GHQ: Winning Them Over
By Suzanne Vita Palazzo
Through a special arrangement, what follows is an excerpt of a current article from Grocery Headquarters magazine, presented here for discussion.
For wellness customers, savings cards don’t cut it. These shoppers have already shown their willingness to pay a premium for healthful offerings, and discounts aren’t often a source of purchase motivation.
When building a loyalty program toward them, retailers should first understand that the wellness base requires a good dose of respect for their chosen lifestyles. They also tend to have a “unique emotional connection” to favorite brands. Since notions of well-being and social responsibility often cause these consumers to remain devoted to a particular manufacturer, it stands to reason that retailers could effectively build store loyalty by highlighting the same themes.
“There’s transactional loyalty, and discount-based loyalty programs are really driving transactional loyalty,” says Phil Rubin, president of Atlanta-based RDialogue. “But that is not nearly as valuable as customer loyalty where there is an emotional component.”
An effective way of activating this emotional component is offering a rewards-based loyalty program tied to a store card that allows wellness shoppers to receive deals and product giveaways relevant to their lifestyles. Particularly beneficial programs help shoppers achieve goals, whether dieting, exercise or something else.
One example would be in-store kiosks delivering highly-specified dietary info as well as recipes.
“Loyalty is about problem solving,” says Frank Beurskens, CEO of Buffalo-based Shop to Cook, which markets such as kiosk. “By meeting individuals specific needs, their focus on just price diminishes.”
Other suggestions for appropriate, tangible benefits in shopper rewards programs require partnerships with manufacturers and outside entities. These may include discounts to local gyms or weight-loss organizations such as Curves or Weight Watchers; or trial subscriptions to health-based magazines. Event-based marketing, such as promoting a local marathon, may open doors for additional partnerships and in-store displays.
In addition, some grocers and manufacturers find newsletters distributed online and in the store as an effective way to underscore their commitment to health and wellness. Retailers could also affiliate themselves with causes and charities held in high esteem by wellness shoppers, such as the Lance Armstrong Foundation.
“You have to have a different reward strategy for a wellness customer than you do for someone who’s just buying stuff out of the sugar aisle,” says Mr. Rubin. “There are all kinds of other things that can be offered as a reward, some of which are of direct benefit to the customer and some are just sort of aligned with wellness and the causes that are congruent to that, where the reward is really partnering with brands that are advocating things that you feel strongly about.”
On the downside, loyalty experts agree that it typically requires a bigger investment to acquire any “premium customer.” Also, making the earning-rewards threshold too high can cause feelings of resentment from a wellness customer. Finally, “too-exclusive” partnerships can alienate some customers since the level of devotion to wellness varies from customer to customer.
Going over the top with any promotion – including rewards-based ones – run the risk of being viewed as less than authentic.
“You don’t really want to shout about it or make it seem like a gimmick,” says Blaine Becker, director of marketing and communications for the Hartman Group. “If it’s perceived as genuine or that it’s really there to help the consumer do something, then it really has a great chance of being successful.”
Discussion Questions: Do you agree that a discount card strategy is not appropriate for the wellness crowd? What marketing approaches do you think are best to build loyalty with wellness shoppers?
Loyalty programs, aimed at any customer segment, all have the same difficult riddles: (1) if the threshold is too high, will resentment hurt business? (2) if the threshold is too low, how can the retailer afford to give any meaningful premium? (3) does having a separate loyalty program just add to overhead and shopper resentment due to the extra procedures? (4) what reward can be uniquely valued? (hint: it isn’t recipes).
I was impressed recently by a Saturn commercial which outlined their commitment to saving the environment. It was suggested that their plant was so ecologically built that an animal habitat could reside next door without danger. Even though I never considered purchasing a Saturn car, the commercial was so effective in tapping into the emotional connection I have with recycling and preserving the environment, that now Saturn is a contender in my future car selection process.
The customer that is concerned about wellness for their body as well as for their family’s is also concerned about creating wellness in other areas of their lives, whether it is to preserve mother earth or people. If a chain store could select high margin brands that are either organic or considered wellness products and initiate a program (to include a wellness card) where a customer can receive points by using their wellness card when purchasing these selected items, and build up these points that would equal to dollars, the customer can either use the dollars at the chain for further purchases or donate to an organization the chain has adopted that would bring wellness to the earth or people (ex. Feed the Children). This program would create an emotional tie-in as well as a financial benefit to the customer.
