Kroger has always been an innovator. It was the first store to combine meats and groceries under one roof, and the first grocery store to have its own bakery. Kroger pioneered the use of optical scanners in the checkout aisles and was one of the first grocery chains to open superstores, a move that has helped it weather competition from big box stores like Sam’s Club and Costco. That drive to innovate has helped make Kroger the nation’s largest grocery chain and the second largest retailer in the country after Walmart.

But, what has really driven Kroger’s recent success is its commitment to the customer experience, and particularly how well it has applied its customer loyalty program. Kroger launched its “Kroger Plus Card” program in 2003. In 2010, Kroger partnered with Shell gas stations allowing customers to redeem points earned on their Kroger Plus Cards for fuel. Well over two million customers use Kroger’s shopping app, which allows users to download coupons, sort coupons by relevance, sync coupons with their shopping lists, monitor their Kroger Plus reward points, and even refill prescriptions.

Last year, a study by Maritz Loyalty Marketing found that Kroger had the highest rated loyalty program in the grocery sector, with an overall satisfaction rate of eighty-three percent. In fact, ninety percent of register transactions are completed with a Kroger Plus card, and eighty-five percent of all United States households in markets where Kroger operates have a Kroger Plus card.

The Way I See It

• As behemoths like Walmart and Amazon continue to gobble up market share – in everything from groceries to clothing to consumer electronics – I see more “traditional” retailers needing to double down on the customer experience in order to compete.
• Successful competition is going to be increasingly dependent on maintaining an ongoing conversation with customers via the tools and channels they prefer, namely their mobile phones and social media.
• Data – not just gathering it, but using it in novel and effective ways, and ways customers are comfortable with – may wind up being the biggest difference-maker for retailers.

The Way the Industry Sees It

I sat down with Natalie Ream, Vice President of Customer Communications & Marketing at Kroger to discuss customer service and customer loyalty programs as a way to differentiate.

 

What’s made your Kroger Plus program so successful? What have you been able to tap into about the way customers like to use these programs that your competitors haven’t?

Our Plus Card program is successful simply because of our ability to deliver real value, and to uphold the trust that our customers place in us as it relates to their shopper data.  Through our shopper card program we are able to capture and analyze shopping behavior, and then apply the insights we gather to create offers, discounts, and recommendations that are meaningful and relevant.  We are very careful to protect our shoppers’ data and their privacy.  Our customers have come to expect us to know them better, and they tell us that they look forward to hearing from us!

What’s the relationship between the Kroger shopping app and more traditional print coupons and circulars?  Will the app and social media eventually replace coupons delivered in the mail, by newspaper, or handed out at the checkout counter?

For more than ten years we have been perfecting our ability to deliver highly-relevant, personalized coupons for the products that our customers like and buy the most through our ‘Loyal Customer Mailings.’  We are now applying that expertise to the digital channel through our mobile app, which allows customers to sort digital coupons by relevance to them.  By applying real-time insight derived from their shopper profile, we can sort and deliver relevant offers based on what we know about a customer’s product preferences or lifestyle segment.  Because we have five generations of customers shopping with us – and because each generation and each customer is unique in terms of their preference for how we talk to them – our aim is to meet our customers and talk with them in the channel or channels that they prefer.

What excites Kroger about the data it’s been able to collect via the app and the Kroger Plus program? What has the company discovered about customers, and how has that helped Kroger serve them better?

Our app lets consumers create an account that can be used to view our weekly ad, load coupons directly to their Plus Card, and to add those coupons and items from the ad directly to their cloud-based shopping list.  They can also refill prescriptions and manage their fuel points at gas stations.  The app includes a store locator and offers mobile-exclusive promotions.  We recently released an update that includes digital coupons and the weekly ad sorted by relevance to the user.  One of the most exciting things that we’ve discovered about customers through the Kroger app is its adoption rate and ranking.  We are thrilled with the organic growth we have seen since we launched, it consistently ranks in the top two percent of lifestyle apps on the app stores, and users give us a four-plus out of five rating and have downloaded more than one billion digital coupons!

I’ve heard that Kroger is at least thinking about getting into the home delivery business.  How does that change your customer relationships?  Are there particular pitfalls or opportunities there?

We are always looking to meet customers’ needs and our customer first culture guides our business strategy.  In fact, we have had a home delivery operation in Denver for many years and we will continue exploring it as a model, although the economics are not yet sound enough to expand the service at this time.  One of the many reasons we are excited about our recent merger with Harris Teeter, an exceptional grocery brand in the Mid-Atlantic region, is to study their “click and collect” operation.  Our knowledge and insight will certainly help shape and inform any venture into e-commerce.

What’s the coolest object in your office?

Other than my family photos that keep me grounded in what’s really important, I would have to say that the coolest object in my office is the replica of the actual ad that recognized and congratulates our team on being named to the Advertising Age “2013 Marketer A-List.”  The reason I think it’s so cool is two-fold:  As a relatively new marketing and loyalty organization that is essentially a full-service agency within a major grocery retailer, with less than thirty-six months functioning as such, we were recognized by Advertising Age for our work.  But it’s the mosaic of photos of each our customer Loyalty & Marketing Team members in the ad that serves to remind me what’s really cool – it’s the talented, passionate people on our team working together – across customer insights, marketing, creative, and media services – that are making retail marketing history and making a real difference in how we first listen, and then talk, to our customers.  We do believe it’s the start of a beautiful conversation!