As direct trade offers continue to decline in effectiveness, new ways of engaging CPG shoppers must be devised that benefit both the manufacturer and retailer. Catalina Marketing believes it may have an answer to this quandary, creating a type of loyalty program simply called Catalina Category Marketing, or CCM. The company recently released a report, “Expand Demand: Driving Efficient Volume Through Category Marketing,” which details the benefits of implementing CCM.
Loyalty360 spoke with Beth Johnson, Executive Director of Special Projects at Catalina, about what makes CCM stand out as a means of building sustained customer loyalty.
Can you give us a quick overview of the CCM loyalty solution?
Johnson: Sure, we’ve had CCM available for about 10 years now, but it’s certainly gained a lot of significance over the past two years as marketers try to find the most efficient and profitable way to grow volume. We really wanted to offer consumers a choice in how they wanted to save. Instead of a 10- or 20-cent discount on a product, you’re able earn reward dollars that are usable on any product during your next trip to the store. We call them “next shopping order” offers, so instead of a coupon for that same product, it allows them to use it toward anything they buy on their next shopping trip.
These programs have really taken off, and people recognize them instantly as “Catalinas.” They drive consumer traffic to the retailer, and they build volume for the CPG brand as well.
You mention how the program creates benefits for both the retailer and the manufacturer; can you go a little bit more into that?
Johnson: For the manufacturer, it allows us to target heavy branding category buyers through an announcement, and they’ll receive a message that for a certain time period (usually 2-4 weeks), buying three of this product will earn them $3 off of their next trip to the store. So once they purchase that amount of the product, they’re entered into a tier that determines their future savings. They’ll receive a Catalina printed coupon, and can redeem that for a discount on their next visit.
What we’ve found is that those who qualify for those rewards are buying 2.5 times more volume in that category than they were before the promotion. The immediate criticism that springs to mind is that they’re just stocking their pantry and will stop buying after the CCM promotion is over, but we’ve seen that those customers are about 50% more likely to repurchase that same brand post-program. These numbers demonstrate that CCM is able to drive traffic back to the retailer so that they can receive the discount rewards, and that customer loyalty is increasing for participating brands.
Your research also shows that shopper engagement increases as you add tiers to the program, why do you think that is?
Johnson: Quite simply, I think that customers appreciate the additional flexibility. Rather than buying more or less than they need in order to meet an arbitrary breakpoint, they can shop as normal and buy as much as they need, and be rewarded accordingly. Because the customer doesn’t feel forced to buy a certain amount, they’re able to engage with the program on their own terms.