Brands in Supermarkets: Customer Loyalty Strategies

“An unhappy customer tells ten others”. You have surely heard this phrase before, and for good reason: loyalty is the major challenge for any brand looking to sustain its activity in supermarkets (GMS). However, while large-scale retail guarantees maximum exposure to brands, being able to ”keep” one's customers is a whole other matter! Indeed, your competitors also aim to win over and retain target consumers, and now you must deal with private labels (MDD). 

But then, how can your brand build customer loyalty in large-scale retail?

That is what we will see in this article. We will start by recalling the fundamentals of customer loyalty for those who were at the back of the economics class! Then we will get to the heart of the matter and review the main strategic areas that every brand must master to defend its customer base in supermarkets.

Customer loyalty: theory and main principles

A loyal customer is generally defined as a customer who continues to make purchases or use a company's services on a regular and consistent basis over an extended period. 

This type of customer is often considered valuable to a business because they contribute to revenue stability and can also generate positive word-of-mouth by recommending the company's products or services to others.

In addition, loyal customers tend to be less sensitive to price fluctuations and more willing to try new products or services offered by the company.

Customer loyalty is based on various criteria that determine the strength and durability of their relationship with a brand:

• Continuous satisfaction;

• Trust;

• Quality customer experience;

• Personalized relationship;

• Added value;

• Rewards and incentives;

• Emotional consideration;

• Engagement.

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Loyalty: the 3 types defined by marketing

Marketing theory recognizes three types of customer loyalty: 

1. Induced or forced loyalty describes a purchasing act linked to the lack of alternatives. Customers buy the only product that meets the demand. This is generally characteristic of a monopoly market;

2. Behavioral loyalty groups together customers who consume a product out of convenience and habit. Convenience can take different forms such as proximity, the cost of switching, or the accessibility of the product;

3. Intentional or attitudinal loyalty corresponds to consumers who choose to buy a product or brand because they prefer it over its alternatives. This is the strongest commercial relationship because it often involves an emotional attachment to the brand. The criteria justifying this loyal buying behavior are most often product quality, excellent customer service, or brand image.

‍Understanding these three approaches is fundamental to determining your market positioning. Indeed, large-scale retail is subject to very fierce competition, which also includes the distributors' own private labels. Induced loyalty is therefore almost impossible to achieve for most brands, and they consequently attempt to differentiate themselves, or work in niche or future markets.

‍But that is easier said than done!

Sidely therefore suggests that you delve deeper into the key areas to improve your customer loyalty.‍

1) Porter's strategy and brand positioning

Now that we have identified the different types of loyalty, we can look at corporate strategies that allow brands to align with customer expectations in order to create a lasting affinity with the brand. 

Here, the most suitable tool is generally Porter's generic strategies.

Porter's theory, named after its inventor Michael Porter, proposes that companies can achieve a competitive advantage by adopting one of the following three generic strategies:

• Cost leadership: this involves becoming the lowest-cost producer in the industry while maintaining acceptable quality standards. The goal is to attract price-sensitive customers and/or achieve higher profit margins by offering competitive prices;

• Differentiation: this strategy involves offering unique products or services that stand out from the competition, whether through quality, design, features, or customer service. The goal is to create a unique value proposition that attracts and retains customers, giving them a reason to choose your product or service over those of competitors;

• Focus: often applied in niche markets, this strategy consists of concentrating on a specific market segment or a particular group of customers. The company can adopt a cost focus approach (targeting a narrow market segment with reduced costs) or a differentiation focus approach (offering highly differentiated products or services for a specific market segment).

To successfully apply Porter's strategy, you first need to identify your strengths and weaknesses, as well as those of your competitors, and understand the needs and preferences of your customers in the market. Porter's approach allows your brand to find a logical positioning in its market, a prerequisite for building customer loyalty over time.

This positioning will also help guide the development of new products. If you have an extensive range, it is recommended to include a product of the future: it is not intended to represent the majority of your current revenue, but its innovative nature positions you in tomorrow's market. To dive deeper into this topic, find out how to define and adapt your product assortment.

2) Brand universe and customer loyalty

Once your brand's positioning in its market is clear, communication must take over. The objective is then for shoppers to resonate with this brand identity and make it their own. Studies show that consumers are increasingly attached to the emotions they feel at points of sale, with advertising having worked extensively to associate well-being with consumption.‍

The brand universe and communication thus become key elements for building loyalty among customers of a brand selling in supermarkets. This includes all visual, sensory, emotional, and symbolic elements that define a brand's identity: logo, colors, typography, but also corporate values and philosophy. The goal is to create a consistent and distinctive experience for customers at every touchpoint with the brand, whether in-store or online.

Communication then helps to strengthen brand recognition and create a consistent experience for customers, but also to build an emotional attachment and a relationship of trust between your brand and its customers.

3) Brand / distributor collaboration and customer loyalty

If you are looking for loyal customers while addressing the market through indirect channels, it is logical to first evaluate your distributor's ability to retain its customers! This is why, if you have opted for a selective distribution strategy, loyalty-building capability can be one of the factors to consider when choosing your commercial partners. 

In this case, major French retailers have experimented with various tools inspired by the American market, such as loyalty cards, credit cards and other financial services, and even monthly subscriptions providing discounts on every purchase.

These tools also bring another significant advantage to retail giants: as we mentioned regarding the nested assortment, retailers are increasingly using digital touchpoints at points of sale to massify data analysis, allowing them to identify specific profiles of typical consumers. Distributors can thus adapt their listing policy in order to increase the average basket size as well as repeat purchases. In short, big data allows retailers to improve customer loyalty by analyzing their behavior in the aisles!

