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Tough love on loyalty from Dunnhumby founder

Tough love on loyalty from Dunnhumby founder

At last month’s “Great Loyalty Debate” in London, Clive Humby accused supermarkets — at least those in the U.K. — of “totally forgetting what loyalty is all about.” He described Morrison’s new loyalty scheme as a “waste of time” and defined loyalty as passion, not frequency of trips or share of requirements.

Since Humby is a co-founder of Dunnhumby, and Dunnhumby gets a lot of credit for Kroger’s success, it’s worth considering how his thinking relates to U.S. supermarkets. Here are two ideas I found particularly thought-provoking.

Loyalty is about building relevance, not just relationships. Humby’s point seems to be that building relationships generally means creating the willingness to communicate, while relevance is about delivering something that’s really meaningful to the individual. He also implies that relevance must start with a retailer’s strategy on how they create value for customers before it advances to the personalization of individual offers.

The purpose of loyalty is to say “thank you,” not to create a vehicle to more precisely target offers that may not be relevant to shoppers. This is an important caution. Today many marketing service providers talk more about the power of their targeting algorithms than their ability to support a loyalty program that creates “raving fans.”

How much of the points above apply to U.S. food retailers and suppliers? Beyond Kroger, which retailers are getting loyalty right in your opinion?

 

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