NATIONAL REPORT — With higher food prices and fluctuating gas prices hitting consumers in their wallets, it is no surprise that shoppers are turning to loyalty programs to ease the pain.
The top loyalty guests overwhelmingly represent the highest spenders and the most frequent visitors, and they offer a lifeline during an economic downturn, according to the 2022 Paytronix Annual Loyalty Report. Looking at the convenience channel, the top 8 percent to 10 percent of loyalty members visit an average of 32 times a month, more than once a day and four times as often as the next highest tier.
Additionally, the spend per check for c-store loyalty members increased by about 25 percent last year, and the annual spend for convenience loyalty members increased nearly 40 percent, according to Newton, Mass.-based Paytronix Systems Inc.
"The Paytronix Annual Loyalty Report shows that the potential of loyalty to build relationships between customers and their favorite brands has never been greater. Between the ongoing generational shift and the critical importance of the top tier of 2 percent to 3 percent of guests, it has become increasingly clear that growing cadres of loyal customers are vital for the health of brands," said Lee Barnes, chief data officer for Paytronix.
Shaking Up the Loyalty Game
There's no doubt that c-store retailers must have a loyalty program to succeed in today's environment. And it's not just about ringing up the incremental dollars from repeat, loyal customers, but also creating and maintaining a direct and meaningful relationship with the customer.
In a recent Convenience Store News webinar, a senior executive with LedgerPay, a payments intelligence platform and data insights company, noted that loyalty programs come in two forms: behavioral and emotional. Behavior loyalty represents actions that can be seen and measured, and are the result of rational decision-making. Emotional loyalty is the result of perceptions, attitudes and values that work in tandem with behavioral loyalty and go beyond rational reasoning in terms of the level of attachment.
Taking the emotional approach to a loyalty program is the key to success for c-store operators. This type of loyalty is where the market has shifted, explained Tom Byrnes, senior vice president of marketing at Irving, Texas-based LedgerPay.
Every brand thinks about loyalty in the same way: How do you take existing customers and make them do more things? "The reality is, most of the time, the existing customers that are willing to play that game are self-selected. Customers who are already loyal take advantage of the loyalty program," according to Dennis Becker, CEO of Mobivity.
Phoenix-based Mobivity is ready for the next evolution of loyalty. The company's cloud-based Connected Rewards technology delivers offers and promotions, building large, owned audiences for some of the world's biggest brands. Through partnerships with game publishers, digital operators and ad networks, Mobivity connects consumers to its broad network of brands.
The company is combining its experience in the rewards space with Houston-based P97 Networks, a leader in forecourt payment technology, to think outside the box to attract a new customer base and turn them into loyal customers.
"At the end of the day, it is about brands driving higher value to their customers. Points-based loyalty programs reward you for every dollar spent, but a lot of times, they just reward consumers for existing behavior. They were going to come in anyway, so you are discounting ambiguously and not really changing the consumer behavior," Becker pointed out.
Thinking Outside the Box
The opportunity lies in cross-brand affinity, similar to credit card and airline rewards programs. For example, airlines offer their frequent flyers discounts on hotels and rental cars.
"We looked at the broader space and asked: Why can't you earn a free sandwich if you play a mobile game, or why can't you get points in your favorite mobile game for the more fuel you buy at Circle K?" Becker posed. "It's not just mobile games, but any situation where you can create that cross-brand affinity."
To that end, Mobivity and P97 Networks are teaming up to offer mobile game users rewards for gameplay achievements. The partnership has two pilot programs underway, one with a regional convenience store chain, and the other with a national fuel brand.
"Instead of rewarding your guests with your products, why not reward them at other brands, and those brands will pay for your referral — and vice versa," Becker said.
The program presents a new opportunity for fuel brands to reward consumers in a way that doesn't necessarily require them to bear the cost of the discount of the loyalty program because there is also value being delivered to the mobile game publisher, he noted.
"It is rethinking how we can bring more value to the consumer without having to track all their purchase behaviors or issue them straight discounts," he said. "How can we create an exchange and bring two brands together? It's a new way of thinking how to drive guest traffic and, ultimately, loyalty."
Previously, the marketplace lacked the technology, but that is not the case anymore.
"Everyone has their loyalty program, and everyone has 10 percent to 15 percent of their customer base that uses it. Now is the time to look outside those walls for the other 85 percent and bring loyalty to the activities consumers do outside of the brand," Becker said.