So, remember to explore this topic during your discussions with national and regional buyers. Negotiating sell-outs is important, but don't stop there, and try to decipher your distributors' strategies to benefit from their loyalty programs.‍

Furthermore, if you work with independent retailers, don't forget that they often have a relatively significant degree of freedom in terms of sourcing. You can thus share your data with store managers to encourage them to list you or to better showcase your products on their shelves. The logic of trade marketing is to be able to win together… It is up to you to make them understand that it is in their interest to work with you to implement the best loyalty-building actions!‍

Finally, don't forget to integrate the loyalty factor into your risk of delisting. Indeed, a change of distributor implies for some brands starting from scratch in terms of awareness, which will generate significant advertising costs to make you known to your new customers!

4) Customer relationship in the digital age

The world of large-scale retail is not a fairytale, and retailers are often reluctant to share strategic data with you, precisely because it gives them a substantial advantage in annual negotiations. This is why you must also develop your own digital strategy.

And the main asset of digital is precisely that it allows you to pursue all the marketing objectives making up the AARRR matrix, representing the different stages of the marketing funnel: 

• Acquisition; 

• Activation; 

• Retention, 

• Referral, 

• Revenue.

And as we will see now, all your digital actions can strengthen your brand's customer loyalty, and lead to more sales in stores over the long term!

Popularity and brand adoption

Social media is an extraordinary vector of popularity: even if you are not a burger aficionado, it is difficult to miss Burger King's communication, as the brand's marketing efforts generate so much buzz on networks. This reasoning also applies to brands in large-scale retail: by being very active on your customers' favorite platforms, you revive the memory of your brand, and their purchasing process is influenced during their next grocery trips.‍

Social listening: listening and being heard on the web

But social platforms also help in understanding how to improve customer loyalty. Besides, your shoppers do not hesitate to share their opinions on the web. For your brand, this is an easy way to evaluate customer satisfaction, but also to be proactive by adopting the right reactionary strategies to these comments: get involved in discussions, reply to comments. Digital indeed offers a unique way to keep listening to what is being said about your brand. This is the famous social listening!

Social networks and websites also make it possible to organize contests or special events to increase your brand's awareness: in a multichannel marketing logic, make your online and offline operations converge to increase their reach and generate more sales in stores.‍

Capitalizing on each touchpoint

Remarketing, also known as retargeting, is an effective marketing strategy to strengthen the relationship between a brand and internet users. Indeed, using tracking tags on the web allows you to deploy advertising campaigns to users who have interacted with your tools (websites, social media, etc.). This technique can thus help nurture the relationship with your brand in multiple ways: 

• Brand recall;

• Ad personalization; 

• Call to action incentives;

• Re-engagement of existing customers;

• Customer journey analysis, etc.

Your online marketing thus constitutes an extremely powerful leverage for building loyalty. Costs per touchpoint are much more easily measurable than with traditional media such as television. And above all, you are the master of the data you collect and can support your store sales through actions over which you have total control.‍

Loyalty building and customer relationship development (FDRC)

Ultimately, loyalty lies in the quality of the relationship between the brand and its customers. This is why brands have every interest in studying the different actions impacting customer relations. In French marketing, this is referred to as FDRC. In this area, digital tools offer fantastic opportunities to accelerate the dialogue between your brand and its customers.

And customer service (SAV) is no exception, as many companies now handle customer requests via channels like WhatsApp or Messenger. These channels generally have the capacity to accelerate and streamline customer relations. The pursuit of efficiency also drives some brands to implement chatbots. 

5) Loyalty actions at points of sale

Old but gold! This is undoubtedly the most timeless point on this list, and one that will always work: setting up attractive loyalty programs. Offer rewards, discounts, points accumulated with each purchase, or other exclusive benefits to build customer loyalty. There are many reward programs to encourage your customers to make repeat purchases: collectible items, the opportunity to participate in a sweepstake, or the accumulation of points leading to a gift after reaching a certain spending threshold. As mentioned above, multichannel marketing can help converge physical and digital touchpoints.

This technique increases your customers' purchase frequency, and you can also add specific promotions, such as instant redeemable coupons (BRI) on the purchase of other items of your brand within the same product range. This improves your revenue and introduces products that the customer might not have bought on their own.

6) Customer surveys and NPS measurement

In order to deploy the right customer loyalty initiatives, it is important to be able to assess the strength of customer loyalty.

While mystery shopping surveys have not lost their appeal in-store, brands can now use their own digital channels to get quick answers, without having to negotiate with their distributors.

The Net Promoter Score (NPS) remains an essential tool for measuring customer satisfaction and loyalty to a brand. It is based on a simple question: "How likely are you to recommend this brand to a friend?". To learn more, you can consult our article on the Net Promoter Score.

Websites, social networks, emailing, and other digital platforms thus allow for the implementation of satisfaction surveys to collect opinions, ask targeted questions to your consumers (polls are a good example), or ask open-ended questions: “what are the points to improve to etc.?”.

Reminders

Before we go, let's remember two points of vigilance to keep in mind:

📉 Promotions: if there is one bad reflex that needs to disappear urgently, it is the systematic use of promotions to build customer loyalty: if all players start lowering their prices, the entire market loses value, dragging down manufacturers' margins! Furthermore, once consumers get used to low prices, returning to more profitable prices for your brand will often be perceived as unjustified by customers. In short, there are plenty of good reasons to launch promotions, but loyalty is not one of them!

🛠️ Quality control and compliance: when you sell your products in large-scale retail, design errors can have serious consequences (for food products, they literally imply health risks). To protect consumers, avoid bad buzz risks, and preserve your image in the long term, make sure you excel in quality control and master recall procedures in the event of a detected risk.