The evolution of loyalty programs

Loyalty is all about customer data — gaining information about peoples’ choices, habits and shopping patterns, and analyzing those details to create a more appealing brand experience.

But while a robust loyalty program offers companies insight into their existing customer base, it doesn’t always shine a light on broader behaviors that can have a significant impact on the business.

In a fall 2023 report, loyalty technology firm Paytronix examined current c-store and restaurant trends from all in-store and online transactions made via its database — which covers more than 1,800 retailers and 35,000 stores — between Jan. 1, 2020 and June 30, 2023.

Overall, Paytronix noted c-stores saw a 19% boost in the number of loyalty members over that span, below QSRs but above full-service restaurants — signaling that that the industry is headed in the right direction when it comes to loyalty participation. 

Here are four key loyalty takeaways from the report.

The value of loyalty program members is growing

Shopping baskets for loyalty members tend to be larger than baskets for non-loyalty members, and the gap between the two is growing. C-store loyalty members spent about 10% more than non members in 2021, while that increased to about 12% last year. That was well above the QSR and FSR loyalty increases, which grew by about 5%.

C-store loyalty members on average spent $18.42 per basket in 2022, according to the report. 

“As c-stores attempt to move into the QSR space and offer prepared foods and specialty drinks, loyalty members will continue to be a foundation to build these services,” Paytronix wrote in the report. 

The report also noted that c-store customers tend to be much more loyal than those at QSRs and FSRs. Additonally, convenience saw more than six monthly visits per guest in the middle of 2023, far higher than the levels for QSR and FSRs.

Morning is the golden time for convenience retail

Morning is the hottest time of day for convenience stores — at least during the work week. Mid-day is the second most popular period, slightly edging out mornings on Saturday and Sunday. 

The report noted that the roughly equal number of visits for the morning and mid-day sections on weekends suggest c-stores are one of the first stops of the day for many people.

“2023 saw a spike in the number of visits early in the year that wasn’t present in 2021 or 2022,” wrote Jeff Hoover, director of strategy and data insights at Paytronix, in the report. “This is an indication that return to office is driving additional visits to c-stores for fuel and breakfasts.”

Younger generations increasingly visit c-stores

When looking at c-store demographics by age, consumers between 16 and 25, as well as 26 to 35, increased their visits the most between 2021 and 2022, the report found.

Generation Z — whose members are mostly in their teens to mid-20s — are an increasing focus for c-stores, with major players like 7-Eleven and Kum & Go tailoring ads toward the cohort. These consumers also generally enjoy the experience of visiting c-stores more than other groups, according to a study from CPG research firm NCSolutions.

On the other hand, visits from those ages 56 to 65 and 66 to 75 declined year over year. Meanwhile, those in the middle — ages 36 to 45 — have the highest percentage of loyalty members overall. 

While there may be broader attitude differences between older and younger groups that account for visitation trends, Paytronix points out the answer may be more mundane.

“Naturally, c-store stats are largely driven by fuel purchases, so these demographic trends are likely the results of working generations returning to the office,” Paytronix said in the report.

Don’t forget about email

While many c-store retailers prioritize mobile engagement and have recently overhauled their apps, email can still be an easy and effective way to reach customers, Paytronix noted.

Customers who gave a retailer an email address were twice as likely to visit the store again as those who didn’t register an email. 

Paytronix highlighted Break Time, a Columbia-Missouri-based convenience chain that instituted a tiered loyalty program and used email to keep in touch with top-tier customers. 

“Within a month of launch, it saw a 25.6% increase in customer spend and continues to see returns,” wrote Hoover.

As retailers look to create or revamp their loyalty programs, they have to size up various rewards options for their customers, including those that offer extra discounts or coupons, punch-card programs and points-based loyalty programs where customers earn rewards for their purchases. 

While the first two may be easier to run, they leave a lot of data on the table, experts say.

With basic discounts and free product offers, “you're simply using the incentive to hopefully get people to come more often,” said Matt Sargent, director of strategy analytics for Sargent Up North and a former director of loyalty analytics for CPG consultancy Big Chalk.

Points-based loyalty programs, on the other hand, tie in directly with shoppers’ accounts and purchases, offering up valuable information for retailers.

Access to more and better data about customers’ actions and preferences is helping drive an increase in interest in points-based programs, according to Sargent.

“It's probably about 60%, 65% of programs out there are points,” said Don Fairbanks, senior strategist for Paytronix. 

