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Almost every major grocery store has a loyalty program for a simple reason: They work.
Nearly 30% of customers choose to shop at one store over another because of the loyalty program. More importantly, offering perks and exclusive discounts is also an effective way to boost revenue.
According to a recent industry report, 67% of grocers said their loyalty program helped them retain customers. Yet, only 20% of independent grocers have a loyalty program set up.
In this article, we’ll tell you how to set up a loyalty program at your store and how to get the most out of it.
Let’s dive in.
How To Start a Loyalty Program: 5 Steps
If you don’t have a loyalty program or need to move a loyalty program to a new system, here’s how to get started.
1. Decide What Type of Loyalty Program You Need
First things first: Before you figure out how to run a loyalty program at your grocery store, you need to determine what type of membership you need.
Here are the most common types of loyalty programs
Points Program
A customer enters their phone number at checkout and then earns points for every dollar they spend. These points can be redeemed for discounts, freebies (e.g., a free coffee at the deli counter), or other perks.
Member-Exclusive Discounts
Customers see a discounted price on the shelves and get that price by putting in their loyalty information (usually a phone number) into the point of sale (POS) at checkout.
Paid Membership
A customer pays a one-time or yearly fee to become a member. This is commonly used at co-ops or specialty markets.
Punch Card
Customers earn a single "punch" for every purchase or dollar amount spent. After getting a certain number of punches, customers earn a free reward.
The majority of grocery stores we work with use a points-based program, member-exclusive discounts, or a combination of the two. These types of programs are the simplest to set up and easiest to manage.
2. Set Up Your Loyalty System
An example of a loyalty program setup on Markt POS
Once you decide the type of loyalty program you want to run, it’s time to actually set it up.
An advanced loyalty program that works across different businesses might require a separate program, but the vast majority of them can be run right from your POS.
In fact, using a grocery POS system with built-in loyalty has a few distinct benefits:
- You can manage your products, vendors, and customers all in the same back office.
- You can connect transaction and customer data to see which types of products your loyalty members buy the most.
- You can create a single customer profile they can use across your various locations and e-commerce site.
- It’s generally cheaper and less complicated to learn than a separate loyalty software.
- Customers or cashiers can enter a phone number at the register without a separate app or terminal.
Every system is a little different, but here’s a quick overview of how to activate a loyalty program on your POS:
Enable customer loyalty in your back office and set how much customers need to spend to earn one point.
Set up discounts and loyalty rewards in the back office to be applied automatically or by the cashier once conditions are met (e.g., a customer earns over 100 points).
Set up various types of rewards and select whether they apply to specific items or a customer's whole basket.
Set up member-exclusive discounts by setting up promotions for select customer groups on your inventory management system.
3. Train Your Cashiers
Once a loyalty program is turned on in your POS, you need to make sure your staff is comfortable using it.
Use the training mode on your POS (if it has one) or ring up a few simple transactions to go through the process of:
- Signing a customer up for the loyalty program
- Having a customer or cashier enter their loyalty information
- Making sure automatic discounts are applied correctly
- Handling prompts for applying bonuses or discounts
Remember: If a loyalty program slows down checkout, people won’t bother using it.
4. Market Your Loyalty Program
Once your loyalty program is working as expected, it’s time to spread the word. Use your social media or grocery store website to advertise your loyalty program. In your posts, make sure to tell people:
- How to sign up
- What the rewards are
It also can’t hurt to place basic signage at the front of your store and near the checkout lanes.
5. Check Loyalty Data Periodically
After customers have signed up and are using the program, use your POS system’s reporting tools to see how it’s going.
Here are a few things you can learn by looking at loyalty reports.
Just like inventory or marketing data, checking on your loyalty program metrics helps you figure out what’s working and what’s not so you can make improvements.
Related Read: Key Performance Indicators Grocery Stores Should Track
Customer Loyalty Programs for Grocery: Key Benefits
With the right system, the hardest part of running a customer loyalty program is the setup. From there, it should practically run itself. However, while nearly every big grocery chain has some form of rewards program, only 20% of independent grocers have the same.
This is a real shame. A well-run loyalty program helps grocers:
- Stay competitive with big chains.
- Encourage repeat business.
- Segment customers for personalized marketing.
- Get actionable data into customers’ shopping habits.
- Drive increased sales.
Don't forget!
The majority of your revenue comes from the customers you already have, not new ones — and repeat customers spend 67% more than new customers. In other words, the more you do to encourage repeat business, the more money you'll make.
How To Improve a Grocery Customer Loyalty Program: Pro Tips
Simply having a loyalty program and having one that customers actually want to use are two very different things. Here’s how to get the most out of your loyalty program:
- Make it obvious how many points a customer currently has and how many they need to earn rewards. This encourages repeat visits.
- Don’t make rewards too far out of reach. If a customer has to spend $150 on groceries just to get a free coffee, they won’t bother. Make the rewards feel significant.
- Have member-exclusive discounts on a mix of high- and low-margin items to target different types of shoppers.
- Differentiate member-exclusive discounts from standard discounts available to everyone with unique signage.
- Use customer contact information to promote the latest deals over email or SMS.
Putting even a little extra effort can have huge payoffs for your business in the form of happier, more engaged customers. So don’t set it and forget it.
What a loyalty program is not
Loyalty programs are great for keeping your store top of mind with your local customers — but a loyalty program is like dessert, not the main course. According to a recent survey, the average person already has 18 loyalty programs on their mobile device.
In other words, most customers won't choose your store because you have a loyalty program.
If sales are really lagging, a superior selection, speedy checkout, and great customer service should always be the first areas you focus on.
Run an Effective Grocery Loyalty Program at Your Store
Interested in starting a loyalty program, but not sure where to start? We have you covered.
At POS Nation, we’re dedicated to matching specialty retailers with the industry-specific solutions they need to thrive. Our grocery POS experts can set you up with a system that won’t just help you set up a loyalty program, but also improve inventory management and reduce costs.
Schedule a demo today to see how the right POS system helps you engage with customers and drive sales.
