1. 20 Loyalty Management™ • LOYALTY360.ORG 21Loyalty Management™ • THIRD QUARTER 2014
FEATURES
SOMETHING EXTRA
The result: Raley’s is giving Something Extra® to its customers.
As Something Extra was being developed, Tom Hutchison, Director Marketing, CRM
& Analytics at Raley’s Family of Fine Stores, constantly asked, “In order to effectively
compete against Walmart or Amazon, how do we create compelling value?”
The answer: “It’s about fair and consistent pricing, understanding customer elasticity,
bringing the right tools to bear, and placing the customer at the center of our world,”
he says.
Hutchison says Raley’s overarching goal is to make the shopping experience as easy
as possible for its customers, while providing a world-class experience.
“Customers are finding that shopping with Raley’s is getting easier, more intuitive,
and is providing them with more value,” he says. “The intuitive piece comes from
Raley’s using the data to dramatically improve assortment, adjacencies, category
shape and store flow. The value comes from the offers, but also from using the data
to smartly improve pricing and promotions.”
Raley’s has seen great results in communications (open rates, click-throughs),
program engagement (enrollment, offer activations, offer redemptions, customer
feedback), and top and bottom lines business improvement.
“Every single tactic is measured through test and control, and the ROI for the overall
program is significantly positive,” Hutchison explains.
LOYALTY PROGRAM BIG PART OF SALES
In its first year, the Something Extra customer loyalty program accounted for 65% of
Raley’s total sales.
“The Something Extra program is not a two-tiered loyalty program where members
get a reduced price and non-members get penalized,” Hutchison says. “To reach 65%
in the first year is unprecedented. Like many grocery retailers, Raley’s faced negative
sales trends during and after the economic downturn and before the launch of the
program. Since the program’s launch in September 2012, Raley’s has seen a return to
sales and share growth. At a time when the rest of the grocery industry is negative,
Raley’s has turned the corner.”
In recognition of its highly successful Something Extra customer loyalty program,
Raley’s garnered three platinum honors at the inaugural Loyalty360 Awards held
in March at the 7th annual Loyalty Expo, presented by Loyalty360 – The Loyalty
Marketer’s Association.
Raley’s took home top honors in the following three categories: Best Reward Program,
Platinum Winner; Best Customer Experience & Engagement, Platinum Winner; and
Best Technology in Loyalty Marketing, Platinum Winner.
In the aftermath of the recession of
the late 2000s, retailers across the
country were faced with the challenge
of examining how they could engage
with customers in smarter ways that
would drive long-term loyalty. For
Raley’s, this was an opportunity to
return to its roots by providing world
class service based on delivering on
what customers were saying is
important to them.
The competitive grocery landscape
in Northern California and Northern
Nevada had become intense and
Raley’s officials needed to find a way
to differentiate themselves while
holding a steady eye on the ultimate
goal: Providing a world-class
experience to the customer.
RALEY’S SURGES WITH 1-TO-1 APPROACH
Hutchison, who came to Raley’s in March 2012, has spearheaded the
company’s team creating a resurgence toward customer-centricity,
implementing a hugely successful loyalty program that’s easy to use,
developing data insights, focusing on 1-to-1 marketing, and making
innovation an ongoing theme.
Raley’s 1-to-1 approach to marketing is more complex when compared
to more traditional loyalty programs because almost all regular
communications are unique to each Something Extra member.
What’s more, senior leadership ensures that everyone is aligned
to its customer-first strategy.
Personalization is at the heart of the Something Extra program “because
we know share of wallet is a privilege and not a right,” Hutchison said.
“We want to earn our customers’ trust and, subsequently, their
business by engaging them in a relevant 1-to-1 dialogue.”
Raley’s Family of Fine Stores is a privately held, family-owned
supermarket chain that operates 118 stores under the Raley’s
(76 stores), Bel Air (20), and Nob Hill Foods (22) names in Northern
California and Nevada.
PUTTING THE CUSTOMER AT THE CENTER OF RALEY’S EXPERIENCE
“Having that world class service/world class experience, and having
the right assortment for our customers in our stores is crucial,”
Hutchison says. “And that’s born out of a lot of research. But it’s also
about the experience we provide in our stores. Raley’s wants to make
shopping better, easier, and more personalized. The customer is at
the center of that and we’re committed to giving them a world class
experience.”
Here is how Raley’s focuses on rewards and relevance:
Points-based program: Customers earn 1 point for every dollar spent
as well as points for various activities (buying specific products,
attending wine events, etc.). At the end of every calendar quarter,
each customer who has a balance of at least 500 points receives a
voucher in the mail (or digitally for load-to-card) for the value of the
points. Points are each worth 1 cent (e.g. 500 points = $5.00, 2100
points = $21.00).
Offers: Customers also receive highly targeted offers (coupons)
on a regular basis both digitally for load-to-card and paper-based.
