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Loyalty Begets Loyalty

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Ask a dozen retailers for their definition of customer centricity and you’re likely to receive nearly as many answers. Ask top executives at leading Canadian grocery chain Metro, and their answer will be multi-faceted, imbued with data and supported by more statistics than most others even measure.

Three years ago Metro launched a joint venture partnership with dunnhumby, a firm best known for helping retailers like Tesco and Kroger put customers at the center of every decision. That partnership has already yielded a 7.6 percent increase in Metro’s customer reach via the weekly flyer.

Greater than 95 percent of shopper communications are now fully customized, and Metro attributes a year-over-year sales increase of $39 million to five million mailings consisting of 37 million personalized coupons. In addition, the Metro & Moi loyalty program now reaches more than one million households and has paid $50 million Canadian in cash rewards to participating customers.

“Becoming a customer-centric organization is quite a journey,” says Marc Giroux, chief marketing officer at Metro, which operates 832 retail locations in Ontario and Quebec. “Launching the loyalty program is only part of it. It must be integrated into the brand strategy and the promotional strategy ... Then you have to use the data to improve the effectiveness of the weekly flyer and ... the merchandise assortment.”

“It’s really an evolution,” says Marc Fischli, COO of international markets at dunnhumby. “A lot of small things start to come together to create the overall picture. Many of the things are not fantastically different ... They’re just more driven by actual data.”

Early stages
The partnership’s genesis can be traced to 2009, shortly after Giroux joined Metro. The retailer had been operating a loyalty program in Ontario for a number of years, but didn’t feel it was getting the full benefit.

“We had to foster a culture where Metro was more loyal to its customers,” Giroux explains. “The customer would then reward us with more loyalty, but it needed to start with our business and our culture.” Retailers, Fischli says, “have to make a distinction between just investing” in a loyalty program “and truly putting your money where your mouth is when you say you are customer-first.”

Giroux and the Metro team didn’t stop at the loyalty program; they looked at what needed to be done differently in the stores, and how changes would affect logistics, in-store assortments and customer communications.

Metro began by surveying customers, asking what they expected from a loyalty program. Three answers rose to the top – simplicity, recognition and lower grocery bills. And, whereas global culture and messages are pervasive in the marketplace today, the proximity of the “local grocer” was core to the experience shoppers wanted.

Metro wanted to communicate, “We understand your community and your needs, and we’re going to deliver on those needs,” Giroux says. The grocer changed the name of the loyalty program to Metro & Moi (French for “Me”) and tweaked its slogan from Metro Grocer to Metro Mon Epicier (“My Grocer”).

Decisions, decisions
One of the biggest debates surrounded consumers’ call for instant redemptions. “We said, if we’re going to be customer-centric ... we need to allow them to redeem their rewards when and how they want,” Giroux says. “Then dunnhumby came to the table with their perspective ... and the pieces began to fall into place.”

Fischli knew that instant redemption sacrifices control and the opportunity for direct interaction with loyal customers. Therefore, the program rewards shoppers every three months with a check based on total spending, and Giroux believes the buzz created on Facebook and in stores when checks are received yields far more excitement than instant redemption would have.

“When people come into the store with their check in hand, it’s a huge win for Metro,” he asserts. “Heaven forbid a shopper in line doesn’t have the Metro & Moi card — we’ve seen customers show them their check and explain in detail why signing up ... is a good idea.”

Another pivotal result of the partnership has been Metro’s ability to piggyback on the loyalty program’s redemption cycle and collected data to tailor pricing and promotions. “By creating a cycle of conversation with our customers, we’re now able to communicate specialized offers,” Giroux says. “Personalized offers are an opportunity to be more relevant ... to increase the perception of value [loyal customers] receive from Metro.

“Our most loyal customers are worth 17 to 20 times more” than the least loyal, he says.

The investment Metro has made over the past three years in its internal systems and in building the new customer interface is significant. Still, challenges lie ahead, including making sure the CMO and CIO are working in harmony.

“Together they need to develop a technology path that is coherent with and enables customer centricity,” Giroux says. “When you want to do personalized pricing it requires significant changes in the marketing mix, the IT systems and merchandising process to make sure you’re executing with the right data and the knowledge and analytics to drive success.”