Loyalty: it’s in the cards

When it comes to customer rewards programs, Glendive True Value in Glendive, Mont., has pulled off what seems to be a small miracle. With just 4,000 households in the store’s trade area, Glendive True Value has managed to sign up more than 5,400 True Value Rewards members.

That’s what an aggressive marketing plan has done for the 30,000-square-foot store, which does a combination of direct mailing to Glendive and the surrounding communities, special promotions, in-store signups and reminders to every customer who walks through the door.

“There isn’t a salesperson who doesn’t talk about it at point of purchase, on the sales floor or at checkout,” said Shelley Rugg, Glendive’s store manager. “Whether it’s a 39-cent pack of gum or a $6,000 weatherization order, we talk to that person. The one making the 39-cent purchase is just as important because he’s probably going to come back.”

Glendive started its program when the co-op launched True Value Rewards in 2004, setting up a booth in the store to sign up as many people as possible. Rugg brings the booth back every three to five months for new membership drives. She also sends “thank you” notes to the top 10 percent of the database every time they make a purchase.

The results have been impressive: Average transaction at Glendive has grown each year, including a 9 percent increase in 2008; 73 percent of Rewards customers respond to certificates they receive in the mail, and 72 percent of total sales are to True Value Rewards customers.

“The key is having information about your customers so you can really build their value to your business,” said Carol Wentworth, vp-marketing for True Value, which has 614 stores and 2.8 million customers on the program. “It’s about much more than points or discounts. It gives the store information on who are the best customers in their area.”

According to data released by Colloquy, a consulting group that studies loyalty marketing, the average American household belongs to 12 loyalty programs and actively uses five of them. These programs are tied to a variety of industries, including supermarkets, airlines, hotels and retail operations.

“There is a trend toward loyalty programs, which is why we’ve seen an increase here at Do it Best,” said Chris Hill, who oversees the co-op’s Best Rewards program—referring to the 40 percent increase in member store signups in the past year.

Hill said that in 2007, Do it Best retailers participating in Best Rewards saw an average increase of $9.15 per transaction for rewards customers. So why wouldn’t this be a no-brainer for co-op members? “I think they may fear it will be an additional workload for them, but, in fact, Do it Best manages the data,” Hill said. “ It’s really a turnkey program.”

Scott Sullivan, owner of Town & Country, a Do it Best store in Bryan, Ohio, has close to 4,000 Best Rewards customers who account for 25 percent to 30 percent of total purchases in his store. Twice a year, he sends out postcards announcing “Members Only” shopping days, where Best Rewards members receive 10 percent to 15 percent discounts on items. Sullivan says he does about 75 percent more business on those days than on a normal week day and that they are his two biggest revenue days of the year—even bigger than Black Friday.

Ace also has a rewards program called “Ace Rewards,” in which about 2,600 of the co-op’s 4,600 stores participate. Ace analytics manager Mary Smith said rewards members spend an average of 26 percent more per transaction than non-participants. Also notable is that Ace Rewards members are retained year over year at a rate of 87 percent, and rewards mailings receive the highest rate of all direct marketing efforts with a response rate of 45 percent, while accounting for $23,500 in sales for an average store annually.

“With all the data on these customers,” Smith said, “we can better manage our relationships over a long period of time.”