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The relationship between the average shopper and grocery store is not monogamous. Consumers shop at an average of 4.1 stores for groceries every month.

But grocery store monogamy isn’t necessarily synonymous with customer loyalty, is it?

The Food Marketing Institute partnered with consumer analytics company Precima for their recently released two-part study, Next Generation Loyalty Get it Right in Food Retail. We think that both Part 1: The State of Shopper Loyalty and Part 2: Loyalty in 3D-The Next Generation are well worth reading.

In this article, we will look at what customer loyalty means, examine what’s important to grocery shoppers and discuss loyalty programs. We will also highlight key differences between consumers’ opinions and retailers’ misconceptions about what is important to their shoppers. All data in this article is from the two-part study unless otherwise noted.

Defining Loyalty: We can see other stores

Customer loyalty means, “the likelihood of previous customers to continue to buy from a specific organization.” It doesn’t mean that the customer only shops at one store exclusively.

Eight in 10 shoppers say they are loyal or very loyal to their primary grocery store yet more than 60% of shoppers say they shop at multiple stores.

More than 3 in 4 shoppers allocate over half of their household grocery expenditures to 1 store. However, only 3 in 10 shoppers allocate more than 70% of their spending at 1 store.

The top 5 reasons that shoppers would spend more at their primary grocery store:

• better/more fresh produce

• improved quality of products

• improved breadth of assortment

• more convenient locations

• improved in-store shopping experience

The Next Generation Loyalty study notes that there isn’t much change in responses by age or location as to why shoppers would spend more at their main grocery store. Product assortment, promotions and an excellent experience at the store (rather than price) are the primary drivers in customer loyalty, the study notes.

Shoppers: What retailers can do to earn their loyalty

Grocery shoppers rated which store factors make or break their decisions where to shop. The study also asked retailers to weigh in and the results show a bit of a disconnect between what shoppers rank as important and what retailers think is important to their shoppers.

The most important factors that help consumers decide where to shop:

• quality of products

• in-store prices

• clean stores

• good locations

• customer service

• short checkout lines

• in—store promotions

• national brands

The least important factors that help consumers decide where to shop:

• best-in-class phone apps

• best-in-class website

• e-commerce offerings

• branding/advertising

• personalized offers

The most important store departments to shoppers:

• produce

• grocery

• meat

• dairy

• frozen

The least important store departments to shoppers:

• in-store eating

• meal kits

• general merchandise (clothes, auto, etc.)

• prepared meals

• ethnic foods

Disconnect #1: Retailers were in sync with the top factors that help consumers decide where to shop, but retailers overestimated how important loyalty programs, personalized offers, e-commerce, website and apps are to shoppers.

Disconnect #2: Consumers rate produce as the #1 most important department, but retailers listed it as the 3^rd-most important. Retailers mistakenly thought the meat/poultry/seafood department was the most important department, but shoppers ranked it as the 3^rd-most important department.

Loyalty Programs: What makes them worthwhile

Loyalty programs are important to both shoppers and retailers. 53% of shoppers say that a loyalty program is important to them in deciding where to shop and 75% of retailers say loyalty is more important to their business in the past 12 months than it was in previous years.

The study defines loyalty programs as having 2 components: possessing a unique value proposition and attaching a customer identifier to as many transactions as possible.

82% of retailers measure customer loyalty but just 21% say their loyalty strategy is delivering a positive ROI. These are the top metrics retailers use to measure customer loyalty:

• 65% customer satisfaction

• 61% marketing program metrics

• 52% impact on sales

• 62% shopping patters

• 42% customer acquisition/growth retention

The lack of ROI from grocers’ loyalty programs may be due in part to more disconnect between shoppers and retailers. Retailers are even more out of tune with shoppers about loyalty programs than they were with what factors sway shoppers to shop at a store.

The most important loyalty program elements to consumers:

• everyday low prices

• good promotions

• convenient locations

• good quality of assortment

• good customer service

Disconnect #3: Retailers overvalued the importance of customer service and undervalued how important prices, promotions and store location are to shoppers.

The most important loyalty program components to consumers:

• points that can be earned/redeemed

• exclusive access to in-store discounts

• option to select rewards

• anniversary/birthday gift

• increased rewards for achieving goals they set for themselves

• loyalty tiers with different benefits

• access to special events

Disconnect #4: Retailers underestimated how important anniversary/birthday gifts are to shoppers. They also overestimated how important it is to shoppers to get increased rewards for achieving goals they set for themselves and loyalty tiers with different benefits.

Disconnect #5: Retailers have less faith that their customers understand how their loyalty programs work. 60% of retailers think their loyalty programs are easy to understand but 87% of shoppers think that loyalty programs are easy to understand.

The image used for this blog post was created by Dragana_Gordic - Freepik.com.