PDI’s C-Store Shopper Report Shows Opportunities for Growing Loyalty Programs

There is no argument that one of the places that loyalty programs got their start was in Europe, and more precisely in the U.K., where grocery store giant Tesco approached marketing gurus Edwina Dunn and Clive Humby about converting their “green stamp” program into something a tad more sophisticated.

That was in 1994, and of course, Tesco went on to see sales dramatically increase with its Clubcard. Dunn and Humby and their agency — dunnhumby — went on to specialize in loyalty programs globally, even setting up shop in the U.S. with the largest grocery chain, Kroger, that also saw sales grow exponentially.

So, it was a bit surprising for Brandon Logsdon, president and general manager of Marketing Cloud Solutions and Fuel Pricing at PDI, to see European and Asia-Pacific c-store brands lagging behind their U.S. counterparts in adopting and growing their loyalty programs.

PDI recently released their “C-Store Shopper Report: Exploring the Global Convenience Retail Environment” that looks at trends and statistics pertaining to sales and strategies that are working — and sometimes not working — with consumers in the c-store industry.

Surprising Data on Adoption and Cultivation
“It was a little surprising to me to see the way that Europe and Asia-Pacific are trailing the U.S. in the c-store vertical based on these survey results,” Logsdon says. “At least at this point in time, relative to where they are as far as program adoption, program cultivation − that was the most surprising to me.”

Logsdon says he was even more interested in the U.S. versus global results considering the relative newness of c-store loyalty programs in North America, especially since Tesco and others have been leaders in customer engagement in the European market.

“My thought around international was that you would see a similar trend in c-store,” he says. “Particularly if you go back as little as 5-7 years and see how nascent c-store loyalty was in the U.S. market.”

This was the first time PDI expanded the report to include a global perspective from 450 convenience retailers across several countries. The survey also included responses from 2,500 U.S. adult consumers and 150 decision-makers who work for retailers, grocers or consumer packaged goods brands.

Of the U.S. c-stores surveyed, 64% say they have a loyalty program, while only 46% of non-U.S. c-stores have a program in place.

Geographic Differences in Loyalty Program Stages
“U.S. and non-U.S. retailers are at different stages in loyalty program adoption and maturity,” Logsdon says, which he attributes to several factors:

  • Point-of-sale technology is more streamlined in the U.S. than anywhere else when it comes to brands getting access to customer data to personalize the engagement.

  • Almost all U.S. brands have more sophisticated infrastructures such as pay-at-the-pump technology, which is not as prevalent in Europe.

  • There is typically a higher sales volume per store unit in the U.S.

“The dollar volume discrepancy naturally drives adoption of these programs, too,” Logsdon says.
PDI’s report shows that U.S. operators underscored the need to engage digital consumers as part of their revenue strategy, with 74% saying they would move ahead with a mobile technology project after the pandemic; 40% of them specifically mentioned implementing mobile couponing/discounting or a loyalty mobile app.

Improving customer retention is a top priority for U.S. and non-U.S. retailers, and the PDI survey showed there are near-term gains since it typically costs less to retain a customer. Logsdon says it is encouraging that the c-stores are acknowledging that there are additional opportunities in retaining customers.

Validating an Opportunity to Improve
“The operators are validating that as an opportunity, and calling it out as a challenge,” he says. “For many years in the U.S. market we heard that their focus was growth, and they needed to get more customers in the front door. But any loyalty practitioner will tell you it is more cost-effective to focus on keeping the customers you have than the cost of acquiring them.”

But acquiring new customers (U.S. 14%, non-U.S. 13%) and understanding who their customers are (U.S. 9%, non-U.S. 10%) followed close behind retention as a top priority.

“There has to be a good balance in the strategy,” Logsdon says. “Brands need to do both well, but they are acknowledging that there is an opportunity to do better.”

The survey also shows that there is a trend towards Loyalty 2.0, which PDI says is a belief of not just rewarding customers who are repeat buyers, but also working to know the customer better than before.

Logsdon says brands need to improve how “tight” their personalized messages are to customers, as well as the cadence, delivery and quality. But he also cautions that some brands may need to step back and reassess their current programs.

“Loyalty 2.0 is very important, but they shouldn’t forget the 1.0 version which they need to have in place to begin with,” Logsdon says. “It’s the baseline, and it’s a necessary part of the journey to get people into the top of the funnel. Combining all those elements results in something we call Loyalty 3.0. At that point, your program can consistently and effectively attract consumers as well as personalize offers, promotions and more to deliver a better customer experience..”

Differences in U.S. vs. Non-U.S. C-Stores
The PDI survey also has some additional extremely deep dives into the world of c-store loyalty programs that showed similarities and disparities across regions of the globe:

  • More U.S. retailers use or plan to use loyalty member data to encourage participation in their loyalty program, as compared to non-U.S. retailers.

  • Compared to U.S. retailers, fewer non-U.S. retailers said they plan to use the data gathered from their loyalty program to power their offers, advertising or promotions efforts.

  • More than a third of U.S. operators said they were using or planned to use loyalty member data to develop cross-brand insights and selling opportunities; while a lesser number of non-U.S. retailers said the same.

(quantitative data in full report, download below)
Overall, the PDI survey shows that c-store loyalty programs are more popular among consumers than ever before.

“There were a lot of forces outside of c-stores creating this demand just as much as c-stores were doing it themselves,” Logsdon says. “The pervasiveness of loyalty programs all around us creates an expectation for a lot of consumers. They see it in airlines and grocery stores and at a lot of places, so there is a natural expectation that a majority of our retail touchpoints today are going to have a loyalty component connected to it.”

To read more about the PDI “C-Store Shopper Report: Exploring the Global Convenience Retail Environment,” download it here.

To learn more about PDI, please visit www.pdisoftware.com

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