Do You Really Need A Loyalty Program?
Two retailers share their differing thoughts on card-based loyalty programs in this point/counterpoint look at the topic. What's the right choice for your garden center?
October 3, 2008
Co-Owner, Berns Garden Center, Middletown, Ohio.
• Decided against implementing a traditional card-based loyalty program.
Q: What are your philosophies on loyalty programs?
A: When these loyalty programs first showed up, we looked at them and we understood them and we talked to lots of people about them and what they were trying to do – what was the result they wanted. And it wasn’t just because ‘everyone else did it so I guess I’ll do it.’ We wanted to drive traffic into our store so we could sell more stuff and make more money, and we wanted to do this in a way that was cost effective. So we didn’t want to give too much away. We wanted the people to think this is a great addition. We didn’t want to make this complicated. and we didn’t want to spend money on it. We wanted to have some kind of program that didn’t cost us to administrate it. It didn’t cost any mailing, any postage, any post cards – we did not want to pay for a program to give our stuff away at a discount. So if I’m going to have to have some of my product leave my store for less than full price, I certainly don’t want to pay lots of money to have that privilege. The loyalty programs of those days seemed to require us to do that – they had significant administration costs involved in them. We chose to use the bonus buck system, where every time someone comes into our store and purchases something, they get a dollar which represents 10 percent of their total. If you buy $10 worth of stuff, you get one bonus buck. Other people were giving 20 percent away – for every $10 you get two bonus bucks. So we already tried to make them less costly by only giving that much away.
Q: Does everyone receive bonus bucks, or do they have to sign up for the program?
A: Everyone – there’s a big pile of them at the register, and at the end of the transaction if you buy $100 worth of stuff, you get the receipt and $10 worth of bonus bucks. So that’s pretty easy to administer. On the bonus bucks it tells everyone the rules. We redeem them four times a year. We redeem them the whole month of June, the whole month of September, the whole month of November and the whole month of March. Then we start the cycle over.
Q: Why did you choose those months for bonus buck redemption?
A: Those are the months we wanted to drive customers into our door. June is after the season, so we have plenty of product and plenty of staff to handle hoards of people. September in Ohio is our fall sales season, and we really want to drive traffic back into the store for one more season so they can plant their yards again. And November we wanted to drive Christmas traffic in and we wanted the early traffic – the people that would spend a lot of money and buy full-priced Christmas items, so we wanted to put the bonus bucks at the beginning of the season. We’re using this to drive traffic to sell stuff that’s full price. We’re not using it to control our inventory or decrease our inventory, or using it as a sales promotion to remove any unwanted inventory from our shelves.
What we want people to do is come in the store with $10 worth of bonus bucks, which they can use on the first $20, but they put $100 worth of stuff in their cart. They give us $10 worth of bonus bucks, and I end up with $90 in the till. That’s what we were after.
So the last one was March, and people came in that still had some bonus bucks pinned up on their refrigerators or in their wallets or in their cars or on their desks – these things are stuck everywhere. You can’t come to southwest Ohio and not see a bonus buck with Berns’ name on it anywhere.
Q: Do you feel your bonus buck program has helped build customer loyalty?
A: Yes. The same people seem to use the same bonus bucks in the same amounts every year.
Q: Is there anything you’d like to add?
A: The most important thing is that we do this to drive traffic and sell full price merchandise. It’s not used for inventory control, and it’s really not used to reward the customers. It’s really used as a sales tool.
General Manager Of Retail Sales, New Garden Nursery, Greensboro, N.C.
• Is a believer in card-based loyalty programs.
Q: When was your loyalty program implemented?
A: It was implemented about five years ago.
Q: How does it work?
A: Every dollar that you spend, you get a point. When you reach 300 points you can redeem those points for $15.
Q: Why did you start the program?
A: We’re a pretty large company, and before we had this loyalty program, we had another one called Grow For The Gold. But there was absolutely no tracking mechanism, so when we got our point-of-sale system, there are multiple types of loyalty programs that you can set up within the system, and along with doing that we can track our customers 100 percent better than we did in the past. We know how many are in our loyalty program. We’ve got 21,000 right now that have signed up for our loyalty program in the last five or six years, and we’re able to go in there and see what they’ve purchased. They can actually come in and if they didn’t remember what type of azalea they bought last year, through the loyalty program, because they’re in our system, we can look them up and tell them exactly what they purchased.
Q: How has your loyalty program benefited your store?
A: Customers love it. It’s kind of like a game to them. Every time that they come in, they know that they’re creating points. We have customers that actually bank points because they want to buy an expensive fountain or they want to buy a set of furniture, so they’ll continue to shop here for a couple years until they’ve got a ton of points.
Q: What advice would you offer retailers who don’t have a loyalty program but are considering starting one?
A: I would say you definitely need to research it. See what program fits your marketplace the best for your customers.
Q: How did you decide on your program?
A: Through meetings with Robert Hendrickson (The Garden Center Group) and just looking at other garden centers like us and what types of loyalty programs they had and what worked for them.
Q: Is there anything you’d like to add?
A: Just to sum it up, it lets us know who our loyal customers are. You’ve got your loyal customers and then you’ve kind of got your transactional shoppers – the ones that just come in when there’s a sale or a deal, and it helps us. We do a couple of promotions each year. One of them is our Christmas Preview Party, and they have a blast. We invite all of our Garden Goal customers to an open house. It’s an evening thing for three hours, and they get first glance and first shot at purchasing Christmas when Christmas is set up. We have food, and they really enjoy it. Same thing with our harvest festival in October. We send postcards out to all our loyalty customers inviting them to our harvest festival, so it keeps them and us interacting together.