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Loyalty and Promotions: A Clear Way for Grocers To Increase Basket Size

Loyalty & Promotions

Alejandra Remolina

What does Loyalty mean?

For years Loyalty has been translated into customer retention, but the truth is Loyalty goes beyond the impact of only increasing purchase frequency. The true value of loyalty and promotions today comes from data and shopper behavior. The value is not in retention or repeat purchases, this is only a simple side effect. There is a greater revenue center that these types of discounts provide to grocers, and it’s about increasing basket sizes in every purchase.

When it comes to discounts, Instead of leveraging promotions to save money on our purchases, we tend to increase our basket sizes and purchase more. For example, if we get a $10 discount, we’ll end up spending $30 more than we usually would spend on that purchase.

Basket Size is the key

Increasing the average basket size of the customer base has been a high priority for retailers so far.

Leading retailers are focusing their efforts on increasing sales and average customer spend across their existing customer bases. According to a Gartner Survey, The majority (73%) of chief marketing officers think they will focus on existing customers rather than developing new markets to foster growth, while 39% said they will focus on their current market by increasing the sales of existing products.

Grocers need to drop their deep-rooted notion of loyalty as a retention tool and tailor it to aid in basket size increases.  The question is how? Here are some of the most effective strategies for increasing basket size and shopper spend.

1. Participation Rate & engagement: 

A high shopper participation rate is key to make customers buy more. The more shoppers you can influence, the more revenue you can generate. It’s essential to offer your customers relevant promotions and marketing programs to keep them engaged. 

2. Spread your high-traffic categories out across your store: 

Another way to make your customers buy more is to take actions in your store such as exposing customers to more of your merchandise. Reminding your customers of what they could have forgotten, you have more possibilities of increasing their basket size.

3. Include a loyalty program and consider gamifying it: 

A loyalty program is about improving customer loyalty through offering customers value, in other words, offering them rewards. The most common one is the accumulation of points according to how much they’ve spent. There is another more innovative way to encourage your customers to increase their basket size, and its the gamification. What makes these types of rewards unique is how fun they are and are perfect motivators to increase their basket size since they’ll receive a gift in return. 

4. Simplify how customers enroll and participate in your loyalty programs

Signing up and using/participating in any loyalty program should be the easiest way possible. This may preclude the required use of a mobile app for participation.

5. The power of Up-selling & Cross-selling: 

Both sales techniques play an important role in increasing basket sizes. On one hand, with an up-sell, you are encouraging customers to increase the amount they spend on a product. Depending on the product category, this could mean suggesting more expensive, larger quantities, or extra features. In the case of groceries, a clear example could be a customer who wants to buy 3-liter bottles of Coca-Cola, and ends up buying twice as much because he notices that there is an offer of a “Pack of 6 bottles for the price of 5”.

On the other hand, Cross-selling is all about strategically suggesting additional related products to your customers with each transaction. For example, imagine a customer who goes to the supermarket to buy exclusively his favorite pasta, but there’s a new sauce that goes well with that pasta. This is a perfect complement to the pasta he already planned to buy. The art of a cross-sell is that the customer is already in a ‘buying mode’; therefore the opportunity is ripe to tempt them with an additional purchase.

6. Create an Omnichannel Experience

Last but not least, you can increase basket size by providing a holistic, omnichannel shopping experience. We’re living in an omnichannel world, and customers expect to receive promotions of their favorite retailers and brands any time whenever they are. 

Today’s consumers want to have the best of both Online and In-store experiences: the variety and competitive prices of online shopping with the best experience In-store.

Redemption rates turn into big results Results

Redemption plays a big role in terms of money. When shoppers redeem their rewards, retailers will see it reflect on basket sizes increased. It has been proven that shoppers will often spend more money than what the discount offers for. On average, shoppers will increase their basket sizes 7 to 8 times per year.  

Increasing basket size through loyalty and promotions is the solution. Talk to our experts to learn more about how to launch the right promotions to increase revenue.

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