Grocery and restaurant leaders know it's easier to keep an existing customer than attract a new one. That's why so many retailers focus on implementing loyalty programs that offer points or rewards, encouraging customers to spend more and spend more frequently.
As valuable as loyalty programs may be, restaurants and grocery stores may not be using the programs as efficiently as they could be. What’s more, both business types may be missing the boat on keeping customers’ loyalty accounts secure. As grocery stores and restaurants deepen their investment in loyalty programs and, consequently, loyalty apps, they must also maximize their initiatives while protecting their customers’ data and assets.
Loyalty program apps are on the rise
Customers love rewards. Almost half of U.S. consumers (47 percent) are in a rewards program.1 And although most people average 14.8 loyalty programs, they’re typically active in only 6.7 of them.2 With the rise in eCommerce and mobile shopping technology, businesses are marrying their loyalty programs with technology so customers can use loyalty apps on their mobile devices.
Restaurants and grocery stores are keeping up with the trend. In a recent Industry Dive and Cybersource survey, more than seven in 10 grocery and restaurant leaders (71.9 percent) said they offered loyalty apps. Those apps do more than provide rewards: they also influence customer spending. In the survey, 34 percent of respondents said customers with the app spent more money than those without apps. Likewise, another 54.5 percent said app users bought more frequently.3
Loyalty program apps help establish direct relationships with customers. This can be vital for restaurants and grocery stores that rely on third parties for ordering, delivery, and payment.
During the last two years, as food retailers rushed to develop and expand their digital capabilities, many relied on partners to get the job done. But as a result, those third parties are the ones that collect customer information, not the business itself. These restaurants and grocers need to collect first-party data, and loyalty apps can help.
Loyalty apps enable one-on-one interaction so restaurants and grocers can send notifications directly, inform customers about specials, answer queries, and even use geolocation to send messages when customers are near a grocery store or restaurant.4
As both business types look ahead with fewer opportunities to use third-party data, they must find new ways to connect directly with customers to better understand their behaviors, needs, and expectations.
Doing more with loyalty apps
Despite the data outlining the benefits of loyalty apps, a surprising number of grocers and restaurants in the Industry Dive and Cybersource survey still don’t offer them. Twenty-eight percent did not have loyalty apps, and more than a third of respondents (34 percent) did not agree that payment methods, including apps, influence customer loyalty.
Although some respondents may not have seen as much value in offering loyalty apps, they may not be using the apps to their fullest capabilities. Just over half of survey respondents (51.8 percent) gave points for each purchase captured in the app. The same percentage offered special deals, like BOGO, solely in the app. Fewer (43.6 percent) provided discounts for downloading the app, and the majority (57.3 percent) did not offer push notifications of sales and special events.3
In addition to using apps for strategic marketing, grocers and restaurants can use the data gathered from apps to connect with additional data such as prior coupon use, repeat orders, and geolocation to improve the customer experience.
Keeping apps (and customer data) secure
As more restaurants and grocery stores offer apps, they both must make sure the information contained in the apps remains secure. Loyalty rewards have value, and cybercriminals are increasingly targeting these apps for the rewards points.5 Furthermore, fraudsters can try to gain entry from a loyalty reward program to uncover additional customer data, like credit cards, bank accounts, and social security numbers. More than half of grocers and restaurant leaders surveyed (54.6 percent) said they've seen fraud issues within their loyalty programs. Furthermore, fraud affected nearly 20 percent of business operations, 20 percent of business finances, and 27.5 percent of customer loyalty.3
Without a robust fraud prevention program that incorporates loyalty apps, grocers and restaurants can put their customers at risk—destroying the very loyalty they are trying to build. By maximizing and using the data from loyalty apps while keeping that information secure, grocers and restaurant leaders can connect with customers to build longstanding loyalty.
How can you get ahead in the market for meals? Read our latest survey to find out more about the top restaurant and grocery payment challenges.
1 “Why Increasing Loyalty 5% Increases Profits 25–95%.” FastCasual.com, July 2, 2021, https://www.fastcasual.com/blogs/no-loyalty-platform-no-growth/.
2 “The Loyalty Report ’19.” Bond, 2019, https://www.bondbrandloyalty.com/.
3 “How can you get ahead in the market for meals? Restaurant and grocery top challenges.” Cybersource.com, 2022, https://www.cybersource.com/en-us/solutions/payment-acceptance/restaurant-and-grocery-payments.html.
4 Goicochea, Elizabeth. “How Retailers Can Use Geolocation to Improve Customer Loyalty Programs.” Mocaplatform.com, https://www.mocaplatform.com/blog/retailers-geolocation-customer-loyalty-programs. Accessed May 5, 2022.
5 “Cybercriminals Latest Retail Target? Loyalty Programs.” Retail Dive, January 2,2020, https://www.retaildive.com/news/cybercriminals-latest-retail-target-loyalty-programs/569196/.
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