Case Study: Supermarket Chain Increases Basket Size With Card-Linked Coupons

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LundsMerchant: Lunds & Byerly’s
Market: Minnesota
Size: 22 Locations
Platforms: Linkable Networks
Results: Average basket size increased 50%
Bottom Line: Merchants are looking for tools they can use to run digital promotions without upgrading their existing POS systems.

Supermarkets have traditionally been pioneers in the world of couponing. At Lunds & Byerly’s, a chain of 22 upscale grocery stores in the Twin Cities region, however, marketing manager Dan O’Rourke faced certain operational limitations that made it difficult for his company to expand into the digital arena. O’Rourke struggled to find a hyperlocal vendor that would allow him to run digital coupons down to the SKU level, without requiring that he upgrade his company’s existing POS system.

To overcome these challenges, O’Rourke looked into vendors that offered card-linked coupons. Unlike most loyalty programs, card-linked promotional programs don’t require any app downloads or plastic key fobs. “We’re getting into digital and apps, but not everyone has a mobile phone … not everyone wants to download apps,” says O’Rourke. “Most people have a credit card, so it was one of those things where there were not a lot of barriers … People don’t necessarily have to be signed up with our program to take advantage of these offers.”

O’Rourke was ultimately referred a company called Linkable Networks, which provides a way for merchants to link digital coupons promoting specific products, brands, or storewide sales to their customers’ credit cards. Savings are credited to their customers’ cards automatically, without any scanning or extra work on the part of store cashiers. “With one swipe of the credit card, you could theoretically be executing on 15 to 20 different coupons, without having to do anything at the POS,” says O’Rourke. “That was important to us, because we value our shoppers’ experience and we don’t want our shoppers to have to slow down.”

Rather than diving in head-first, O’Rourke took a more moderate approach by running an eight-month pilot. “Initially it started with internal testing, then the last four months we’ve rolled it out more publicly,” says O’Rourke.

Already, O’Rourke has seen a dramatic shift in the buying patterns of customers with linked cards. Average basket size has increased more than 50% for people who use card-linked offers, versus average basket transactions. Additionally, O’Rourke says customer visit frequency has almost doubled. “The two biggest metrics for us are basket size and frequency,” says O’Rourke. “So those are great findings for us. It’s really opened our eyes.”

Being able to offer discounts down to the SKU level has also benefited Lunds & Byerly’s stores. “When we talk to manufacturers, they always want to focus on certain products and certain different new items,” says O’Rourke. “To be able to get down to that SKU level and do tests, like ‘purchase this item four times over the course of a month and save $2,’ really gives both ourselves internally with our private label brand and manufacturers a whole variety of different options. It really gives you some interesting tests that you can do.”

By providing discounts on certain products, rather than taking a pre-set amount off the customer’s total purchase price, O’Rourke is able to promote selected products within certain categories. Offers can be structured in a way that promotes visit frequency or purchases in certain departments.

Card-linked promotions have also become a useful tool for retargeting lapsed customers at Lunds & Byerly’s. “If there are customers who shopped with us, redeemed an offer, but haven’t shopped with us for a while, we can target them and try to get them back into the store with an offer,” says O’Rourke.

From a long-term perspective, O’Rourke is looking into ways to integrate card-linked offers with the Lunds & Byerly’s mobile app. “We view a time in the future where you can view items within our app. You’d see there’s a Linkable offer, you click it, and it adds it to your shopping list within our app. Even when you’re in the store, maybe you get a push notification that there are offers available,” says O’Rourke. “Really [it’s about] making that shopping trip seamless.”

The Takeaway
Inclusivity was incredible important to O’Rourke when deciding which hyperlocal vendor to work with. The marketing manager decided against creating a digital loyalty program at Lunds & Byerly’s because he found that most loyalty systems excluded certain customers by requiring them to sign up with their email addresses or use smartphones to earn points. He instead opted for a card-linked program, because virtually all customers who shop at Lunds & Byerly’s have at least one credit or debit card in their wallets. Another advantage was that customers don’t have to be signed up with Lunds & Byerly’s to take advantage of the company’s Linkable offers.

Another important factor in O’Rourke’s decision to work with Linkable was the lack of work necessary on his end. Because Linkable is a card-linked program, Lunds & Byerly’s didn’t have to upgrade its POS system or run any extensive front-end training with its cashiers. Coupons are redeemed behind the scenes, which eliminates many of the headaches that O’Rourke’s office would otherwise have to deal with when running digital promotions.

Stephanie Miles is an associate editor at Street Fight.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.