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Loyalty Matters with Product Recalls

Loyalty Marketing

In 2010 there were more than 150 Class I product recalls according to the FDA. The pace of these high-alert recalls is increasing due to consumer awareness and watchdog advocacy groups. In August 2011 alone, there have been separate recalls of 36 million pounds of ground turkey and 60 million pounds of ground beef across the United States.

Class 1 recalls typically involve food, drugs or children’s products that can cause illness or even death.  In most recalls, the manufacturers notify the retailers and media; the stores then take the items off the shelf and post a notification on the bulletin board—hoping to reach everyone. Unfortunately, in this day and age of technology, combined with the potential liabilities that go along with selling such products, a bulletin board is not the answer. When was the last time anyone actually read a bulletin board in a retail store?

A recent Consumer Reports survey found that 40 percent of Americans lack confidence that manufacturers and retailers provide consumers with appropriate product recall information. With the explosion of communications channels, businesses should be able to do a better job communicating timely recall information to their customers.

Done ineffectively, product recall notifications can result in bad press, negative brand perception, and costly litigation. Safeway supermarket is in the midst of a class action lawsuit. The plaintiffs claim that since Safeway had their contact information in their loyalty database, they had an obligation to contact them regarding a recalled product.

So what is a retailer’s obligation to notify customers of potentially harmful products?  Managed properly, recalls can display great customer service and a sense of confidence in  customers that actually enhances brand loyalty.   Recent legislation was passed requesting “voluntary participation” by retailers involved in Class 1 recalls. The next step could be mandated regulations.

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Building Loyalty through Product Recall Alerts

Therein lies a key driver in improving the effectiveness of recall alerts: loyalty programs. Thanks to the growing use of loyalty programs, retailers (particularly supermarket chains and retail stories) are best positioned to notify those who may be adversely impacted by product recalls. This is a message that customers want to hear and reinforces the benefits of being in a loyalty program.
Following are tips for those considering adding recalls to their loyalty program strategy:

  • Plan ahead—Timing is everything.  Only by integrating it into your communications and loyalty plans in advance can you react quickly.  SoundBite recently helped a leading retail grocery chain with their product recall notifications, notifying its loyalty customers of the both Cargill turkey recall and the ground beef recall.
  • Highlight the service to increase enrollments—While coupons and discounts are common enticements for enrolling in loyalty programs, our work with retailers shows that offering the recall notification service could increase enrollment while attracting customers that would not otherwise participate.
  • Do it—Retailers that work with SoundBite receive overwhelmingly positive responses to the recall messages they send. The service helps improve customer safety and satisfaction, and should be a proactive communications feature within every retailer’s loyalty program.

How are you communicating Class I recalls? How would you improve the process?

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