Both experts discussed what makes a good points-based program for retailers, as well as some of the pitfalls. 

Good and bad points

With points-based programs, companies can control what earns a customer points, how quickly they can be redeemed and more, allowing them to craft programs that are responsive to their target consumers. 

Sargent pointed out that with a data-focused loyalty program, “you know when [customers] started their progression. You know what they did in between to get there. You know how profitable that customer is.”

Having that information not only makes it easier to market the right deals to each customer, but it can also set the retailer up to negotiate agreements with CPG companies that can help subsidize special offers for the program.

It’s not all good news, though. About five years ago, updated rules around loyalty points “changed the financial reporting of programs … so that you had to claim the liability of those points on your books against your financials,” said Fairbanks. 

He noted that for companies with large, complex points programs, the amount of money customers had in the form of points “became a crisis” and prompted some major companies, like Coca-Cola, to discontinue certain programs.

But lately, he noted, companies have adjusted to new regulations and have shifted back towards points-based loyalty programs. 

“There’s risk mitigation, things you can do to keep that from getting out of hand,” Fairbanks noted. Those included expanding the catalogs of rewards, letting customers trade points for a chance to win prizes and adding expiration dates on points. 

The right rewards level

Fairbanks said that, on average, c-store points programs yield about $2 to $4 in value for every $100 customers spend. While some programs can return a lot more, he warned against retailers being overly ambitious.

“The biggest mistake most brands make is they try to be too rich with their points program” said Fairbanks.

Some retailers may decide to create a specific catalog of items that points can purchase. For instance, Baltimore-based Royal Farms’ RoFo Rewards offers an array of free food and drink offers starting at 73 points. Customers can get a free car wash at 400 points.

Other companies may convert points to in-store currency. 

When thinking about rewards, retailers need to make sure they’re not just lowering their own top line.

“Are we simply just bankrolling customers that already would have done the activity that they're doing today?” asked Sargent.

To direct some of those customer behaviors, retailers can be thoughtful about what goes into the rewards catalog, like adding their trademark fresh food items. They can also augment their programs with special offers. These can include everything from free or discounted items on certain days to bonus points for certain actions — for example, giving the customer 200 points for buying a 20-ounce Coke. 

These can come at a low or even no cost for the retailer.

“The brands that I've seen would be paying for those points,” Fairbanks said. “It's good, it's synergistic and it really moves the needle. And at the end of the day, the customer is winning because they're getting a lot of value for that $2 Coke.”

Implementing an effective program

Fairbanks pointed to GPM Investments, the c-store arm of Arko, as a company whose program is well implemented. Customers get points for purchases, and for every 250 points the customer gets $1 in rewards. 

“They didn't make that program rich. It's a 4% payout,” said Fairbanks. “But they are active in the campaigns, both vendor-related and their own internally.”

Those campaigns can include buy-one-get-one offers, fuel discounts on holidays like Father’s Day or other methods of leveraging the program to drive engagement and encourage specific behaviors. 

Both Fairbanks and Sargent pointed to Casey’s General Store as another company with a top-tier program. Casey’s Rewards operates the same way Arko’s fas Rewards does. Because pizza is its bread and butter, Casey’s program focuses on getting a customer to their next slice, including offering double points on whole pizzas. 

“They are focusing on how they're different from other players,” Sargent said. “I think that's a smart move.”

He pointed out that Casey’s also highlights when a loyalty member has earned rewards in its app. 

“They take that moment where somebody has shown loyalty and they kind of celebrate it,” he said. 

In contrast, Sargent pointed to Caribou Coffee — a coffee company that he says does a lot right, but whose loyalty program doesn’t clearly remind customers about rewards they’ve earned or encourage them to use those rewards. 

When and how to re-evaluate

Most retailers will eventually need to right-size the speed and scope of their loyalty points programs, Fairbanks said, pointing out that Wawa expanded its catalog of offers in 2023.

Those re-evaluations will likely happen at a regular clip in the coming years, said Sargent, given how many c-stores are “still in the beginning of loyalty program evolution and implementation.”

He added that revamps should be an easier lift than implementation, since all the startup work is already done and the retailer will know more about how the customers are using the program and what they want. 

Kum & Go updated its points program in June. 

“While still early, we have heard a lot of positive feedback from our members so far,” said Matt Riezman, director of brand marketing for Kum & Go, which is owned by Salt Lake City-based Maverik. 

