Marketing

Creating a safe third place through loyalty programs

Melissa West, vice president, product marketing/convenience retail, at PDI Software, explains why retailers focused on developing or adjusting loyalty programs must do so with three aspects in mind: analyze, adjust, and engage.

Photo by istock.com

August 26, 2020 by Melissa West — Product Marketing, PDI

Last year, Starbucks put out a statement saying it wanted its stores to be "a third place" for consumers.

The statement was, "We want our stores to be the third place, a warm and welcoming environment where customers can gather and connect. Any customer is welcome to use Starbucks spaces, including our restrooms, cafes and patios, regardless of whether they make a purchase."

The world has certainly changed since then. But what did they mean by the third place? The third place is a sociology-inspired concept, referring to another place outside the home and work that people can gather and build a sense of community.

As we begin to reopen as a country, every business and store is attempting to navigate the challenges that exist to create a safe environment, build a sense of community and reestablish themselves as that third place for consumers.

So how do stores go about creating that third space that reconnects with people and makes them feel a somewhat safe return to normalcy?

Convenience stores can quickly create a sense of community by understanding the customer mindset. Currently, customers can be categorized into three areas: those who have a heads down approach and will continue to shop with safety precautions; those with a short-term memory who can't wait to get back to normal and don't want to think about COVID-19; and those who are operating from a place of fear, where shopping in stores is still challenging for them.

Stores should consider using loyalty programs to address all three consumer types and create the third space so many customers want them to become once again.

As stores develop or adjust their loyalty programs they should do so with three parts in mind: analyze, adjust, and engage.

Analyze: Loyalty program data can give you a leg up on understanding consumer sentiment and enable you to formulate strategies to best meet the needs of these consumer types. Focus your efforts on assessing behavioral data like trip frequency, basket size and bulk versus immediate consumption product sales. Are trips and basket size still down week over week after your state's reentry program? If so, it might take more effort to reach outward to bring consumers back. But if trips are up again, this signals that consumers in your region are more comfortable with heading out and engaging. Keep in mind that data at one store may differ from data at another — whether across the city or state or in different regions. Geographic data will help you determine consumer confidence — and this will more than likely look different from New York to Nevada.

Being able to look at local data holistically will help a store better understand these key differences.

Adjust: Once you understand consumer behavior impacting your locations, use your loyalty program to re-establish trust and show that you care. While this isn't the time to overhaul your program strategy, it is the time to dig into your arsenal and adjust tactics to demonstrate empathy, help consumers get back into their routine and share the new enhancements you have in place to better their experience.

Simple methods like issuing surprise and delight rewards and partnering with vendors to create special rewards that incentivize members to ease back into their routines can be effective. Additionally, showcasing new technology solutions you have implemented like mobile ordering and curbside pickup is a great retention strategy and provides an opportunity for new member acquisition.

Engage: One of the most important things you can do is engage with your members in meaningful ways, no matter what their comfort level is post-COVID-19, to create a sense of safety. Shift your focus from only executing tactics to nurture sales to really connecting with your members on a personal level.

Consumers love honesty. You can reach out to them and let them know that this experience has been hard on everyone, and when they are ready, you are here for them — either with a promo code or a discounted item. Many of your loyal shoppers have experienced hardship during this crisis. Let them know that you are supportive of their struggles and, therefore, are providing coupons for essential items like milk or toilet paper. Take the opportunity to shift your program value from providing a nice perk to an actual lifeline.

It is also great to remind people why they loved shopping with you. If a consumer is a coffee drinker, how about adding more points to their loyalty coffee card paired with a thoughtful communication to remind them about how much they loved getting their morning coffee from you each day.

Creating great customer experiences is really important as we embark on our reentry as a nation. Don't underestimate the human connection you can establish with your customers during this time, making them feel a sense of community and safety. By using loyalty tactics, engagements and exceptional customer service, stores have the opportunity to create and build true brand loyalty at this time.

They also have the opportunity to create that third place — a warm and welcoming environment — that is so desperately needed in communities around the country. Many consumers are eager to safely gather and connect as well as and revive some of their pre-COVID routines. Over the last few months, uncertainty, fear and separation have become the norm. So, provide the opposite, and don't miss the chance to be your customers' safe third place

Melissa West is vice president, product marketing/convenience retail, at PDI Software.