I respectfully submit that some analysts may be missing a key point with regard to health and wellness shoppers. While it’s evident that present committed shoppers are less price-sensitive than the population at large, that need not mean that price-sensitive shoppers would not buy more healthier products if they felt the prices were a little more attractive.
In other words, just maybe this particular shopper segmentation is partly an artifact of the price differential. This is testable, of course. And there are some clues to consider: The performance of Safeway’s, Wal-Mart’s and Kroger’s relatively new organics lines come to mind.
Organic and healthier products may convey some “badge” value to some shoppers, but its their actual benefits that count. Many of us would prefer to buy those organic bell peppers, but have trouble justifying them at twice the price. If the price gaps were narrowed somewhat, how many shoppers would trade up? Alas, so long as supplies of organic products remain tight relative to demand, we must wait to learn the answer to that question.
The wellness shopper is focused on just that! But they still enjoy discounts. So, why not use discounts on companion products to get the wellness shopper to spend more? The wellness shopper will spend more if you educate them on the benefits of products and services. Newsletters, recipes and membership programs will not be successful. Many wellness shoppers are more educated, affluent and interested in health-related issues. Therefore, service, product availability, freshness, knowledgeable staff and cleanliness will be attractive to this consumer. If you can provide all of this with discounts, you will capture their loyalty.
When retailers carry premium brands with true points of differences in quality, formulation, design, packaging, and image, then the premium customer will shop that store for her premium destination items, and then she will spend well above the average on the rest of her shopping trip in the same store. Here are a few (abbreviated) guidelines I give my clients, retailers and manufacturers alike, about premium brands:
1. Carve out a segment within your overall set to merchandise your premium brands within a given category. Why? Because your premium brand consumer is a destination-shopper looking specifically for her premium products. Make it easy for her to find, shop, and spend, by surrounding her with an array of “premium.”
2. If you are a manufacturer, be sure to dress up your premium brand appropriately. Design and packaging are paramount to communicate your products premium image to the consumer right at the point of purchase, as well as in your advertising and publicity. Don’t be overly practical on the quality of your boxes, bottles, lids, or labels.
3. Similarly, resist the temptation to overdress your product, even premium. If you glitz up your product too much it will look like that economy car with the Rolls Royce front-end, and it comes off as not being credible.
4. If your item is premium, make sure you are using the right body language. Use the right fonts, styles, and wording to make your statements, your product claims, and the products call-outs, and avoid phrases that lose credibility (for any number of reasons.)
5. Premium items should have the right lids, safety seals, and they should not leak, spill, fall apart, or break, at least not too easily.
6. Do not over-promote, under-price, over-discount, or use gimmicks to market your premium product, and if you are a manufacturer, you need to offer, council and advise your retail partners on the brand’s objectives and how protecting the brand’s integrity for pricing will help preserve lasting profits not only for the brand and the retailer, but also for the entire premium segment, in any given category.
If there is one bad apple in the bunch, get rid of it, before it destroys the growth and profitability of your retail brands segment.
The wellness products consumer segment is considered premium for the current time and a discount and premium are opposite ends of the value spectrum–but everybody likes a deal. So, there are ways you can still maintain a premium brand image while offering value in return. Premium image is maintained by not discounting the product as much and value is offered by offering other benefits like trial offers for new products in the health and wellness segments. Consumers in this segment have already shown their willingness to be innovators, so helping them to try newer products has the dual benefit of inducing trial and offering value.
Discounts should never be removed but they do play a diminished role. The article makes good recommendations around the wellness shopper. One other point I would add is, be sure there are places either in-store, on the retailer’s website or in a home mailed newsletter, where wellness/health questions can be answered. Granted, wellness or health-minded consumers do a lot of their own research. So, if a customer feels his/her retailer is researching the same topics, providing solutions and directing customer to possible purchases, then the retailer continues to build a strong relationship.
I agree that discounts are not nearly as effective with the wellness crowd as with the average mainstream or the value shopper. However, there is an opportunity to mine transactional data and build “communications” programs with these shoppers if a retailer is willing to invest. Typically these shoppers are higher margin customers than average so investment makes sense. The idea of a rewards program may turn them off so I believe a strategy designed to inform the customer about products, services and communications materials would help build loyalty and drive sales. This strategy would be different by retailer but I could see Wegmans identifying, communicating and reaping the rewards of such a program, if they are not already doing so.