He added, “Our new program also enables them to engage more often.”

While retailers should always be re-evaluating their programs, they need to be selective about how often they make changes.

“Changing the points structure creates an interruption for our customers, which we try to avoid, so it is not something we look at changing often,” noted Riezman. 

Fairbanks concurred, noting that when a program changes, some members may feel they are being cheated, especially if the rewards decrease.

“You just need to keep the conversation positive,” Fairbanks said. “We're making these changes, and some of them are really good and you're gonna like them.” 

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Loyalty programs are quickly becoming one of the core staples of convenience stores, as c-store loyalty members spend about 38% more on average than non c-store loyalty members, according to customer experience vendor Paytronix. Additionally, c-store loyalty members increased their fuel visits by about 8% from 2020 to 2021.

Even as the ripple effects from inflation continue to strain c-store operators’ finances, one area that’s not getting pinched is loyalty.

“Everybody’s looking to reduce budget, but the one area I’m hearing [c-stores] are not reducing investment is loyalty and investment in customer data,” Jeff Hoover, director of strategy and data insights for Paytronix, said in an interview.

While “most major players” already have loyalty programs up and running, smaller retailers may be “a little behind the game,” Hoover said. For them, loyalty will be a critical area to invest in moving forward, he said.

Here are some tips for developing a successful loyalty program, from developing a strong concept to ensuring it thrives down the road.

Developing a value proposition

Retailers getting started with their first loyalty program need to first think of the backbone of that program, the value proposition, which should be simple and easy for both employees and customers to understand, Hoover said. 

While it’s necessary for smaller retailers when starting out, a simple concept can also be useful for bigger retailers who haven’t seen consistent results within their loyalty program.

“A lot of [retailers] try to launch a complex program, and no one can explain it,” Hoover said. “You need a simple reward mechanism.”

A great example of a retailer doing this, Hoover said, is QuickChek — a 150-store chain owned by Murphy USA — whose loyalty program is centered around customers receiving a $5 reward for every $50 they spend. This program is simple and presents clear value to customers, he said.

“Focus on the mechanism that's valuable and explain that to the customer,” he said.

But what should retailers do if they can’t think of a simple value proposition for their program? Surveying customers about other loyalty programs they’re currently part of, what they like and dislike about those programs and what they value in a loyalty program can help, Hoover said.

“Think about your competition and the programs they provide and what consumers like about them,” he said. “A lot of [your program] is going to be based on your ability to execute and who you’re competing with.”

Getting customers — and employees — to participate

Once a value proposition is created and the program is ready to launch, it’s all about getting members to sign up — and retailers should cast as wide a net as possible, Hoover said. In a program’s first year, retailers should spend 80% of their time on increasing participation, according to Paytronix.

To get people to sign up for loyalty programs, retailers must present a reason for them to do so, Hoover said, and offer a way for people to identify themselves as loyalty members every time they visit, whether they’re at the pump or inside the store.

Retailers should also encourage employees to enroll in the program. This can spark customer participation by enabling staff to explain the program’s qualities and benefits, Hoover said. Retailers can even incentivize employees with additional perks for joining the program.

“We want employees to participate, and often see companies with employees participating perform much better,” Hoover said. “[Employees] can talk about the program, because they're in the program.” 

Hoover noted that having employees engage customers at checkout and asking them if they’re in the program and giving a brief rundown of its benefits — which “shouldn’t take longer than three seconds” — can improve participation.

“This doesn’t have to be complicated,” Hoover said. “A lot of [retailers] come in wanting the silver bullet, but that’s not what it’s about. The details are in the execution and participation.”

Have a team or individual own the program

When it comes to running a loyalty program, Hoover suggests making it the sole priority of a team or one individual.

“You have to have a dedicated person to focus on loyalty,” he said. “You can't have your marketing or social media person [run it] — you need someone to own it and make it top of mind.” 

It’s these individuals who, once the program has taken off, must ensure the program keeps growing, which means tracking performance at the store level. This is done through identifying and addressing various key performance indicators, such as the percentage of loyalty transactions per store.

Besides tracking performance, the brands that win in loyalty are those who invest in artificial intelligence to boost their first-party customer loyalty data, Hoover said. Having more refined data lets retailers conduct “tighter due diligence” and deliver better value back to customers through personalized offers.

“Even within loyalty, how do we make the reward cost in our program much smarter, and how can data help us do that?” Hoover said.

