Empowering Loyalty Customers

Retailers are energizing their rewards programs and using social media to keep loyalty customers active.

The modern loyalty program may be 28 years old, but in a saturated market, chains are turning up the creativity to gain customer attention by pushing game-based promotions, cause marketing, discounts on fuel and using social networking to drive interest.

COLLOQUY’s Loyalty Census 2011 found the average American household is now the carrier of 18 different loyalty programs—that’s more than two billion memberships nationwide—but only active in about 8.4 of those programs.

“If you have a loyalty program the challenge doesn’t seem to be growing the membership base, it seems to be growing the engagement of members who have already signed up,” said Jim Sullivan, partner at Colloquy, a loyalty research and consultancy.

The Pantry, which operates 1,642 stores in 11 states under multiple banners including Kangaroo Express, is one chain investing in loyalty and leveraging social networking to ensure its program is one where customers remain active.

“There are three precise areas where we want to drive loyalty. The first is transitioning from a gas station to actually being a destination for customers. Then getting people from the pump into the store using location-based apps like Facebook and Twitter, and then driving on-the-go meals and snacks by promoting those segments in the channel,” said Alec Bleday, assistant brand manager at Kangaroo Express.

At presstime, the Kangaroo Express Facebook page had just reached 1,000 fans, even before recruitment efforts, which are slated to begin this summer. At the beginning of April the chain also started reaching customers through Foursquare.

“The great thing about Foursquare is it adds another level of interaction to the store, and lets you run promotions by market or district, so it helps when you have a really big footprint to be able to treat stores in rural areas differently from stores in urban populations and break it out by region,” Bleday said.

The chain is still experimenting with Foursquare promotions, such as awarding discounts after customers check in five times, or rewarding customers who reach “mayor” status on the site.

“The c-store user is actually one of the heaviest digital media users—giving product reviews, on Facebook, writing blogs—so to reward people who are checking into our locations really helps our brand and drives frequency around it,” Bleday said.

Targeting Trends
Kangaroo Express is also capitalizing on two major loyalty trends—gamification (rewarding customers with contests, trivia and other fun campaigns) and cause marketing focused on a charity.

Earlier this year Kangaroo Express engaged basketball fans from University of North Carolina, North Carolina State University and Duke University, encouraging them to Battle for Bean Street by buying coffee cups featuring their team’s logo and rewarding the team with the most support by donating $20,000 to its charity of choice.

The promotion was a “slam dunk across the board,” Bleday said. “It gives you such good content to broadcast on social networking channels. With Battle for Bean Street you could track sales via a particular store and help push your team into the lead. About 20% of our visitors stoped by a particular store more than 12 times looking for updates to see who was winning.”

This summer, Kangaroo Express is raising money  to support United Service Organizations’ (USO), celebrating 70 years of delivering programs, entertainment and other services to the military; Wounded Warrior Project, honoring and empowering injured servicemen and women; and National Guard family assistance programs in five states. In addition, the company is inviting guests to share stories about their hero via Facebook and a designated Website. The chain also plans to roll out a beverage frequency program to drive sales around fountain drinks, frozen beverages and coffee in late June, which will center on text messaging.

“That helps us out because we’re able to study the analytics, the redemptions and customer behavior on all the different channels,” Bleday said.

Rallying for the Cause
Kwik Trip Inc. is also attracting customers at its more 350 stores with cause-based promotions. Through its 10% off Scrip Gift Card program organizations can purchase gift cards for 10% off and sell them to make a 10% profit.

“In today’s tough economic times the nonprofits are the ones feeling the effects of people’s budgets being a little bit tighter. This allows people to support their favorite organization or charity without having to take anything out of their family budget,” said Jenny Frandsen, fundraising coordinator for the LaCrosse, Wis.-based convenience store chain.

In addition, Kwik Trip offers its Kwik Card through which customers can earn 5% off gas for 60 or 120 days based on which card they choose, plus 10% on in-store purchases. The Kwik Card can also be used as a fundraising program if customers want to designate a charity or organization to receive their Kwik rewards. Once five account holders designate a specific organization to gain their rewards, Kwik Trip donates an additional 5% on top of the in-store purchases.

With gas prices high, Kwik Trip has seen an uptick on loyalty card usage as customers look for strategies to save on gas. “We’ve also seen an increase in gift card usage because those organizations can make some money off of selling our cards and people flock to that,” Frandsen said.

Kwik Trip offers emailed coupons that customers can sign up for and print, something the chain promotes on its Facebook page. In addition to being active on Facebook, Kwik Trip reaches customers through Twitter and with YouTube where it features its 10% off Scrip gift card program and commercials to highlight various in-store sales promotions.

Kwik Trip also cultivates loyalty through its Dollar Deal on Wednesdays, where it promotes a food product like its Blue Mountain pizza every Wednesday for $1. “It helps draw people into the stores,” Frandsen said. “We promote that on our Facebook page and we tend to get a lot of response based off of that. People will let us know in the comments how much they enjoyed it or if they can possibly improve it or how many they have eaten that day.”

“Loyalty is important to any business,” Frandsen added. “Not only do we want to keep the customers we have who are loyal to our stores, but we also want to track those new guests.”

Coalition Programs
Joining forces with noncompetitive partners, especially around fuel discounts, is an ongoing trend in loyalty seen in the c-store industry. Examples include partnerships such as Kroger and Shell, and NOCO and AAA (see our Back Room story http://csdecisions2.wpengine.com/2011/06/11/fuel-rewards-luring-customers/).

Alliances with other companies allow for endless creativity in partnerships. Giant Eagle is a prime example. Through its fuelperks! program, Giant Eagle allows customers to earn rewards from grocery purchases at Giant Eagle and redeem them for cents off gas at its GetGo gas stations.

At presstime, ConocoPhillips reached a deal with KickBack rewards to offer its Phillips 66, Conoco and 76-branded retailers a turnkey and cost-effective loyalty solution. Consumers can earn and redeem points instantly for fuel and merchandise purchases at participating sites as well as other participating coalition sites.

The program’s flexibility allows participating retailers to identify their most loyal customers and engage them through customized offerings.
“This program is particularly appealing because it was developed to improve site profitability. It was created by a petroleum retailer for a petroleum retailer. The simplicity and flexibility of the program makes it attractive to both single site operators and multi-site chains,” said Mike Krampf, ConocoPhillips’ brand value manager.

ConocoPhillips will introduce the Kickback Points Coalition Loyalty Program starting with sites on the West Coast in the third quarter of 2011.


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