Saturday, January 09, 2010

Loyalty in the Grocery Biz

Are you one of their MVP's?

Study Confirms Importance of the Most Loyal Grocery Shoppers An analysis of over 2 million grocery shoppers by Lisle, Ill.-based marketing firm Concept Shopping, Inc. found that the top 10 percent of a store's customers visit over twice a week, spend over $39 per visit and represent almost 40 percent of the store's total sales.

The study additionally discovered that these most valuable shoppers tend to be extremely loyal to the retailer, with 95 percent continuing to shop there year-round. By contrast, just 34 percent of the store's worst shoppers -- those who visit the store less than once a month and spend only $9 per visit -- stay customers.

"Shopper churn is a fact of life for every marketer," said Concept Marketing VP of sales and marketing William Young. "Shopper loyalty continuously ebbs and flows through retail banners and store types, but sorting shoppers by their value helps identify which ones should be courted and which ones can be ignored."

Research carried out by Concept Marketing showed that only 11 percent of the dollars spent by the best shoppers were on markdowns, making these heaviest shoppers the most profitable, too, while more than 35 percent of the worst shoppers' dollars went toward sales items, making them unprofitable assuming a 33 percent profit margin.

In terms of shopper retention rates, one retailer kept 70 percent of its customers overall, while 30 percent defected to other retailers. Of the defectors, only 5 percent were from the highest-spending group.

"Retailers should spend the lion's share of their time, effort and promotional dollars on their top-spending, loyal customers," noted Young. "Moreover, other studies have shown that it costs about five times as much to win a new customer as to keep a current one."

(Source: Progressive Grocer, 12/17/09)

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