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The Food Marketing Institute (FMI) is out with a new Precima-conducted study concluding that “the best way for food retailers to gain an advantage over digital retailers and other competitors is to have a large, loyal customer base,” and that “to achieve this, it is critical for retailers to take a next generation approach to customer loyalty.”

The study says that “food retailers have the ability 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 … 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.”

One suggested approach: “Central to the suggested approach is a Crawl, Walk, Jog, Run strategy to capture then retain the attention of the customer and build momentum at the company and with its trading partners.”

Better understanding the customer through a next-generation approach, the study says, could help a retailer with $2 billion in sales and a 25 percent gross margin to generate $70 million in incremental sales and $30 million in incremental gross profit.

FMI members can access the report, the second in a series, here.
KC's View:
The problem with this is that second-generation loyalty marketing may not be much good to stores that never got the first generation right. They called them loyalty programs, but they really were just juiced up coupon programs … about bribing customers into staying rather than demonstrating their loyalty to the shopper.

The stated purpose of these programs seems obvious. They won’t mean much to retailers that are oblivious.