The ecommerce-focused membership program gives the grocer a promising response to Amazon Prime.
By Brian Higdon, The Mars Agency
I started my career in loyalty marketing many years ago, in the era of points programs. Back then, a paid loyalty program was the “Holy Grail,” providing better funding rates, enabling the right mix of hard and soft benefits to drive higher consumer engagement –a game changer, when it worked.
The challenge was always getting a critical mass of customers to join the program. And because it cost money to get the flywheel going and drive an overall return on investment for the program’s launch, very few survived. (I have a few failure stories of my own I could share …)
Then, Amazon Prime launched in 2005, forever changing the “loyalty” landscape and forcing other retailers to chase that model ever since. Many retailers have launched their own “Prime-like” loyalty/subscription program, like Walmart+ did in late 2020, but they all still pale in comparison.
Kroger, however, arguably has one of the most successful and long-standing loyalty programs with its Kroger Plus Card. But the paid subscription model, while attempted before, has never made its way out of pilot — until now, with this week’s announcement that Kroger Boost is going national.
Launched last November in four pilot divisions, the Boost program provides members with free home delivery on ecommerce orders of $35 or more, along with double the fuel points earned by Kroger Plus cardholders and $100 in deals on own-brand products. Members pay $59 a year for free next-day delivery but can upgrade to fulfillment in 2 hours or less for $99. The orders are fulfilled by Kroger’s own customer fulfillment centers (powered by Ocado) where available, or by Instacart (Boost members can choose their preference).
Kroger Plus/Boost Benefits Comparison
Source: Kroger
Kroger will also soon begin offering “Boost Member Exclusives” through the longstanding Best Customer Communications program, which is sent to Kroger Plus members. And opportunities through the Kroger Precision Marketing platform are expected soon as well.
As part of Kroger’s goal to double e-commerce sales (to $25+ billion) by the end of 2022, the rollout comes after the retailer experienced “promising results” from the pilot, which was conducted in the Cincinnati, Atlanta, Central and Columbus divisions. In announcing the expansion on its most recent earnings call, and press release earlier this month, the company cited the number of members gained as well as increased per-household delivery sales and repeat orders compared with activity in non-pilot divisions.
The Takeaway for Brands
Quick expansion during a time of inflation and soaring gas prices is expected to attract price-conscious shoppers to the Boost program. Kroger reported the number of “digitally engaged” households increased by more than 500,000 in the first quarter alone.
Shoppers continue to seek value and convenience, and Kroger is dedicated to delivering incredible value to its customers through relevant, personalized offers, fuel discounts and free delivery. For brands, testing & learning in this space will deepen their understanding of Kroger customers while strengthening their relationship with them.
Getting involved will also demonstrate to your Kroger partners that you’re aligned on delivering personalized, relevant “seamless” experiences to customers.
About the Author
As SVP-Customer Development, Brian Higdon leads all of The Mars Agency’s grocery channel activity and serves as GM of the Cincinnati office, guiding a team of shopper marketing experts driving growth, ROI and strategic engagement with retailers for our key clients. Prior to joining Mars in 2018, Brian led an independent cross-functional team of consultants and analysts dedicated to the creation of new retail formats and market-winning strategies.