More Than a Coupon: The True Value of Retail Personalization

Consumer price sensitivity continues as we dive into Q3, with inflation having accelerated in June. This means shoppers are wary of spending, with dollars being stretched further than ever. But retailers are dealing with a cost-intensive environment, too, and their razor-thin margins can’t withstand prolonged downturns in spending. What they need from customers is both short-term spending and long-term loyalty to support a healthy bottom line.

A robust, tech-forward personalization strategy can help retailers increase basket size and earn customers for life.

Making Every Dollar Count

Retail customers know that spending money, especially on items like groceries, is a fact of life. It’s not necessarily spending they’re averse to; it’s feeling like their dollars aren’t being spent well. In other words, they expect value.

The best way retailers can deliver this value is by catering to individual customer preferences through personalization. At a baseline, this means offering personalized promotions based on shopping patterns (e.g., a customer who frequently buys a can of Coke might receive a coupon for $1 off their next can).

It also means developing gamified elements with personalized prizes to encourage store visits (e.g., the loyalty app offers a “spin to win” game with a free Coke as a prize). Gamification is especially fruitful for retailers; Lobyco’s 2024 consumer research found that 40 percent of shoppers spend more as a result of playing games in loyalty apps.

Perfecting Personalization

The most successful retailers go further with advanced personalization strategies, removing the guesswork and acting with precision. Recency, frequency, monetary (RFM) value segmentation helps retailers develop hypertargeted engagement. For example, high-value loyal customers can receive exclusive offers on their favorite products, while frequent mid-value shoppers might receive stretch-spend promotions.

Journey orchestration automates engagement so it lands at the exact right moment for every customer. If a shopper is at risk of churning, they’ll receive a highly persuasive offer intended to bring them back to the store. Shoppers who have already activated promotions can receive “next best offers.”

McKinsey has found that companies that excel at personalization generate 40 percent more revenue than average players, so learning to leverage these strategies is well worth the effort and investment.

For retailers, getting personalization right means offering customers maximum return on investment for their continued patronage. By choosing to spend at a particular retailer, customers get the reward of discounts and promotions that align with their regular shopping patterns.

Beyond the monetary value is something less tangible but just as important: the social and environmental value derived from belonging to a community that really knows you. The average U.S. consumer travels just eight minutes to get to their grocery store; these retail hubs are the proverbial watering holes of their local communities. The more retailers cultivate a sense of familiarity and belonging through personalization, the better it will be for business.

The Way Forward

To get started with personalization at scale, retailers can take incremental steps like segmenting their customer base, building tailored promotional campaigns, and incorporating gamified elements into their loyalty programs. From there, it’s about monitoring results, iterating as necessary, and making manageable progress toward more advanced personalization tactics.

And despite its transformative outcomes, personalization at scale doesn’t have to break the bank. The beauty of personalized promotions is that not everyone receives the same coupon. Amounts, products, and frequency of offers all vary depending on the customer segment. Plus, retail media placements can help brands recoup costs.

Personalization at scale can help bridge the gap between affordability and customer loyalty. No matter how it’s executed, the goal is the same: show customers that their dollars — and their preferences — matter. In doing so, retailers won’t just build better baskets; they’ll build lasting relationships rooted in value, trust and community.

Anders Mittag is the chief commercial officer at Lobyco, a powerful, modular, scalable SaaS platform that empowers grocery retailers to deliver seamless promotion management, enhanced loyalty programs, and streamlined checkout capabilities.