October 14, 2014

Whole Foods Market Rewards: A New Take on Loyalty?

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It sounds like Whole Foods finally heard our big news:

Consumers are over 82 percent more likely to shop at stores that offer some type of customer loyalty program.

After 30 years of business, the natural and organic food grocer plans to follow in the footsteps of competitors like Kroger and Safeway by launching its own rewards program. Well, at least partially. The plan isn’t just a standard point-system, and builds on Whole Food’s previous experiments with digital engagement.

The program, called Whole Foods Market Rewards, allows customers to earn points for each purchase and then redeem them for store discounts or “experiential” rewards, such as free cooking classes. If successful, the program is scheduled to roll out nationally just in time for the 2015 holidays.

Walter Robb, co-CEO of Whole Foods, says the goal is to deepen the company’s connection with existing customers and appeal to new customers as well. According to spokesman Michael Silverman, “Our customers have wanted an affinity program for some time.”

So is Whole Foods simply giving people the “points” they want, or is the company trying to redeem itself?

As competition for natural and organic food rises, Whole Foods stock has fallen from its late 2013 high of over $65, and is now hovering in the $30 range. It appears the company is trying to revamp its costly image by lowering prices, starting its first national marketing campaign, and leveraging new technology. The Whole Foods Market Rewards program is just one stop on the company’s “Digital Roadmap” focused on innovation.

Whole Foods’ Marketing Makeover

Whole Foods is embracing digital in an effort to provide customers with new choices and new ways to engage with the brand. Along with the customer loyalty program, the grocer plans to introduce a Whole Foods Market mobile app. The app will incorporate loyalty rewards, order-ahead, and mobile payments in order to improve customer experience before, during, and after shopping.

Though the company is just now hopping aboard the digital rewards bandwagon, this isn’t the first time Whole Foods has harnessed the power of emerging technology. Features of the new rewards program follow the company’s track record of leveraging several key trends associated with gamification.

Whole Foods + Gamification

Whole Foods has previously used game elements in both marketing and employee engagement efforts. In its 14-Day Blast Off challenge, Whole Foods encouraged participants to start the new year on a path to health. Each day users could earn badges for completing healthy living “missions” such as exercising or eating healthy. They even incorporated a forum for community feedback and encouragement. In addition to promoting consumer fitness, Whole Foods also uses gamification to encourage employees to stay healthy. By meeting the company’s health benchmarks, workers can earn a discount on their in-store purchases.

Whole Foods Market’s customer loyalty program builds on these previous efforts. It’s also in line with consumer preferences regarding digital loyalty and mobile-first payments. Our recent loyalty study found 59 percent of US consumers would be more likely to join a loyalty program offering a smartphone app.

Alongside the new mobile app, Whole Foods has partnered with Apple to integrate Apple Pay in their stores. Imagine: going out for a run, popping by Whole Foods, redeeming points at the juice bar, and paying for a healthy snack – using nothing more than your iPhone.

Over 37 percent of consumers cite receiving rewards as their primary reason for participating in loyalty programs. Whole Foods hopes to bring a new era of digital choices to its customers by giving more than just points for each dollar spent. Their experiential rewards will be personalized based on individual preferences and purchase behavior – a powerful game element prevalent in many new customer loyalty programs.

Whole Foods Market Rewards program seems to be attuned to why customers participate in loyalty programs, but what’s really in it for the $12 billion retailer?

Data: The Other Side of Loyalty

It’s a little difficult to imagine a company that offers a curated wine club as synonymous with discounts or deals. But loyal customers aren’t the only ones that could benefit from Whole Foods Market Rewards.

Besides convincing cost-conscious shoppers to try out the store, the new initiative will help the company amass valuable data about their customers’ buying preferences. Going digital means these “personalized” discounts and rewards will be based on targeted profiles designed through data analysis.

By keeping track of consumers’ shopping habits, Whole Foods will be able to keep stride with competitors whose loyalty programs already provide personalized perks. With data that can be leveraged to help shoppers feel special and give the company a competitive edge, only time will tell who’s getting the biggest reward– consumers or Whole Foods.

Does your business offer a rewards program? Do you think Whole Foods can successfully appeal to budget conscious shoppers? Let us know in the comments!

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