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Consumer packaged goods (CPGs) have historically been marketed to attract a mass audience. But this customer engagement strategy of attempting to appeal to the largest possible number of people is no longer the type of customer experience that many shoppers seek.
Gaining and keeping customer loyalty now requires a personalized approach that targets the uniqueness of each consumer. Often, this requires focusing less on the popular items that move quickly and more on what the most loyal customers want, even if it means retaining those niche items that, in and of themselves, never generate substantial profits.
Nowhere has this become more evident than in the extremely competitive supermarket industry, as Rick Swinkels, the Vice President of Global Customer Loyalty of Ahold, is keenly aware. Ahold, an Amsterdam-based retail company that operates grocery stores across the Netherlands, Belgium, Germany, and the Czech Republic, has been trying to “create focus,” Swinkels told Loyalty360.
In the past, grocery stores looked almost strictly at shelf activity and product rotation to gain a measure of profitability. And many of the products that did not rotate as quickly were simply discontinued, often to the disappointment of some of the most loyal customers who would take their business elsewhere.
Ahold not only recognized this trend, but since has taken innovative measures to capitalize on the power of new loyalty strategies.
“Now we know that some low-sellers are extremely important to our best customers,” he said. “For CPGs, that’s a totally new business model. We don’t challenge the CPGs on their campaigns, but on what’s in it for the best customers.”
To accomplish this goal, Ahold has recently begun retrofitting stores in Europe with many of the loyalty strategies already in place at U.S. counterparts. Using the considerable experience U.S. stores had with analyzing and integrating personal customer data, Ahold has also begun concentrating on better understanding its customers and rolling out more personalized promotions across the Netherlands.
“We believe that because we can build the right solution to each customer, we can offer much more to CPGs than has been possible,” Swinkels said. “We can be extremely relevant for our customers and for our CPGs in targeting the customers who are important to the CPGs.”
The real bottom line is to first keep your customers happy, and then you will keep their loyalty.
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