From my experience consulting with premium Health Food stores, I will agree that customers are not looking for savings. However, customers being customers they like to be appreciated and favoured once they frequent a store.
Creating a relevant and meaningful reward is, of course, the best approach but not all retail owners–especially the smaller ones–are capable of such creativity, nor do they have the time or the means to hire a creative agency.
Giving away a small cash discount is probably the easiest way to show their appreciation, other than personalised service.
Wellness and green-ness are more important than savings to many Americans today. If your loyalty program was oriented toward savings and your customers are no longer primarily coupon-clippers, then it’s probably time for a wholesale program change.
Having worked with the Wild Oats and Safeway marketing teams, I can safely say that wellness is increasingly ‘the’ issue in many families. (By disclosure my company also runs a wellness loyalty point program for Bally Total Fitness). Your loyalty program should reward customers for the goals they want to achieve. Losing weight, staying out of the hospital, running 5 miles–whatever. If they are happy and feel your brand support their choices, its a win-win.
Well, as others have said, discounts don’t a loyal customer make. Value-added and total solutions do.
Take a page from cosmetics: gift with purchase and exclusive plus-ups for regular buyers. If a special, exclusive aromatherapy product or service comes only with loyal shopper behavior that could work–provided the reward is worthwhile & the day-to-day purchases are meeting customer needs.
Saks Fifth Avenue offers free fur storage and valet parking for customers who spend over $10K a year. That’s a real value-added for those shoppers on a functional level and has great badge-value too.
As David Mamet had Don Ameche said to Joe Montegna, “Things change”; I think promoting Health and Wellness, etc. makes sense. Health and wellness, fresh, organic, have been the domain of specialty stores who would do little price promotion; hence, the practice seems at odds with the theme. However, consider the underpinning that their appeal was offering a very different alternative to the mainstream grocery stores. Now as those mainstream retailers catch on, the specialness of a Whole Foods is challenged, making it less motivating for people to make “two trips” (because most shoppers who go to Whole Foods probably want to buy mainstream products too, especially non-food household items.) Under such circumstances, Whole Foods would need to find ways of continuing to drive traffic and that might mean the well-designed promotion offer, carefully targeted on those products for which such offers are persuasive.
As a Wellness product consumer and a Marketer, my loyalty is not affected by price alone. Having been afflicted with Prostate Cancer, I make my purchases as though my life depended on it.
Marketing is based on knowing what the customer wants, so ask them in person!
Wellness shoppers are into community and everyone in a community wants recognition and to be appreciated by their community. Since food and health are such powerful emotions in their lives, wellness consumers, in my experience, don’t respond well to loyalty cards. Here is a quote from a shopper who refused a loyalty card at the checkout at one of the largest Health Food Chain Stores: “…someone else who wants to invade my privacy, track me and my behavior, just like I’m a lab rat!”
My stratagem is to have someone the customers know from the store, who happens to like people and is a wellness consumer themselves, be assigned the project of asking each and every regular customer what they want from the outlet. Regular customers will speak with someone who has smiled at them and that they recognize. Give the in-store person or persons a sabbatical from their daily duties and a financial incentive to engage the customers. After shopping for over 12 years at Health Food Stores, I have been asked less than twice what I wanted from the stores. By the way, I am considered approachable.
So, if you want to know, ask them.
A&P and its banner stores have a great wellness program which I belong to.
They offer both discounts and information. They tie-in products which are featured by manufacturers along with healthy lifestyle promotions, and even, offer an America’s Choice prescription health insurance program.
Like Mark Goldstein, my company, CVC Distribution, also sells loyalty programs. Our program mirrors exactly what Vickie Purifoy asked for above. We believe many consumers will stop chasing discounts and start supporting a cause related rebate program. If I can support my green wellness cause with my purchases where half goes to my cause and half comes back to me as cash on my card, Why not? Now you give the consumer an emotional reason to use the card, many of whom would not otherwise have considered it. Most importantly, as J. Peter Deeb stated, we now garner transactional data on purchases which can be translated into better marketing offers!
So, yes I believe a card program will work and if it is tied to a coalition program all the better. our current wellness partner loves the program.