These are called “Personalized Offers.” Customers also have three
other sources of offers they can interact with and use. Extra Friendzy:
Social commerce offers where customers load high-discount, limited
quantity, limited time offers to their cards and this information is also
posted to that customer’s Facebook newsfeed. Social Evangelism:
Something Extra Try-It™ is a social advocacy platform where Raley’s
elite customers can receive free and highly discounted products with
the expectation that they share their feedback with all their friends
and family both online (social media) and offline. A key aspect of the
Something Extra loyalty program is the extreme focus on relevancy in
total experience, in content, and frequency. The program has a fixed
learning period with a calculated contact frequency aimed at providing
increasingly relevant content to the customer as Raley’s learns more
about them and at teaching the new member about the program and
its mechanics.
The Rewards and Relevance campaign response rate is more than
75%, a staggeringly high figure considering the industry norm is 11%.
“It speaks to the success of the relevance and reward strategy, and the
strategy to wade in slowly toward increased frequency,” Hutchison says.
What’s more, manufacturer (CPG) support of the Something Extra
program is significant and very encouraging, Hutchison adds. More
than 150 manufacturers representing over 300 brands are actively
engaged with Something Extra.
“Raley’s has over 1,000 offers/coupons in the system from these
manufacturers to target to customers, which is much greater than
the industry norm of 300,” he explains.
Keeps It Simple, Intuitive
and Compelling for Its Customers
Jim Tierney
Loyalty360
Continued on page 22

2. 22 Loyalty Management™ • LOYALTY360.ORG
FEATURES
COMPETITIVE LANDSCAPE PROPELS INNOVATIVE CUSTOMER
EXPERIENCE STRATEGIES
The competitive landscape for grocery retail in California and Nevada
is highly saturated, Hutchison explains. Customers have an abundance
of options in brick and mortar and ecommerce.
“This highlights the need for effective and forward-looking customer
experience and engagement strategies, which will build loyalty and
share of wallet,” Hutchison says.
Raley’s customer experience and engagement strategies focus on
ease, reward, relevance, and value, Hutchison outlines.
Ease: Raley’s is focused on making life easier for its customers as it
pertains to grocery shopping (pre- and during shop). “Our aim is to
reduce the amount of time needed to plan, shop, and check out. This is
accomplished by thoroughly understanding our customers, providing tools
to help them plan and shop, using customer information to provide
only those things most relevant (thus reducing search), and integrating
all of our programs to ensure seamless checkout.”
Reward: Raley’s shows its loyalty and thanks to customers by rewarding
them for shopping. “This reward comes in the shape of cash back on
purchases and highly relevant and rich offers.”
Relevance: Raley’s is committed to ensuring that all communications
are personalized and contain highly relevant content to each customer.
“Customers’ worlds are increasingly overloaded with information and,
amongst this sea of noise, our customers need to have confidence that
when they get a communication from us that it has value they want to
see and experience.”
Value: Raley’s is pursuing multiple avenues to provide value to its
customers. “Raley’s is partnering with manufacturers and third
parties to get offers (coupons and promotions) and we’re illustrating
them in a variety of ways, both targeted and untargeted. We’re using
proprietary tools to ensure we have the best promotions in front of
customers in the stores and our communications, and we’re using
our loyalty data in combination with market data, research data and
proprietary tools to ensure we get pricing right for our customers. We
have a robust training and organizational engagement practice, which
motivates our store frontline team members and empowers them with
the right information to engage the customers.”
CRM/customer data: This is central to the customer experience and
engagement strategies employed by Raley’s.
GREAT PLANNING SPARKS ENHANCED QUALITY OF INTERACTIONS
“Great planning has taken place to build the systems and processes
to store, organize, cleanse, access, and execute against customer
data toward our customer experience and engagement strategies and
tactics,” Hutchison says. “We’re zeroing in on perfecting quality of our
interactions, and we’ll continue to refine our frequency of interactions.
We felt it very important to start on the low end of communication
frequency so as not to violate promotion overload, and we will learn
more and more about each customer to better understand their
optimal communication frequencies.”
The customer-centric loyalty approach and its customer experience
and engagement strategies are changing customer behavior and
drawing market share as well as profitability, Hutchison says.
“With more tools and customer solutions launching continually as
part of Raley’s customer road map, these positive returns will only
accelerate,” he says.
Raley’s customer segments are divided among five groups: Premiers,
Valuables, Potentials, Uncommitted and Lapsed. Premier offline shoppers
shop three to five times per week, while our click-and-collect
ecommerce grocery shoppers shop online once every two weeks.”
“Making suggestions based on their purchase history is how we can
help change behavior,” Hutchison says. “You have to do it and do it
well, and that will set those companies apart by putting the customer
at the center of the organization.”
When asked about what how Raley’s targets customers and personalizes,
Hutchison explains: “We look at each customer and their shopping
behavior and their derived communication preferences and we
personalize effective tactics for them.”
Hutchison is excited about evolving the company’s digital space,
which will provide an enhanced shopping experience with
cross-selling involved as well.
