Loyalty Programs in Grocery and Food & Beverage: A Comprehensive Guide (2021)

Due to the global COVID-19 pandemic, we’re experiencing turbulent times. While fashion, apparel & luxury retailers, like Zara, H&M and Macy’s, are shutting down production, other industries, like grocery retail and food & beverage, have seen an unprecedented spike in demand. As a grocery retailer, you are probably doing your best to adapt to this new situation. A food and beverage loyalty program is one way to continue engaging with your new customers, but where can you start? Which features will help you stand out? What are the best examples on the market right now? This guide aims to answer all of these questions, showing you how next-gen food loyalty program can help move any of your business KPIs. On that note, Antavo held a webinar on that exact topic.

Loyalty Programs for Groceries and Food & Beverage Companies

Loyalty programs for food delivery companies, supermarket chains or online beer retailers are fundamentally different from what you have come to expect in other industries. For example, discount coupons aren’t the biggest draw-ins. Customers tend to engage more with free treats, complimentary delivery and branded gift items, like a stylish coffee mug.

When designing food loyalty programs or grocery store reward programs companies should focus on three major aspects: 

1. Give people the freedom of choice, so they can pick the rewards they want from a wide list of incentives
2. Make members work harder for the most attractive and valuable rewards
3. Being omnichannel is no longer an advantage, but rather a necessity, so be sure to offer the same smooth experience on all platforms

The Biggest Challenges for Groceries and Food & Beverage Companies in Terms of Customer Retention?

These industries are characterized by small yet frequent purchases and cutthroat competition.

• Maintaining regular contact with customers is great: loyalty members have more opportunity to earn points or level up to a new tier. 
• On the other hand, without a sense of true brand loyalty, these customers are at risk of churning after a single bad experience. 
• Once customers set their sight on an incentive they consider valuable, for instance a high-quality set of cooking utensils, they’ll be emotionally invested in obtaining it, sticking faithfully to your brand in the process. 
• Another prevalent issue for grocery store chains and food & beverage industries is that it’s hard to have a unified customer profile if customers are alternating between online and offline purchases without a means to connect them. 
• Companies often feel the need to change the structure or the rules of food loyalty programs because some rewards become too popular to sustain.

Top Loyalty Program Features for Groceries and Food & Beverage Companies

With the key priorities set in place, here are several features required to run a grocery reward program, as well as some additional features that can help make your loyalty program feel unique and exciting.

1. Identifying Customers

Physical loyalty cards

In terms of customer identification, it all started with traditional plastic grocery store loyalty cards, which people kept in their wallets and handbags. The cashier scanned the customer’s card with a POS device, and boom, that customer left a footprint in the store.

It’s a tried-and-tested feature that customers are familiar with, but more than likely they already have plenty of other plastic cards competing for space in their wallets, so this approach isn’t a very unique one.

Identification by email address or phone number

If you wish to modernize your grocery store program, one best practice is to identify customers based on their “unique characteristics”, look them up in your CRM system, and add the purchase to their profile automatically. There are multiple ways to create a “unique identifier”, which should be something that’s exclusive to each customer, such as their:

• Email address
• Phone number
• Name & address

The downside of this method is human error or fraud. The staff member might make a typo, causing the system to be unable to find that customer, meanwhile other customers waiting in line will start getting frustrated.

Mobile passes as Digital Loyalty Cards

Mobile passes are digital loyalty cards, which are stored in the Wallet Application on iPhone and Android.

• They don’t take up extra space in handbags, pockets or wallets
• They are easy to scan, greatly reducing human error
• Mobile passes can be updated in real time
• You can issue both digital loyalty cards and coupons as separate passes in the wallet
• Customer can even receive their passes via email, so it’s easy to add them to the wallet application and start using them right away

2. Different Approaches for Groceries and Food & Beverage Brands

Being omnichannel

One of the most important things for grocery or food and beverage loyalty programs to offer is a holistic customer experience. In other words, no matter whether customers buy products online or in-store, they’ll receive the same benefits. This might sound simple, but many businesses are still only tracking eCommerce purchases, and offering vouchers that can only be redeemed in brick and mortar stores. This limits customers, and is not a particularly good or convenient experience.

Connecting with buyers through receipt scanning 

With a comprehensive loyalty program, you can still connect with customers and learn more about them, even if you’re selling through partner retailers. The process is simple: ask customers to take a photo of their purchase receipt and upload it through the loyalty program membership page, or by using a special URL featured on the receipt. In this case, make sure the receipts showcase verification information, such as the store where the purchase was made, the date, order volume and a listing of products purchased.

To learn more about the difference between loyalty programs for brands and retailers, check out this video hosted by Antavo’s CCO and Co-founder, Zsuzsa Kecsmar, and Antavo’s VP of Strategy and Insights, Jörn Roegler.

An online membership site 

You should offer an easily accessible area to explain how the loyalty program works. This would be the hub where members can interact with the loyalty program, redeem rewards, as well as learn about the benefits of being a member.

3. Loyalty Program Logic

Discounts

If you plan to offer discounts or coupons, make sure to tie them to a loyalty program. This way the reward is still there, they just have to complete certain (valuable) actions to get it—for example by enrolling or making their first purchase. 

Points

Points, diamonds, credits, chips—whatever you choose to call your loyalty currency—are more versatile than instant discounts, because customers can use them to redeem for a wider variety of benefits, such as physical gift items, services like free shipping, or entry into VIP clubs.

Perks

If you’re already offering certain services for free, such as free delivery, consider making this service exclusive to loyalty members. With perks, customers still receive instant access to these benefits, but they need to register for the program first, boosting your enrollment rates and giving you more insight into customer preferences and behavior.

