Say thank you to your store’s repeat shoppers with instant gratification rewards and digital couponing

The goal of every retailer is to see increased spending in their store. Customer retention also is critical to winning the day at retail. Could loyalty and reward programs be part of the answer to what increases shopper receipts and retains a store’s customers?

When Amazon made the shift to a more robust—and more expensive—version of its Amazon Prime program in March 2014, the jury was still out on whether Prime would help the company garner greater customer loyalty and a bigger slice of the market. Now the online giant is touting the shift as one of the reasons for an increase in first-quarter profits. In fact, analysis by Chicago-based Consumer Intelligence Research Partners shows that Prime members are spending $1,500 a year while their non-Prime counterparts spend less than half of that figure at $625 per year.

Amazon’s success in increasing spending and retaining customers poses the question of whether loyalty programs can work for other retailers. Although retail expert Britt Beemer, chairman of America’s Research Group, says many Christian retailers tell him they haven’t been successful at seeing a good return on investment with loyalty initiatives, he encourages them to be willing to try something new.

“If there’s no one coming in your store, you’ve got to get in front of people,” Beemer advises.

SHOPPER SAVINGS

Beemer says that one of the keys to success in designing a loyalty program is instant gratification. One example of a retailer who uses this principle is Kohl’s, where customers earn dollars with their purchases today and are able to spend those dollars tomorrow. Typically, Beemer advocates for a turn-around time of a week or less between earning and using rewards. Depending on the industry, however, other marketing analysts stretch that time frame to as long as three to six months.

Beemer also points out that digital couponing is growing by leaps and bounds, allowing retailers to make an offer each week if they choose to, thereby giving their store more opportunities to stay top of mind with customers.

Digital couponing also offers a low-cost way to provide more specific offers by personalizing the offers to favorite authors, artists or brands whose products a customer has purchased in the past. Even without using customers’ buying histories, the same strategy can be employed at a macrolevel to test the waters with offers on fiction, greeting cards, children’s movies or other high-turn categories.

Andrea Povick, marketing coordinator of the Gospel Book Store in Berlin, Ohio, said that her store uses a simple approach to its rewards program, providing a $5 coupon for every $200 worth of purchases a customer accrues. By keeping a customer profile, the store can do a phone number look-up, saving customers from keeping a loyalty card in their wallets and retaining information for creating future offers.

Similarly, LifeWay Christian Stores has long used a punch card system offering 30 percent off a fully punched card.

Scott Gabrielson, owner of Church Mart in Rocky Mount, Virginia and Lighthouse Gifts and Books in Hardy, Virginia says that his stores use different types of systems with similar objectives.

“Each store has a different point-of-sale system,” Gabrielson said. “At Church-Mart, we utilize a Blessing Box. When customers shop, we add their total for regularly priced items to the back of the card in our box on the counter. After they shop six times, we total it up and send them a gift certificate for 5 percent to be used in the store. [Customers tell us] they really love this program.

“At Lighthouse, the register keeps track of sales, and when you hit $100, it gives you a $5 reward to use on a future purchase,” he added. “The system emails the customer also. It is a good system and is easier to use, but it’s not as personal as the first system.”

Owner Donna Baker uses the loyalty program designed by Bookstore Manager Software at Dightman’s Bible Book Centers in Tacoma and Gig Harbor, Washington.

“Our computer keeps track of customer sales and prints a ‘Frequent Buyer’ coupon when their total is earned. Every time our customers reach $100.00 in sales (excluding tax) they receive a $5 coupon which is good on their next purchase of $10 or more. The coupons expire in three months. Since the coupons print on regular cash receipt paper, we hand write a big $5 on the top, highlight the words coupon, and hand-write the exact date that the coupon will expire. We tell them that the coupon is like cash and suggest they keep in their wallet so they will have it next time they come in. Seeing this coupon in their wallet is a constant reminder to return to Dightman’s.

“They receive a $10 coupon if they spend $200, but we don’t go any higher than that. Low discount items (like Sunday school curriculum) do not earn frequent buyer points. Also, we don’t give coupons if they received another type of discount like a quantity discount or they used a catalog coupon.”

Baker believes the Frequent Buyer coupons work very well.

“Customers love them and look forward to getting them,” she said. “I really do think that it encourages customers to come back or spend more. Sometimes they use them the same day to buy something they really wanted but decided not to purchase because of going over their budget. We redeem about four to seven coupons on an average day.”

Another strategy some retailers have adopted is charging a modest fee for access to a membership that offers deeper discounts as well as additional offers. For general market retailer Barnes & Noble, the key is demonstrating to customers that they’ll make the fee back easily in the course of a year. The retailer’s frontline staff are able to look up a cumulative total for shoppers upon their request. The sales pitch for the $25-a-year membership also offers coupons worth more than the cost of membership as an incentive to buy.

Family Christian Stores is using a similar strategy with the chain’s enhanced Catalyst 1:27 Rewards. For $10 per year, customers will save an extra 10 percent more than the coupons sent out in the stores’ free 1:27 Rewards program.

SUCCESSFUL STRATEGIES

With such a wide variety of strategies in use, determining how to create or revamp a rewards program can be confusing, but there are certain qualities that make for a successful program in any type of store.

Natasha Mazey from Collect, a company offering cloud-based loyalty and marketing solutions, points to the customer data first.

“Experiment with different rewards to find out what works for different segments of your loyalty program,” Mazey said. “Look at your data. What rewards and offers do your customers respond well to? Over time, you will find out what works for different segments. Use this insight to create rewards and offers that your customers will love, and therefore, will encourage them to keep coming back.”

Are there different types of customers your store should reward? For many Christian retailers, there may be a big difference between church purchasing and individual purchasing patterns. Does each type need their own program or could individual purchases also feed into perks for a customer’s church as part of an overall loyalty strategy?

Consider tiered programs that provide increased incentives for purchasers of larger amounts or for ministry or church customers who can influence foot traffic.

When it comes to the church customer, Baker of Dightman’s believes her Frequent Buyer coupons provide her with a good response to a common question.

“The coupons are a good answer when people ask, ‘Do you give a pastor’s discount?’ ” she said. “We tell them that we give discounts to everyone, not just pastors.”

It’s also critical for Christian retailers to know their competition—and how their store is distinctive. Can you tie in loyalty offers with special meet-and-greets with authors who won’t be making appearances at a big-box store? What about offering free personalization or gift-wrapping during key seasons for your loyal customers? Creating a memorable experience for loyal customers is a win-win.

Finally, know that not everyone is a fan of loyalty programs. Bob Phibbs, known as “The Retail Doctor,” doesn’t see their value.

“You have loyal customers because you’re already giving them what they want,” Phibbs writes in his “How to Build the Best Retail Loyalty Program” blog post. “Hopefully, that doesn’t involve discounts and markdowns. If it does, they’re not really loyal customers; they’re just looking for low prices and that’s a battle you can’t win.”

Whichever side of the argument you agree with, Baker urges caution.

“Trying to be fiscally responsible is a fine line,” she said. “You need to encourage customers without giving away the store. We have held the line when competitors around us have offered ridiculous discounts. Now, all those stores are either out of business or in bankruptcy! We pray every day for wisdom, and God has blessed us.”

Deonne Lindsey has led public relations and marketing efforts for several major publishers and authors and for a children’s entertainment label. She has worked in the Christian products industry since 2002.

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