CHICAGO -- Analyzing the nuggets of customer data stored in loyalty marketing databases is enabling smaller retailers to plan more effective promotions, as well as meet customers' needs. For instance, some retailers use data indicating when their best customers shop to make labor-scheduling decisions.
"Customer data compiled through a frequent-shopper card lets small retailers leverage the playing field to better compete [with larger chains] in the industry," said Albert Lees Jr., chairman and chief executive officer of Lees Supermarket, Westport, Mass. "This helps smaller retailers become guerrilla warriors in the supermarket wars."
Lees spoke during the session "Frequent Shopper Programs: Unlock the Secrets of Your Data," at the annual Supermarket Industry Convention and Educational Exposition here, May 3 to 6. The convention is sponsored by the Food Marketing Institute, Washington.
By tracking its best shoppers' spending behavior, Lees promotes items specific to their needs through an eight-page circular. Customers spending an average of $20 a week for a five-week period receive the flier.
"It is imperative to communicate with your customers -- especially your best customers," he said during the session. "Our database lets us understand our shoppers. [We can] identify the items that are selling and compare them against a list of our best customers.
"When we make up our ads, the items promoted are the ones that will sell," Lees added. "The old days of guessing are gone."
"By tracking customer behavior and rewarding loyalty we have unlocked the secret of increased sales per year," said Herb Butler, director of card marketing for Gregerson's, who also spoke at the conference.
Gregerson's, an eight-store retailer, launched its frequent-shopper program in 1994. The retailer reported that 70% of customer transactions are on the customer-loyalty card, and they account for 90% of store sales.
Gregerson's frequent shoppers also earn points through their card purchases. Points can be redeemed for rewards within a specific time frame. The purchases and points are monitored in the retailer's database.
The data enables the retailer to pinpoint card sales per store, defection rates, point-redemption rates and sales during its short-term promotions.
Retailers also use their compiled data to improve labor scheduling by matching employee shifts to peak shopping times.
"We used our database to find that our best customers shop between 10 a.m. and noon," Lees explained. "We schedule our cashiers during this slot so our best customers do not have to wait in line. This is a soft reward, though it helps because if they go to another store at this time they most likely will wait on line."
According to Lees, the objective of a frequent-shopper program is to offer rewards that meet consumers' needs. "Just as you cannot buy love from your children, you cannot buy love from your customers," he said. "You need to focus on what benefits them and what items they want. That will win their loyalty."