Experiential rewards

For customers, special swag, or even a guided tour in the flagship store of their favorite food & beverage brand are seen as more valuable than a simpler freebie or a discount.

Tiers

People love tiers and it’s a perfect loyalty structure for this industry segment. Advancing toward a higher rank gives members a substantial goal to work towards. Not to mention those who have worked to reach a higher tier are less likely to switch to another competitor, because doing so would mean giving up their hard-earned privileges.

4. Special Loyalty Program Elements to Stand Out

App-only benefits

Make the most out of your app by integrating it with your food and beverage loyalty program. Give customers bonus points for daily logins, or for placing an order through the app to incentivize the creation of new habits. 

Friend referrals

Grocery store loyalty programs are an ideal tool for rewarding people who recommend your services, producing positive word of mouth. To make the system even more enticing, give customers a bonus reward for reaching certain milestones, like referring their 5th or 10th friend.

Offer management

Businesses whose customers purchase frequently need to keep things fresh to keep their customers’ attention. Offer management is a module that allows marketers to conveniently plan and manage various reward campaigns within the loyalty program.

Offer management allows you to create reward campaigns that are specific to certain stores, countries, or even customer segments. Learn more about this module in Antavo’s Prime Steel Winter Release. 

Limited access clubs

Drive sales by creating special interest groups with exclusive access, which customers can join and gain access to limited-edition products. This type of group attracts the attention of customers who seek “unique”. 

Antavo’s client, the online retailer LuisaViaRoma has an early access club for sneaker lovers. The club is so popular that members are willing to spend over 2 million points in just one month on membership, and have sought advice on Reddit on how to buy their way in the club!

6 Online Loyalty Programs Examples for Inspiration

1. Starbucks Rewards

One of the most influential and well-known food and beverage loyalty programs industry, Starbucks Rewards, boasts nearly 17 million users. And for good reason: the coffee giant made sure that engaging with the program is fun, convenient and provides a unique experience.

• Participants earn 2 stars for every $1 spent using either the mobile app or registered gift card.
• There are five different reward categories. Each category unlocks a new freebie depending on the number of stars you spend.
• For 25 stars you can get an extra shot of syrup, and for 50 you can choose from a good ol’ cup of coffee or a baked goodie.
• On the top of the pyramid is the 400-star offer: an enticing signature cup.

2. Amazon Prime Membership at Whole Foods Market

Whole Foods Market, the multinational supermarket chain with 500 stores in North America and the United Kingdom was acquired by Amazon in 2017. One result of these brands joining forces is an attractive grocery discount exclusively for members of the Amazon Prime loyalty program. 

Customers get 5% off all purchases when they use the Amazon Prime Rewards Visa Signature Card, and can take advantage of 2-hour delivery in selected cities. One major appeal of this loyalty program is Amazon Prime’s free 30-day trial, which allows everyone to taste the benefits without any commitment. 

Whole Foods Market also features a mobile pass, which can be used to identify yourself at the cashier, thus connecting the offline and online loyalty experience.

3. PC Optimum from President’s Choice

President’s Choice is a Canadian private label and store brand owned by Canada’s largest food retailer. Through their grocery reward program, PC Optimum, the company offers both a digital grocery membership card and an app, which can be downloaded from the Apple or Google stores. What makes it interesting is that PC Optimum members can earn points not only when shopping for groceries, but also when buying fuel or medicine.

PC Optimum also offers free shipping and product pickups, but these perks are reserved for Insider members, which requires a paid subscription. And the program stays relevant by tailoring your rewards to match the food and products you buy most.

4. Beer Hawk Beer Tokens

The UK-based craft beer retailer has redesigned its loyalty program in an effort to provide customers with a truly omnichannel experience. Beer Hawk’s primary platform is its ecommerce store, but they also have two bars in London, so connecting the in-store and online experience makes perfect sense. 

• Loyalty program members receive one Beer Token for every £1 spent, both online and at the bars.
• Members can redeem all of their Beer Tokens in one go, where each token is converted into a £0.05 discount.
• Beer Hawk engages members outside of the buying cycle, giving them the option to earn points for rating beers, referring their friends, and returning draft kegs.  
• Bartenders can scan each member’s unique mobile pass ID at the bar and make personalized beer recommendations based on their profile.

Beer Hawk’s loyalty program, which is powered by Antavo. It led to a significant increase in customer lifetime value, and most customers decided to take part in it. Learn more about the program in this case study.

5. Wegmans Shoppers Club

Wegmans is an American supermarket chain with 101 stores in the Mid-Atlantic. The company has an omnichannel loyalty program: customers can create a shopping list online (and organize the list by aisle to make it easier to navigate inside the store), or simply have the products delivered to their doorstep. It’s also worth mentioning that the program operates without points, and instead relies on digital coupons.

6. Tesco Clubcard

Multinational grocery and general merchandise retailer Tesco has over 6800 shops worldwide. Keeping up such a global presence definitely requires a loyalty program. The Tesco Clubcard operates in several countries all over Europe.

What makes this type of grocery discount card noteworthy is that customers don’t need to worry about the points. Why? Because after each purchase, the points accumulate in their account. At least four times a year, members receive vouchers based on the number of points they have earned.

Final Words Before Starting the Preparation

Planning to launch a grocery or food and beverage loyalty program to keep your hard-earned customers after the crisis? There’s one thing to keep in mind: no two programs are alike. The end result should not only reflect your brand values, but also cater to the needs and wants of your unique audience.

So don’t rush the planning phase, and always look for the best solutions. You can find out more about loyalty program planning and implementation in our definitive guide.

Andy Nemes

Andy is the CSO and Co-founder of Antavo. He is a natural-born helper who takes the time to understand prospects’ unique business needs and is always ready to pick up the phone. He supports Antavo’s clients in finding a loyalty solution that best fits their business.