Customer Loyalty Program Goes Beyond Discounts and Coupons

CIO — Just about everyone has a key chain full of plastic cards for discounts at various stores. The traditional loyalty offerings from many retailers involve collecting lots of customer data, but companies—particularly grocery stores—often do a poor job of analyzing it, says Forrester principal analyst Lisa Bradner.

However, some grocers are slightly ahead of the game, Bradner says, by offering coupons or other savings based on what a specific consumer buys. Along these lines, CIO Harrison Lewis of supermarket chain Haggen created a loyalty program that goes beyond what most grocery stores offer.

"If it exists today, we aren't thinking big enough," Lewis says about ways to engage with his customers. "It's more about using the data to build relationships with the customer than for discounts."

Last September, Haggen, an $800 million supermarket chain based in Bellingham, Wash., launched its Top Connection program to improve customers' shopping experience by giving them access to their own purchase information along with cash-back incentives. "We wanted to redefine the game because we believe this is a competitive advantage for us and we wanted things that really would benefit our guests," Lewis says. By creating an experience different and easier than that of other supermarkets, Lewis believes customers will bring in more business for the company.

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Haggen launched the RFID-enabled program at four Washington state locations, with the intent to roll out to its remaining 13 locations this July.

Top Connection puts customer data online, where shoppers can create lists based on their purchase history, find sale items and read about products similar to ones they usually buy. After a few months, about 60 percent of Haggen's customers had signed up for the program.

Most supermarket loyalty programs require that customers scan a plastic card to get discounts at the register. Haggen's token—a 1.5 inch square available in a choice of four colors—instead keeps track of what shoppers buy. If a product goes on sale within a week, Haggen refunds the difference to the shopper's "electronic wallet," along with a 1 percent reward. The money held in the electronic wallet can be used for future shopping trips.

Giving customers money back is not an option available at most supermarkets, says Forrester's Bradner. The closest example is a partnership with credit card issuers—for example, when you use a Costco American Express card you can get cash back for future Costco purchases. But it's something that's important to consumers. A recent Forrester report found that 58 percent of shoppers are interested in joining loyalty programs if they can earn value to use toward future purchases.

Members of the Haggen staff took the time to hear the opinions of customers before implementing the program by holding a panel to discuss their preferences about supermarket shopping. "We wanted [the program] to make the experience easier for them to shop in our stores," says Lewis. "We respect our guests and their time."

Jarina D'Auria is a freelance writer based in Massachusetts.