As with any B2C brand, the best way for food retailers to gain an advantage over e-commerce companies and other competitors is to have a large, loyal customer base. New research reveals that to achieve this, it’s critical for them to take a next-generation approach to customer loyalty and see it in 3D by applying a three-tiered strategy: Loyalty as a strategy, Loyalty as an outcome of daily decisions, and Loyalty as a program.

According to a newly released report from the Food Marketing Institute (FMI) and retail strategy firm Precima, Next Generation Loyalty: Get it Right In Food Retail Part 2: Loyalty In 3D, food retailers have the ability to compete successfully and sustainably in today’s highly competitive market by understanding and consistently satisfying shopper needs better than the competition.

But retailers need to realize that they can’t assume that their current customers will remain loyal

They need to consistently earn the loyalty of their shoppers by aligning their resources and decisions with customer needs.

“Food retailers need to reboot the way they think about loyalty, taking advantage of the latest tools to truly engage shoppers and earn their loyalty across all customer touchpoints and not merely through a loyalty program,” explains Graeme McVie, chief business development officer at Precima, in a news release. “They need to align their strategic, tactical and operational decisions across merchandising, marketing, store operations and supplier collaboration so a clear and consistent message is sent to the market that the retailer is working hard to earn the shopper’s loyalty.”

The report provides a framework and roadmap for how food retailers can successfully approach loyalty in 3D and take their efforts to earn customer loyalty to the next level. The intangible benefits from a comprehensive approach that includes all of these elements include the advantages of having a very loyal customer base and a purpose driven workforce that is energized and committed to delivering a higher level of value to customers. This one-two combination is difficult for any competitor to replicate or steal and provides an almost unassailable competitive advantage.

From a tangible perspective, next generation loyalty enables retailers to grow their number of valuable shoppers, sales per shopper and lifetime value per shopper

It allows the retailer to do this in the most cost-effective and lowest risk way by understanding and satisfying customer needs better than the competition. By way of a bottom line example, the report shows that for a $2B retailer with a gross margin of 25 percent this equates to $70M per year of incremental sales and $30M per year of incremental gross profit.

“With the intangible and tangible benefits that are possible from taking a shopper-centric approach, it is surely time for retailers to embrace next generation loyalty. As one of our member CEOs told us, ‘if you don’t like change, you’re going to like irrelevance a lot less,’” said Pat Walsh, senior vice president for industry relations at FMI, in the release.

The report, based on survey of more than 3,000 shoppers and 200 retailers and available for purchase here, provides guidelines for how retailers should implement a next generation approach to loyalty. Central to the suggested approach is a Crawl, Walk, Jog, Run strategy to capture and retain the attention of the customer and build momentum at the company and with its trading partners.

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