Magazine Article | February 1, 2000

Build Customer Loyalty With Technology

Source: Innovative Retail Technologies

Today's consumers are fickle. Do you have the loyalty programs and technologies needed to keep their business?

Integrated Solutions For Retailers, February 2000
I'm a tough customer, but a loyal one. I shop at a select number of stores, which have earned my business through good customer service, quality goods, and rewarding frequent shopper incentives. A retailer would be hard-pressed to make me shift my alliances.

Unfortunately, my "regular" supermarket recently lost my business. For five years, I was a loyal patron of a regional supermarket chain. The store offered everything I needed. It had a wide selection of products (bakery, café, and deli) and services (banking, dry cleaning, and video rental). It was also conveniently located within minutes of my house. Why shop anyplace else?

Bad Experiences Alienate Customers
Ironically, the store's frequent shopper program — an electronic marketing program designed to reinforce customer loyalty — led me to switch supermarkets. My frequent shopper card included advantages such as video store rentals, buyer rewards, and check cashing privileges. But, in the last few months, my frequent shopper card gave me more headaches than benefits.

More than once, I was delayed at the checkout counter. Each time, the cashier informed me that my frequent shopper card did not have check cashing privileges. I disagreed, so the cashier called the store manager. The manager looked up my card on the main computer. Each time, the manager returned, apologized, and explained that there was a computer problem. After the second occurrence, I asked the manager to fix this glitch, so I wouldn't need to go through this inconvenience again. Powerless, the manager suggested I call store headquarters to sort out the mess.

After that experience, I stopped shopping there. Now, I drive 10 minutes further to a different supermarket, whose frequent shopper program has caused me no pain — so far.

Loyalty Programs Continue To Grow
Supermarkets aren't the only businesses that have cashed in on the frequent shopper phenomenon in the last 15 years. Airlines, specialty stores, restaurants, etc. are all realizing the advantages of these programs. A study done by the Food Marketing Institute (FMI) of Washington D.C. found big rewards for retailers who invested in frequent shopper programs, including:

  • 10% to 20% increase in company sales
  • 10% to 20% reduction in advertising expenses because of targeted promotions to top customers
  • 11% increase in customer retention.
Technologies Working For Customers
While frequent shopper programs have existed for a number of years, new technologies continue to be introduced to improve customer loyalty. My new supermarket now offers radio frequency identification (RFID) key chain tags for frequent shopping. Also, biometric technologies, such as fingerprint and hand readers, have decreased in price enough to be used in shopping applications. Take Who? Vision (Lake Forest, CA), for example. This company offers fingerprint readers built into TV remote controls and computer screens to identify shoppers using a TV home shopping channel or a Web e-retailing site.

The technologies used by e-retailers are advancing customer loyalty offerings to a higher level. Business intelligence software has allowed e-retailers to gather detailed information about their customers. When this information is paired with Web portals, e-retailers can identify a customer as he enters the site, and customize the shopping experience to the customer's preferences.

And, this is just the beginning. These technologies — and others — are in their infancy. They will offer retailers greater abilities to build customer loyalty in the upcoming years. Perhaps even my former supermarket will devise a way to win me back.

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