Personalization vs. segmentation: How to build customer loyalty in grocery

How Upside is helping grocers drive incremental revenue and boost sales with personalized offers

As a grocery retailer, you know how important it is to keep your customers coming back. Loyalty programs have become increasingly popular in recent years, but the one-size-fits-all approach may not be the most effective way to build customer loyalty. This article will explore why personalization is becoming the preferred approach for grocers looking to drive lasting incremental revenue and customer loyalty. Personalization is the key to standing out in a crowded market, and Upside is here to help you do just that. 

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Understanding personalization for grocery shoppers

What exactly is personalization, and how does it differ from segmentation?

Segmentation groups customers based on shared characteristics such as age, location, or income. On the other hand, personalization goes beyond grouping customers to tailor the customer experience for each individual based on their preferences and purchase history.

How can personalization benefit my grocery store?

Personalization can involve offering discounts on complementary products to items that customers frequently purchase, encouraging them to add these items to their baskets as well. By utilizing customer data, grocery retailers can better understand their customer's preferences and needs, and provide them with targeted offers that incentivize small behavior changes, resulting in bigger baskets and increased revenue.

So why is personalization more effective than segmentation?

In the grocery industry, personalization is more effective than segmentation because it allows retailers to tailor offers to individual customers based on their purchase history and preferences. This individualized messaging creates a more targeted shopping experience that is more likely to resonate with each shopper, leading to increased loyalty engagement and repeat purchases. 

Learn more about segmentation vs personalization for your grocery store: Segmentation is now. Personalization is the future.

Upside in action: Complementing a grocer’s in-house loyalty program while boosting sales

One large regional grocer with over 100 locations and nearly 2 million members in their loyalty program partnered with Upside to drive incremental revenue and profit to their stores. Their in-house loyalty program consisted of a rewards and savings program based on segmentation and another based on personalization.

  • Segmentation-based component of the grocer's loyalty program: This program offers weekly sales to any loyalty member, with a flat discount applicable to future shopping trips. Customers self-select into the loyalty or non-member group, but the approach is limited as rewards are granted on a "two-sizes-fits-all" basis, despite unique preferences.
  • Personalization-based component of the grocer's loyalty program: The loyalty program offers personalized coupons via the grocer's mobile app. These AI-generated offers are based on the customer's shopping history and result in a 23.2% increase in sales by app users. However, the benefits are limited to existing customers who have signed up for the loyalty program and downloaded the app.

Upside partnership to further leverage personalization:

The grocer partnered with Upside to leverage personalization further to reach new customers and increase the spending of existing customers. The grocer and Upside collaborated on an analysis to see how members of their loyalty program responded to personalized cash back offers through the Upside app. We found that Upside increased store sales by 26.3% beyond the lift attributed to the grocer’s in-app coupons. This shows how Upside increases revenue without sacrificing store profit or taking away from established loyalty programs.

Another retailer in the Midwest has a well-established loyalty program where customers earn points that could be redeemed for future cash discounts. The points were awarded on a fixed basis, meaning it is a one-size-fits-all way to build loyalty. The retailer partnered with Upside to bring in new customers and increase their existing customers' shopping frequency. 

After Upside launched, loyalty members who claimed personalized offers through Upside were 2.6 times more likely to visit. And if that wasn’t enough, Upside users were also more likely to sign up for the in-house loyalty program than non-Upside users.

Drive incremental profit with Upside

At Upside, we believe personalization is the key to driving loyalty and revenue in the grocery industry. While segmentation is still an important strategy, it’s not enough to stand out in a competitive market. But with tools like Upside, you can take your existing loyalty program to the next level. 

By working with Upside, you can: 

  • Leverage completely anonymized transaction data to personalize offers to each individual shopper.
  • Personalize offers for both existing and potential customers, enabling you to reach a larger audience and drive significant growth for your business.
  • Create dynamic promotions with personalized offers that maximize profit without sacrificing sales.

Join us in leading the way to the future of grocery with the power of personalization.

About the Author: Tyler is a business development leader with 15+ years of experience identifying new segment opportunities, crafting go-to-market strategies, and developing high-performing sales teams. As Upside's Vice President of Grocery, Tyler has established and grown Upside’s grocery business, and continues to drive retailer adoption alongside his team. Prior to joining Upside, Tyler held senior leadership roles at Instacart and Groupon, where he led partnership strategies and built lead generation machines to identify prospective strategic partners.