JERSEY CITY, N.J. — The convenience store industry has been transforming itself into a serious competitor to foodservice outlets for years now, but c-store operators can still learn much from restaurants when it comes to engaging guests. By learning more about their customers, c-stores can build loyalty and earn repeat business for years to come.
The best ways to achieve this were explored during an April 21 webcast hosted by Convenience Store News, entitled "What Can Convenience Stores Learn From Restaurants About Guest Engagement?" Dave Taylor, technology consultant for Paytronix, a leading provider of reward program solutions to restaurants and retailers, and Stephen Stone, marketer for Paytronix, served as speakers. Convenience Store News Editorial Director Don Longo moderated the webcast.
"The convenience store industry has battled with the challenge of creating loyal customers," said Longo, noting this involves getting them inside the store, garnering repeat visits, and creating a bond between the brand and shopper. Hotels and airlines have focused on this for a long time, but it's restaurants that lead in guest engagement.
Stone asked webcast attendees to consider one simple question: Are you category-centric or guest-centric? To properly answer this, he said retailers should think back to their last marketing meeting. "What kinds of conversations were you having — how to sell more fountain drinks or thinking about who is buying your products?" he posed.
A guest-centric approach still involves trying to sell products, but it thinks about who is buying them first.
Three questions will help retailers develop a guest-centric approach:
1. Who are your customers?
2. Are you using different engagement strategies for different customers?
3. What is your customers' lifetime value?
Numerous questions can also help c-store operators gain an understanding of their customers: Which ones visit regularly? Who only buys gas? Who only comes into the store? Who does both?
"What do you currently know about your customers and how do you gather more info to get to know them better?" Taylor asked.
Getting to Know You
The restaurant industry uses rewards programs and segments loyalty groups by visit and spend behavior. Successful brands target the groups that have the potential for incremental visits and spend, and then sends relevant messaging to get their attention.
Taylor cited the success story of Pie Five Pizza Co., which wanted to target millennials. The company used rewards program data to send targeted messages and rewards, and used surveys to improve the in-store customer experience. Ultimately, Pie Five grew its business by more than 1,000 percent within three years.
By collecting information on segmented guests and their preferences, retail outlets can send relevant messaging, such as alerting past purchasers of a particular item when it has returned to the menu. The resulting incremental visits "are the lifeblood of a successful rewards program," Taylor said.
He cautioned attendees, however, that "your customers will only accept relevant content." While it is tempting to schedule marketing campaigns as e-blasts that target everyone, such a sweeping approach may result in a net loss of money over time, despite achieving better initial results.
To figure out a customer's potential for incremental visits and spend, retailers can examine guests' best time period, or how many times they visited during a set period of time, and how often they repeat that rate of visits. Customers already at their potential are consistently repeating that top performance.
Using data, c-stores can also classify guests based on how price sensitive they are and whether or not they are at their potential. Price-sensitive customers below their potential are motivated by a discount and therefore more likely to visit the store when offered a coupon or deal. Conversely, price-sensitive customers already at their potential will take advantage of a discount, but won't visit more than they already do, which could result in a net loss of money.
The key is to accurately categorize customers and target campaigns to the right categories.
As for return on investment, retailers can calculate the "loyalty impact equation" by multiplying the number of guests enrolled in a rewards program by the percentage of active members and their spending activity.
To boost enrollment, the Paytronix speakers recommend lowering the barrier of entry to a rewards program by letting people join via mobile app, website, at the point-of-sale or through other methods. They also encourage retailers to be creative and give customers a reason to want to join.
As an example of a convenience store retailer that successfully used data to improve guest engagement and rewards program participation, the presenters used Thorntons Inc. as a case study. The Louisville, Ky.-based c-store chain incentivized customers to enroll with an attractive fuel discount and lowered the barrier of entry with cards and mobile enrollment.
Thorntons, a Paytronix client, surpassed its initial benchmarks in less than one year and revised its two-year goal after successfully reaching one million rewards members in early 2015.