TOP Food & Drug, a leading grocery store chain in Washington State operated by Haggen, Inc., has implemented an innovative program that could serve as a model for other retailers seeking to move beyond the traditional way of discount pricing to improve customer retention and store profitability.
The company has developed a customer relationship program, TOP Connection, which uses RFID technology to enhance the shopping experience with targeted marketing promotions and unique value added services. The RFID-enabled program could also be used to motivate specific customer behavior, such as driving sales of particular products, increasing per-trip spending and accelerating the rate of return trips. In an industry where pricing wars and perishable inventory are the norm, programs like TOP Connection provide grocery chains with a way to differentiate themselves without compromising lean margins or creating unsustainable customer expectations.
The TOP Connection program pairs an on-demand customer acquisition and retention platform, Accelitec | interact, deployed as ‘software as a service’ (SaaS) provided by Accelitec, Inc. The platform includes RFID readers mounted on top of payment terminals and RFID-enabled key tags or adhesive tags for cell phones that contain unique customer identifiers. All customer information is encrypted and held securely on Accelitec servers. The key tag consists of a plastic card, designed by Vanguard ID Systems, and a UPM Raflatac HF RFID inlay based on the Mifare standard.
Accelitec | interact is a technology-agnostic platform and is compatible with the legacy hardware and software used by many grocery retailers. The platform provides encrypted data exchange, protecting customer identity and payment information during card reading and transaction processes.
To participate, customers enroll in the program and set up an on-line profile, inputting personal data and product, communication and payment preferences. Customers can choose to provide only basic information or offer detailed information in return for highly customized offers and marketing communications. After completing enrollment, customers receive energized RFID key tags which are tied to their profiles. Within 100 days of the TOP Connection rollout in September 2008, more than 60 percent of TOP Food & Drug customers had signed up for the program.
“The TOP Connection program has given TOP Food & Drug a unique way to provide our guests with benefits. Our prices are already great, and everyone who shops with us can enjoy those prices. Then, if you choose to become a TOP Connection member, you obtain benefits that no one else in the grocery industry offers,” says Emily Mallahan, Director of TOP Development for Haggen, Inc. “We’ve had an incredible response rate from our guests because they see the value and services we can offer when they tell us more about themselves.”
“As marketing costs rise and response rates fall, grocery retailers and consumer packaged goods manufacturers are seeking new ways to strengthen customer loyalty,” says Peter Gruman, President, Accelitec, Inc. “Accelitec | interact provides companies with a powerful way to leverage business intelligence, offered by the customers themselves, that can be used to transform the shopping experience and drive store revenues.”
“UPM Raflatac is pleased to partner with Accelitec, Inc. to bring the benefits of RFID to a high volume industry where deep customer knowledge can provide a new level of competitive advantage,” says Jan Svoboda, RFID Sales & Marketing Director, Americas, UPM Raflatac. “We believe that RFID provides grocery retailers with the right insights they need to increase customer profitability and create long-lasting relationships.”