Case Study: Customer Loyalty Program

The Objective:
An “everyday low price” philosophy, coupled with limited point-of-sale capabilities, prevented a regional supermarket chain from offering its customers a card-based loyalty program. Consequently, their understanding of their customers was limited by lack of detailed insights provided by customer-level transaction data. They asked iDfour to create a temporary initiative that would gather this data, and in turn, help them better understand their customers and decide if a permanent card-based rewards program was valuable to their business.

The Challenge:
The chain did not have existing technology infrastructure or POS system to provide the same level of detailed data that an established card-based loyalty program would. The chain’s management also did not want customers to perceive them as abandoning “everyday low prices” or forcing them into an invasive information grab. Therefore, the program needed to run long enough to gather an acceptable amount of data, but not so long that it felt permanent to customers.

The Solution:
iDfour created a temporary card program offering purchase rewards. Each card had a unique barcode assigned to each customer, and were both mailed to households in the stores’ primary trade areas and made available in-store. The program debuted before the holidays as a rewards promotion. Customers earned points for registering online and for every dollar they spent, and received store gift cards based on their spending levels after eight weeks.

The Results:
The program provided detailed insight into shopping frequency and buying habits. The supermarket chain also gathered valuable customer contact information, such as email addresses and phone numbers, which they did not previously have. Cards were associated with more than 22% of all transactions, an excellent result for a short-term, opt-in program. Card-based transactions accounted for more than 35% of sales, and the average basket size of a customer participating in the program was almost twice as large (191%) as a non-participating customer’s. In a post-program customer survey, more than 90% said they would also participate in a similar program, and 70% felt they would increase their spending in a permanent program. Store management viewed the promotion as highly successful in overcoming their challenges.