Jeff Hoover has witnessed the evolution of loyalty programs since the early 2000s firsthand. The director of strategy and data insights for Paytronix, a leading loyalty vendor in the retail and foodservice space, has worked in customer engagement roles across several industries for two decades.

Hoover — who at one point was a digital marketing consultant for BP-owned convenience store Thorntons — noted that small and mid-sized c-store retailers originally got into loyalty simply to leverage rebates and competitively price their products.

“I don't think there was [much] thinking given to ‘How should I make the most value out of my loyalty program[?],’’” Hoover said in an interview.

However, a lot has changed in recent years as c-store retailers become more in tune with their customers. 

As they seek more customer data to help improve their operations, many retailers have launched tier systems within their existing loyalty programs to gain a stronger following.

“You see all the value things can bring by just getting to know the customer better and remarketing to them and creating tiered programs,” Hoover said. “I think [retailers are] starting to model and then evolve these programs into more depths that drive more participation with customers.”

Customer data is gold

Circle K, RaceTrac and Sheetz are three well-known c-store retailers whose loyalty programs feature a tiered structure. 

While regular members of Circle K’s Inner Circle program receive discounts on fuel and merchandise, they can upgrade to a premium membership, which includes more exclusive deals and early notice of new products once the customer spends $500 at Circle K stores. The retailer saw 1.2 million enrollments in the new membership program just three weeks after its limited debut in Florida.

Similarly, RaceTrac’s loyalty program offers members a VIP status, which includes 10 cents off per gallon of fuel on their first 40 gallons and 3 cents off per gallon on each additional gallon purchased every month. A VIP membership costs $2.49 per month.

Sheetz’s loyalty platform is structured a bit differently. The Pennsylvania retailer offers three tiers to its loyalty program: Fans, Friends and Freaks. Customers become Fans simply by registering for the program, are updated to Friends upon reaching 1,000 loyalty points and hit Freak status once they reach 2,500 points. Every level includes more deals and perks, such as invitations to special events, free and exclusive items, and Sheetz merchandise.

While all three platforms differ in their details, they’re all structured on a tier system that, for c-store retailers and customers, is a “win-win,” Matt Sargent, director of strategy analytics for Sargent Up North and a former director of loyalty analytics for CPG consultancy Big Chalk, said in an interview.

Sargent noted that tiered programs invest in a brand’s most loyal customers while “holding a little back” from more infrequent visitors. This makes for an “attractive tool” to compel more people to not only visit the c-store, but also to join the program as well, he said.

“Everyone is looking to have bigger engagement with their customers, and when you can get people to invest in a brand either emotionally, financially, time-wise or whatever that commitment may be, it tends to have ripple effects in very positive ways,” Sargent said.

However, Hoover emphasized the importance of acknowledging and showing value to lower-frequency customers when developing a tiered system. These are the shoppers who have room to grow with the brand, and are the ones who can help grow the program, he said.

Tiered loyalty programs also have a gamification element to them, which consumers are naturally drawn to, Sargent noted. Specifically, having a “next level up” is something that resonates with human behavior and “makes perfect sense” in a loyalty program.

For retailers, tiered loyalty programs offer a better sense of who their customers are and what they’re buying. This can help them create a better connection with their visitors, Sargent said. 

Once retailers have this shopper data, they can rework their merchandising strategies and even offer said data to CPG brands, which are also hungry for this information.

“To be able to understand exactly who is buying your product, why they're buying it and in conjunction with other brands or categories, that's gold,” Sargent said.

Baby steps

The first step to creating a tiered loyalty program is understanding how well customers are currently engaging with the brand, Hoover said. 

If overall engagement is less than 5% participation in an existing loyalty program, it’s too early to even consider tiers, he noted. In this case, retailers must refocus on training and operations instead of advancing their loyalty programs.

Once that engagement reaches about 15% to 20%, then the tier conversations can begin, he said.

“Think about the maturity of your program, and if now is the right time for tiers or, honestly, should you be stepping back?” Hoover said.

When it’s time to build the tiered program, “keeping it simple” is essential, Hoover noted. He suggests picking one or two things that customers can comprehend and a concept staff can understand and communicate to shoppers.

“You still have your ‘earn 20 points per dollar spent in the store and 10 points per gallon,’ but then if you get to five or 10 visits a month, you're going to be in our gold tier,” he said.

But how do retailers pick that concept? Finding the clusters in existing customer behaviors is a place to start, Sargent said.