But what it really comes down to, Hutchison says, is delivering on the
core, simple threads.
“Some customers want a lot of noise and movement, others want it
to be quiet,” he says. “We have to focus on things people will focus
on and present it in a clean and compelling way. Shopping can be
stressful for people. How do we take this potentially stressful chore
and make it more pleasant?”
Offline and online need to be aligned, he says, as far as look and feel,
tone and personality.
NOT JUST LIP SERVICE
“This isn’t just lip service,” he says. “We’re setting ourselves apart by
putting our customers at the center and asking, ‘Does this project
deliver on one of these promises, whether it’s accounting, supply
chain, operations, merchandising or marketing?’ It’s all customer-centric.”
Hutchison says Something Extra is aptly named because “we don’t
penalize our customers who aren’t members, and we give them a
compelling reason to swipe their cards — a check they get back at the
end of every quarter.”
Raley’s tracks measurable metrics related to sales growth and customer
opinions as key metrics to define success and improvement.
If it can’t be measured, you should not do it at all, Hutchison believes.
The customer is at the center of every decision Raley’s makes. One of
the most rewarding things about Hutchison’s job is when he receives
notes from customers.
“I get handwritten letters from our customers who love the fact we’re
making their lives easier,” he says. “They don’t have to search for
coupons online. We send them coupons that are relevant to them.
Relevancy, rewards, experience, and giving back. We personalize their
experiences for them and we tie into all the other ways our stores
differentiate in positive ways. You have to keep it simple. We’re not
Walmart. We’re not Safeway. We’re not Amazon. Manufacturers can
spend their incremental dollars with us because we’re showing this
return on every dollar they spend with us.” L
Can you talk a bit more about what you’re doing from a customer
experience/employee training perspective? How often do you train
and what are the overarching categories in which Raley’s trains?
We have a cross-functional team engaged within the organization
focused on ensuring Raley’s delivers on commitments made to our
customers. Part of that effort is making sure our team members know
what the commitments are, and how to effectively deliver upon them.
We’re using a technology solution as well as team leadership driven
efforts for training, which includes scenario-based training. The most
important part is that this is supported at all levels of the company
and is based on strong organizational engagement principles and
best practice.
Can you talk about how Raley’s leverages the CPG/manufacturer
offers? Are these the offers that are sent to customers?
Personalization is a key pillar of our CRM efforts. Offers are one of
the primary fuels in engaging our customers, and if they’re to be
personalized, then we need to have offers representing a breadth of
products across the store. For that to be achieved, CPG/manufacturers
have to be highly engaged and in-sync with Raley’s. We have spent
a lot of time and emotion building the technology, processes, and
relationships to support the acquisition on the offers from CPG, the
intelligent targeting and dissemination of those offers to our customers,
and the reporting of the results to our CPG partners and internally. The
result is a streamlined, yet evolving system that ultimately delivers
relevant offers to our customers in a relevant channel.
Does your research and/or database allow for a matching of
behavior to offer?
We absolutely use behavioral data to target the offers for each
customer on a 1:1 basis.
What do the manufacturers think of the process? With this targeted
approach, are the manufacturers able to hit their numbers?
We have excellent relationships with our CPG partners where we
work together towards a common goal of building loyalty with our
customers. We also recognize that both the CPG partners and Raley’s
have business objectives that need to be met as well. The great news
is that building loyalty with customers results in achieving business
objectives of CPGs and Raley’s. The key is in the smart execution of
the loyalty program and in ensuring that proper measurement and
reporting follows. Another key is having a host of tactics within our
marketing portfolio to satisfy a variety of business objectives for
CPGs. Some are solely 1:1 and some allow for greater degrees of
customer acquisition.
Can you offer a few more specifics on this statement?
We felt it very important to start on the low end of communication
frequency so as not to violate promotion overload, and we will learn
more and more about each customer to better understand their
optimal communication frequencies. Essentially, our goal is to get to
a point where we understand the desires and action points for each
of our customers with respect to communications from Raley’s. Some
customers would prefer to receive one communication every two
weeks, while others would prefer to receive three per week, while others
just want to receive communications whenever there is relevant news
from Raley’s. While we work toward that knowledge level, we are
starting from a point of less is more whereas some other companies
prefer to start by sending communications daily to customers.
Can you expand a bit about what Raley’s is doing now digitally, and
how that might change in the future?
We use all of the primary digital communication channels including
email, SMS, Push Mobile (both iBeacon and Geo-fencing), mobile
apps, web, and social media/social advocacy. With social advocacy,
we have the world’s first retailer-owned platform. We’re constantly
evaluating where to go with respect to all of those, and particularly
with our web and mobile platforms. The aim is to provide solutions
that make our customers’ lives easier, better, and more personalized.
with Tom Hutchison, Director Marketing, CRM & Analytics | Raley’s Family of Fine Stores
Q&A
Raley’s continued...
23Loyalty Management™ • THIRD QUARTER 2014