Loyalty programs in the food sector

Challenge

A beverage company observed that consumers were purchasing their products less frequently and were often switching to competing brands, primarily due to attractive promotions offered elsewhere. To counteract this brand switching and infrequent buying, the company decided to develop and launch a new, comprehensive loyalty program.

Action

The company built its loyalty program strategy on precise segmentation and personalized communication:

1. Segmentation Based on Preferences: Consumers were divided into dynamic segments based on their purchasing habits and preferences, including:
   
   • Carbonated Beverage Lovers
   • Parents Buying Low-Sugar Beverages
   • People Choosing Limited Edition Products
2. Loyalty Program Design: The manufacturer created a multi-tiered loyalty program where consumers could collect points and redeem them for prizes or discount coupons tailored to their favorite products.
   
   • Customers who achieved higher loyalty thresholds (e.g., "Gold Customers") received additional, exclusive benefits.
3. Personalized Messaging: The company deployed a series of automated notifications about the loyalty program. These messages included advertisements for products specifically tailored to the individual customer's preferences and segment.
4. Targeted Discount Coupons: Program members received personalized messages containing discount coupons specifically for products they regularly purchased, incentivizing immediate repurchase.
5. Point Redemption Reminders: Regular emails were sent to customers informing them of their current accumulated points balance and reminding them of the minimum points required to redeem specific, desirable rewards.

Results

The new loyalty program delivered substantial returns across sales, frequency, and retention:

• Average Order Value (AOV): The AOV saw a significant increase of 22%. Consumers actively selected more products to accumulate points faster and reach reward thresholds.
• Purchase Frequency: The program successfully encouraged regular visits and shopping, resulting in a 20% increase in consumer purchase frequency.
• New Members: The loyalty program attracted strong participation, with the number of new members increasing by 16% within the first year of implementation.
• Consumer Retention: The enhanced value proposition of the loyalty program drove a 15% increase in consumer retention.