Do loyalty schemes work in fine food retail?

Finding new ways to attract loyal customers is increasingly important for independent retailers amidst the cost-of-living crisis. With larger businesses doubling down on their loyalty schemes, how can fine food shops make the most of these digital schemes?

According to recent research by digital product agency Future Platforms, almost two-thirds of Brits said they joined a retail scheme to benefit from member-only pricing, and over three-quarters said they are motivated to change their shopping behaviour in return for benefits like free products or money off.

“Our research supports the theory that loyalty programmes can be used as a key way to change consumer behaviour,” says Future Platforms managing director Remy Brooks. “Over 60% of respondents admitted to trying something new because of loyalty programme incentives, demonstrating the significant impact these schemes can have.”

Should indie retailers use loyalty schemes?

Loyalty schemes come in many different forms, from stamps for spending, to sophisticated systems that track customers’ every purchase.

When considering introducing or revamping a loyalty scheme, the first question to ask is whether your customers will use it. “There is an argument that people are a bit sick of having cards,” Edward Berry of The Flying Fork tells Speciality Food, “but I think I think you have to bear in mind that that there is a generational challenge. A lot of the independents do appeal to slightly older people, and they have no problem with cards. They like to hand in their cards and get a couple of points off,” he says. 

But Edward adds that retailers should choose their loyalty schemes wisely.

“Decent EPOS systems will give you some internal data on the customers, and because you’re an independent you can actually respond independently.” For example, whether you market through emails or letters in the post, you can identify individual customers who haven’t visited and send them offers for the products they typically buy.

“You can be a lot more tailored to individuals,” Edward says. “The reality is that loyalty customers spend more than non-loyalty customers.” 

What’s more, building up a loyal base of customers is essential for independent retailers, and loyalty schemes offer a key way of doing this.

“It costs more to attract new customers than retain older ones,” Edward says. “Existing customers are key to any business.” With a loyalty scheme, you can not only discover who your most loyal customers are but also reward them for visiting your shop – whether that is through free items, money off, or special treats like private event shopping or invitations to cheese and wine tastings. 

While there are obvious pros, one of the cons indie retailers will face is the time it takes to research and set up a system. “They do require a bit of brain space to use them well,” Edward says. But he certainly believes it is a worthwhile investment of time and money. “I would encourage everybody to have one.”

Two perspectives on loyalty cards

Speciality Food speaks to two retailers who have introduced loyalty schemes to find out how they have impacted their shops.

“We decided to introduce a loyalty scheme because we thought it might encourage people to buy their meat and groceries regularly from our shop instead of from a supermarket,” says Matthew Homfray, managing partner of Forage Farm Shop in Wales.

Previously, he says, the shop had manually stamped cards that offered free coffees and steaks after nine purchases, but this was “clunky and open to fraud, plus it wouldn’t make people buy their milk from us every week,” he tells Speciality Food.

After some research, he and the team chose to partner with TapMango, a new entrant to the UK market at the time that allowed them to white label their app. “The scheme has been received well by customers, lots of them really care about collecting points. It also has fun perks like ‘miss you’ text messages if they haven’t been for two months, and ‘happy birthday’ text messages offering a free slice of cake,” Matthew says. 

Another attraction of TapMango was the many features that it offered. “I feel we only use 20% of its functionality, but this will increase as we add triple point Tuesdays and other promos,” he says.

Whether the loyalty scheme has increased sales is difficult to gauge, Matthew says. “Sales have increased, but we are a young and growing business so they would have anyway. I suspect that it has been financially beneficial because most of the ‘rewards’ that people get for their points are high-margin products made in house, such as hot beverages, sausage rolls, etc.”

Jon Edwards, managing director of Ludlow Farm Shop, says the shop set up a scheme not long after opening in 2007, and it now has over 10,000 loyalty card holders, with around 5,500 that are very active. The system he uses is fully integrated with the shop’s tills and sales data, which makes it simple and straightforward to learn about customers’ shopping behaviour.

“We have specific offers that are just targeted to our loyalty database,” he says. For example, if the shop launches a new gin, they can target the customers that have typically bought alcohol in the past and send an offer directly to them.

The loyalty cards do two things for Ludlow Farm Shop: they help boost sales by encouraging customers to buy, and they give the shop useful data to make informed business decisions and better understand their customer profile. “We know where our loyalty card customers that no longer shop with us come from, so we can target marketing in the local press in a certain area,” Jon says.

For independent retailers, loyalty cards are also about making customers feel part of something. “We can target communications that are more beneficial for us and more beneficial for them, and they get the feeling that someone’s talking to them about things they’re interested in.”