“You're going to have a high velocity of people that are already doing close to the behavior you want,” he said. “You take your high-level people and say, ‘Hey, you're already doing this behavior — do you want to continue doing X, Y, Z, and reach X status?’”

Casey’s General Stores unveiled its upgraded loyalty app last March, which the company had said was in the works since late 2022. The new features are meant to increase the ease of use and convenience of the app, and include an improved user interface.

One of the updates is a lifetime savings tracker, which makes it easier for members to see their points in real time. This feature can go a long way, since letting customers see how much money they’ve saved over time can help reinforce why they've chosen to join a specific loyalty program in the first place, Matt Sargent, director of strategy analytics for Sargent Up North and a former director of loyalty analytics for CPG consultancy Big Chalk, said in an interview.

“I think it's important that Casey's — or any rewards program for that matter — really displays that and pushes that front and center,” said Sargent.

While working for Big Chalk, Sargent helped lead the strategy and innovation for Casey’s rewards program, with a focus on using customer behavior to drive program strategy. Sargent only commented on the information about the app that Casey's made public.

Sargent said he also likes Casey’s new quick-redeem option within the app, since customers often complain about the complexity of a brand’s redeem process. That matched survey data from PayByCar, showing that more than 20% of the respondents said they didn’t bother using a loyalty app because redeeming rewards was too complicated.

Beyond that, Sargent noted that Casey’s shareable referral codes will be something other retailers can lean into moving forward as they look to gain new loyalty members.

“One of the things I’ve often suggested to retailers is [a feature to] give your points to your friends,” he said. “The retailer would do that because they're bringing in a new customer, particularly at a loyalty level, and that's a great way to get things started.”

Besides Casey’s, Circle K, Arko Corp. and Parker’s also relaunched their loyalty apps early last year. And as loyalty participation continues to trail industries such as grocery and restaurants, more retailers are likely to keep investing into their programs in effort to bring in more customers.

“If you have a slight incentive to go here versus [another store], that can really steer a lot of dollars,” Sargent said. 

That incentive often includes members-only discounts. Since consumers are price conscious by nature, those promotions can entice potential new members, Sargent said.

“You can do it in a way that you're actually going out to the customer and engaging them digitally versus having to wait for them to go and store,” he said “And that's kind of a big play.”

But beyond the dollars and promotions, retailers can benefit from upgrading their loyalty programs to build better connections with their customers, Sargent said. A quality loyalty program can give customers a sense of familiarity, which can reinforce their relationship to the entire brand moving forward.

“Retailers are realizing the importance of truly investing in their own brand,” Sargent said.

Retaining customers is an endless battle, but loyalty apps can make it easier.

By signing up for loyalty programs, customers give companies permission to record some data and feed them offers and reminders. The arrangement is designed to help companies understand their customers better and hopefully keep them coming back. 

“We really want to focus on building good behavior with active guests,” said Hillary Hadley, senior loyalty strategist for customer experience vendor at Paytronix, during a May 2023 webinar. “And there are a lot of different directions that we could take when thinking about marketing to active loyalty members based on their behavior.”

Turning a visitor into a repeat customer has material impacts on the bottom line. A 5% increase in customer retention translates to a 25% boost to profits, according to data from Emarsys, an omnichannel marketing software company.

Some customers may not get engaged quickly, while others may become regulars, then eventually stop visiting again. During the webinar, “The Future of Digital Guest Engagement,” Paytronix experts shared some steps companies can take with loyalty data and outreach to keep customers engaged with their brands. 

Encourage repeat visits early

Once people sign up on a company’s app, it’s vital to encourage them to return, said Aubrey Giasson, product manager for Paytronix, so “you can bring them in as a repeat customer and build desirable behavior for your brand.”

Giasson said Paytronix sends loyalty members new offers after their first, second and third visits. If a customer has visited three times, it shows that the store and customer are a good match, and increases the chances of that customer being “stickier” in that brand’s ecosystem, she noted.

“A new loyalty member will have a customer lifetime value of $94 and the likelihood of next visit is 44%,” Giasson said. “But by the time they reach their third visit, that customer lifetime value will go up quite a bit, and they’re twice as likely to visit again.”

Segment groups by behavior

After signup, a number of customers will become regulars, others will visit occasionally and some will fade from the brand entirely. Separating these groups, in addition to other types of segmentation, is important, Hadley said.

“Having these guest segments makes it really easy to focus on the right guests for any marketing initiatives,“ said Hadley.

