Food For Thought

Loyalty programs have attracted more and more attention since the advent of database marketing and the web. A good loyalty program is one that fits naturally into the current needs of customers, while fitting into a company’s ability to collect and use profile data.

For years, supermarkets have collected mounds of data about product merchandising – everything that can affect sales, from the time spent in the store to the use of end-aisle displays.

When you look for an industry that has an abundance of data about customer behavior, the grocery industry is near the top of the list. Selling $425.7 billion of products with an average price around $2 makes it one of the most data intensive industries in our economy.

And they have only recently started tracking individuals. It seems that every grocery chain now has a “frequent shopper” card that gives discounts in return for allowing the store to identify individuals.

But do they share that data with consumers?

No. The only way most of us have “access” to our purchase data is through the printed cash register receipts.

Of course, the online grocers such as Peapod help customers use purchase data to create future shopping lists. This helps them retain customers. So why can’t traditional grocery operations help customers use their purchase history data, too?

For instance, many people are concerned about their weight and how the food they eat affects their health. This has led to a growing interest in nutrition.

Just think how much easier it would be to adjust eating habits if we became aware of what we’ve been purchasing — like those pints of Chocolate Chip Cookie Dough — without having to keep cash register receipts hanging on the refrigerator.

Years ago, one of the applications touted for home computer use was a program to store recipes, and those recipe managers are still available today.

There are many reasons why cooking software didn’t become the primary home computer application, but one reason was that the data had to be entered manually to know what food items were on hand.

So why can’t traditional grocers provide our purchase history data to us so we can do a nutrition analysis, or feed data into recipe programs on our home computer? How hard would it be to email a data file to us for import into a spreadsheet or some other nutrition software program?

None of the leading grocery store chains I contacted would say if they had plans for adding this type of service. But it’s only a matter of time before they realize that profile data can help improve customer loyalty. Of course, it wouldn’t be long until competitors started emailing their customer purchase data as well, which could turn into a real food fight.

So, is there a way for a grocery chain to derive real long-term customer loyalty with this strategy? Sure. Do everything possible to make life easier when groceries are purchased from the same chain. This means giving customers more than just their own data, perhaps adding purchase recommendations, relevant coupons, and tips for preparing the food actually purchased.

One of the challenges of web marketing is how to keep customers coming back and making more purchases. This is a critical issue for many sites, as the cost of acquiring a customer is often greater than the size of the first order.

Grocery stores, however, have this problem solved. Every family buys groceries on a regular basis, so the capital outlay of adding this service can be amortized over the life of the customer. Literally, the life of the customer.

While this use of profile data will probably make some grocery chain outstanding in its field, all companies collect data that might be useful to their customers. And by considering how grocery stores could use purchase data to improve customer loyalty, we gain food for thought, as well.

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