industry, is very extensive in Poland. Our client (a grocery store chain), which did not have a loyalty program to date, approached us with a need to create and implement such a solution. The loyalty program was to be tailored to its business profile and effectively support long-term growth, while taking into account the technical limitations and systems used in the company.
Here is a summary of the project, in which, with the help of Loyalty Drive Enterprise, we created an attractive loyalty program for consumers, meeting the client’s business requirements.
- Implementing a massive loyalty program for more than 1.5 million active users.
- Handling more than 50 million user account transactions annually.
- Providing a solution based on Loyalty Drive Enterprise’s highly efficient and scalable loyalty engine that responds to more than 1,000 concurrent API requests with a response time of less than 0.5 seconds (500 milliseconds).
Business goal – improving customer retention
Our client’s main competitors were already successfully running their loyalty programs, so the solution implemented by the client had to be at least as good, and ultimately better and more attractive than programs available on the market, known and liked by consumers.
The business goal was to increase shopping frequency and basket margins. The intention of our activities was to improve performance in the context of share of wallet, so that as much as possible of a given consumer’s spending is carried out within our Client’s store network.
We wanted to create a solution in a no-code model, so that ultimately it would be the business user who would manage the loyalty program, offers, mechanics and communications, without having to involve the IT department on the vendor’s side.
Since the client has specific operational processes, it was important that the program and the IT solution being implemented should not shatter the existing order, and could easily adapt to the stagnant situation on the client’s side, integrating with the distributed infrastructure, and ensuring live collaboration with POS systems and customization under the processes already in place on the company’s side. We assumed that the main channel of access to the loyalty program would be the mobile application. The challenge was to strike a golden mean between making the app as simple and intuitive as possible, and providing a wide range of functionality for users.
The app had to be tailored to all age groups, as we did not assume the possibility of offlien registration for the program with a plastic card. Registration for the loyalty program does not disrupt the customer service process in stores and does not require an employee. In addition, when creating the loyalty program, we kept in mind the existing activities on the customer side and naturally integrated them into the functioning of the mobile application.
The client was looking for an experienced provider of loyalty solutions, whose strategy would fit into the business model and creatively relate to the company’s positioning and image, which had been encoded in consumers’ minds.
The most important criteria for selecting a solution were:
- Scalability and ease of adapting the solution to the existing infrastructure
- High performance of the tool
- Experience of the partner and its team
In order to prepare a business case that synthesizes the costs associated with the program, presents the profits that can be achieved and enables the definition of key indicators (such as recruitment, data quality, card bargains), Loyalty Point’s experienced consulting team carried out the „Raport Otwarcia” project. The process itself is very methodical and, in addition to an analysis of the organization’s available data, also involves a review of available IT tools, team structures and processes.
It turned out that the initial concept of the loyalty program, independently developed by the client, including assumptions about functionality, rewards and the mechanism for awarding them, based only on averaged values of shopping baskets, would make the rewards difficult to achieve for most consumers and the program itself unattractive.
Using a proven methodology, we revised the original assumptions and initial ideas for the loyalty program. Through the use of transactional data and based on a simulated customer profile, we made the underlying mechanism significantly more attractive.
Mechanics of the program
The developed mechanics accrue benefits to the club member’s account (points) on the basis of realized expenses. The parameters of the base mechanics are fully customized – the business customer decides on his own what products and assortment groups he offers in the program. He can freely control them based on assortment, store location, limits and other values. The ability to impose per-consumer limits provides the potential to create more attractively priced offers, and on the other hand significantly reduces the possibility of fraud. With a loyalty program, a company can manage communications and price offers much better.
UCE Research’s study “Inflationary Dilemmas of Poles. What do we save on in stores?” indicates that in times of crisis, more than 78% of respondents look for cheaper items and promotions on store shelves. As a result, we are noticing increased interest in promotional newspapers and loyalty programs. That’s why we were keen to build ease, speed and accessibility to the benefits in the program, which will mean greater appeal for consumers. Welcome points, products sold at very low price, high-rotation products available at attractive prices have resulted in customers’ openness to the loyalty program – shopping within a brand simply pays off for them.
By offering club members fast-moving products at very competitive prices, we allow its participants to save real money. The high efficiency of the system ensures that after a transaction, the club member immediately receives information about the benefits gained. This is the best authentication of the program’s operation.
Loyalty at the center of activities
The client put the loyalty program at the center of activities. It was actively involved in its implementation, including creating newspapers with extensive information about the program, promoting offers only for club members, investing in ATL communications, and preparing training for employees. Retailers in stationary stores were involved in the process of creating the loyalty program. By making the application available to them pre-release, they learned about the idea, collected points and took advantage of offers and promotions. As a result, they themselves experienced the benefits of belonging to the loyalty program and, as a result, sincerely recommend joining the program to customers. We are definitely more willing to recommend things we have tested ourselves and have confidence in. Salespeople explain and remind people about the program, being ambassadors for it.
At Loyalty Point, we offer a solution that is flexible yet easy to implement. By using the Loyalty Drive Enterprise engine, the loyalty program has been implemented and aligned with the customer’s existing systems. The advantage offered is a flexible API, enabling connectivity to multiple systems and databases, supporting up to 1,000 concurrent queries with a response time of less than 0.5 seconds (/500 milliseconds) within this one project. In addition, it is a no-code model solution, allowing the business user to customize the offer, communication and other elements of the loyalty program on their own, depending on consumer needs, location or other parameters.
The client successfully implemented an attractive loyalty program. Thanks to a data-driven strategy and strong commitment on the client’s part, the results were better than expected at the beginning of the project.
- Recruitment targets exceeded 6 times within the established timeframe.
- Up to several tens of % of transactions executed on club members’ accounts. This is a great result for such a short time of the program’s operation (the program launched in March 2022).
- Excellent ratings from employees and consumers (the mobile application is one of the best rated in its category).
- Significant increase in assumed business parameters such as the margin per customer minus the cost of the program – which means that we managed to increase the frequency and value of the receipt.