Paytronix divides consumers into core loyalists, casual loyalty guests, those who are lapsing and those who haven’t visited enough to know much about them. This segmentation lets a company make incremental offers to their regulars while using more substantive coupons for those in danger of falling away from the brand. 

For example, one of Paytronix’s clients, a sandwich shop, gave regulars a smaller add-on reward while bigger offers — such a free sandwich — went to lapsing customers. Hadley said the shop “got an increase in incremental sales of 150% and a 265% increase in incremental visits” using this kind of segmentation.

Segmentation based on visit frequency can make sure a company is not overwhelming customers with offers. “Different customers can have different visit cases even within the same brand,” said Hadley. “So some visit weekly while others may only visit once or twice a month.” 

Weekly visitors may start to lapse if they don’t visit a store once every three weeks. Monthly visitors, however, are still well within their normal schedule. 

Solicit and use feedback

While many loyalty apps, especially in delivery, ask for customer feedback on services, about 96% of that feedback never receives a response on the company’s end, said Giasson. Additionally, about 63% of consumers think businesses need to do a better job while listening to feedback.

Failing to respond to customer feedback can be a missed opportunity. “These surveys give you the ability to change and respond to guest feedback by reaching out to them or by making changes to your program at the store level to improve,” said Giasson.

But polite communication combined with coupons or other offers can encourage an unsatisfied customer to try the business again.

“We’ve seen that offering a coupon leads to an incremental order a third of the time, it boosts the total lifetime spend of that guest by $9 and offering this specific coupon will probably lift the next check for by $2.50 when the coupon usually only costs $2.30,” said Giasson.

Supermarket chains that also operate fuel centers and c-stores have long excelled at fueling in-store purchases via their loyalty program. And many have stepped up their offerings recently to encourage all sorts of purchases among their rewards members.

“2023 is a year where loyalty is taking an even more central role in most grocers’ strategy as ... they’re finding that loyalty programs are the most efficient way to deliver value to shoppers,” said Jordan Berke, founder and CEO of Ann Arbor, Michigan-based Tomorrow Retail Consulting.

Fuel is a “very high-impact feature” of grocers’ overall loyalty programs, he said.

For example, the second-most-popular feature of Walmart’s Walmart+ membership program is its fuel benefit, which saves members 10 cents per gallon at both Murphy USA and ExxonMobil stations along with Sam’s Club and Walmart.

“They realize that adding that fuel benefit made the overall program so much more attractive,” Berke said. 

Still, while high gas prices have been front and center in recent years, grocers have actually focused more on the savings they can provide in-store in their messaging and loyalty programs, according to Diana Sheehan, founder of Evanston, Illinois-based PDG Insights.

“I think when gas prices are high and grocery prices are high, they focus on what they know and what they can control,” Sheehan said. “A 10-cent discount per gallon on gas may save you $3 or $4 at the pump. But through rewards and digital coupons, they can save you $30 on your weekly grocery purchases.”  

Hy-Vee builds a robust blend of offers

One way grocers are leveraging their loyalty programs to boost their c-store arms is simply to include both in the same program. 

West Des Moines, Iowa-based Hy-Vee is driving both fuel and in-store purchases with its long-running Hy-Vee Fuel Saver + Perks rewards program, which has approximately four million active loyalty members, according to Mike Kueny, Hy-Vee executive vice president and president of Fresh Brands.

Hy-Vee operates more than 180 Hy-Vee Fast & Fresh c-stores in eight states — many which are located adjacent to a Hy-Vee food store. The rewards program “effectively drives customers to the pump when gas prices spike,” Kueny said. "Customers have immediate access to their fuel saver rewards and can fuel up without waiting for their rewards to load and without traveling to another location.”  

Additionally, Fast & Fresh may have different promotions which can give customers additional options and can increase their grocery and fuel sales, according to Kueny.

Hy-Vee has also enhanced its app, which now includes the fuel saver card “so customers can always see how much they would save on their next gas purchase, along with easy ways to save online and in-store,” Kueny said. 

The program continues to see steady growth, Kueny said, and the company keeps improving members’ experience with upgrades like allowing members to scan their fuel savers digital card at the pump. 

In 2021, Hy-Vee launched its Hy-Vee Plus premium membership, which added perks to Hy-Vee Fuel Saver+ Perks rewards with qualifying in-store or online purchases, along with monthly offers and coupons.

It also has additional fuel savings based on qualifying purchase levels, according to Kueny. For instance, Hy-Vee Plus members who spend $50 earn 10 cents per gallon. “So, if a customer spends approximately $100 per week on groceries, they have the potential to earn approximately $260 in fuel savings each year,” Kueny said.

But the basic program continues to be a “driving force” for Hy-Vee. ”We find that incentivizing customers with fuel saver rewards drives customers to make in-store and online purchases and to use our c-stores for fuel,” Kueny said. “Additionally, Hy-Vee’s digital coupons continue to grow in popularity as print publications reduce in size and scope.”

As the ownership of electric cars accelerates, Hy-Vee will also look into how fuel saver rewards can be used at EV chargers, according to Kueny.

Giant Eagle gives customers broad options

A big booster for Giant Eagle’s myPerks program, which boasts more than four million households, is that benefits can be earned and redeemed at any of the company’s banners, including its c-store chain GetGo Cafe + Market, said Brandon Daniels, manager of public relations for Giant Eagle.

The rewards program drives both grocery and fuel/c-store purchases via lower prices on “thousands of products” and the fact that every dollar spent on fuel, grocery items, gift cards, and out-of-pocket pharmacy purchases earns perks, which can then be redeemed for dollars-off rewards on future purchases, according to Daniels.

“We also recently introduced the new myPerks app, which allows our guests to earn perks on non-Giant Eagle purchases at more than 150 retailers,” Daniels said.

The app also includes the new myPerks Play, which gives guests the opportunity to earn additional perks by playing games and participating in challenges.

Sheehan praised both Giant Eagle and Hy-Vee’s rewards programs. “With their regional focus, they are particularly attuned to who their customers are and what they need. While corporate drives the strategy, they are connected in a more integrated way to what matters locally then many of their competitors,” she said. 

She continued: "Their fuel center/c-stores are also an imperative part of their portfolio, and so they manage them with a strategy that complements grocery operations but ensures that those retail outlets are run just as effectively and intentionally as their grocery stores.”

Kroger’s 90% loyalty reach

While Kroger doesn’t have a significant c-store presence anymore, the company still has fuel available at nearly 1,000 site in 16 states. That footprint could grow significantly if regulators give the green light to the company’s $24.6 billion planned merger with supermarket rival Albertsons.

Kroger’s Kroger Plus rewards has the highest loyalty participation of any major grocery chain at around 90%, Berke said, and does the best job at pushing those customers into stores to buy food and other products, according to Tomorrow Retail Consulting’s proprietary research.

It is increasingly using its rewards program to “offer in-store promos that are personalized and much more productive than many of their competitors,” Berke said.

“If you look at any of Kroger’s weekly printed flyers, approximately 20% of the deals are app-only deals,” Berke said. “What that does is drives users to have the app — their app download and penetration rate is very high — and through the app they serve up personalized recommendations.”

For example, during one week, Berke received three personalized offers — and one resulted in him trading up to an organic peanut butter that he didn’t realize the grocer carried.

The importance of individualized offers

While Giant Eagle, Hy-Vee, Kroger and others sport successful loyalty programs, most grocers suffer from a lack of personalized offers and connectivity between their c-stores and fuel centers, according to Sheehan.

“In essence, loyalty rewards tend to be geared towards brand or category and not location purchased. Many fuel centers/c-stores that support rewards are often not directly owned by the retailers,” she said.

Most grocers are “just starting to scratch the surface in using data analytics and AI to personalize experiences and truly drive desired customer behaviors,” Sheehan said. “We will get to the point where e-commerce shopping (and search) will be curated based primarily on past behavior. It’s not there yet. When we see ‘personalized’ offers based on loyalty card data right now, we really see it in pricing and digital coupons.”

Effective c-store loyalty programs focus on both fuel sales and in-store purchases, according to Sheehan.

“They have been designed to get people to walk in and buy on impulse (or necessity) things in the c-store. They feature perks on foodservice, products on shelf and fuel. They also can provide offers to products that might not have the same focus in grocery: fountain drinks and foodservice, lotto, and other categories that are sold at grocery but deprioritized,” she said.

However, with many c-store loyalty programs, members don’t earn rewards on fuel sales. Instead, other purchases provide rewards that can be used to discount fuel.

“It’s an interesting dynamic because, for many c-stores, the focus is still about how you get people in-store once they are there,” Sheehan said. “Not how do you get people to your fuel station.”