Originally published in Today's Garden Center January, 2007

CREATING LOYAL CUSTOMERS!
Adding real value to your customer loyalty program.

I drive my wife, Ann, crazy when we shop together, especially at malls. I am always checking out sign designs, gift cards and loyalty cards. Last weekend it was a visit to Borders Books. Although by nature I am interested in customer rewards programs, I find that, personally, I resist them. Case in point – I would shop at Barnes & Nobles, another bookseller, and they would always ask, “Do you have a Barnes & Nobles card?” No. “Would you like one? It is only $25 and you get 10% off all purchases for a year.” No. Why would I pay to be treated preferentially? Back to Borders. “Do you” – I don’t even let them get the rest out. No. “You’ll get 30% off your book purchase.” I wasn’t expecting that one. OK. I gave them my e-mail address and phone number and it was mine in less than 30 seconds. Now I have a Borders card. So what will it mean to me (I ask myself)? “You’ll get e-mail notices with discount coupons,” says the perky sales clerk.

OK, so it is just a discount card. Oh well.

I bring it up because I get calls all the time. “What discount should I give with my loyalty card program?” It is a logical question, but it is missing the mark by a mile. The operative word is “loyalty.” Discounts are for shoppers. What you want are customers, better yet advocates, no, fanatical customers! There is a big difference.

FIRST, IDENTIFY YOUR OBJECTIVES

As Rex Briggs and Greg Stuart point out in their book, What Sticks, “If you condition consumers to wait for price discounts… then you’re also conditioning them to switch from your brand to a very similar competitive brand that may be offering a price deal this week.” It all comes back to price.

So how do you break out of the pack and distance yourself from your competition? First, you must identify what you are looking to accomplish with your program. Ideally, you’ve come to realize that it is cheaper to keep an old customer than to spend the time and money necessary to get a new one. Peppers & Rogers in their seminal work, One to One Marketing, point out that there are four kinds of people: prospects, customers, loyal customers and former customers. Your job is to turn the prospects into customers and the customers into loyal customers. When you do a great job creating loyal customers, even the old customers might come back.

Let’s take a trip Up The Loyalty Ladder with authors Murray and Neil Raphel. Their process is based on the long term value of a customer. Rather than thinking of it as marketing, think of it as investing in customer development. What’s the first step?

Get them in the store. Where do you find good prospects? Probably living near your good customers. We often analyze our client’s customer list in order to determine penetration, or market share of any particular zip code or region. What is the bait? Murray and Neil say, “Offer them a major reason to shop for the first time.” Make the offer what customers would want at a greatly reduced price (read, loss leader).

Step two. Get them to buy. What do customers want? I’ve always said that customers buy for one of two reasons – escape or solution. Customers come to Independent Garden Centers (IGC) for solutions. They tell you what’s wrong; you tell them what to buy. If it is the right solution, they will come back again. Escape is another way of saying they shop for the experience. Is your store clean, well signed, stocked and staffed with friendly, knowledgeable help? If you get them in the door and concentrate on those basics, the customer shopping part will take care of itself.

Step three. Turn a customer into a client. This is where your loyalty, or rewards program should kick in. With every customer your staff should be able to identify whether it is a new customer or not. Remember the bookstore? “Do you have our rewards card with you today?” A “No” answer is returned with an invitation to join. This is where you, and your staff, express the added value to the shopper. So, what are your added values? At the end of the day, people want to get things done and save either time, money or both. How do you explain all this? Easy, point them towards the sign. You see a sign remembers ALL the benefits and repeats them correctly each and every time. What does your sign have on it?

If the benefits are obvious, they will sign up (just like I did). Now you have a loyalty program with tangible benefits, plus the road map for step four:

Turn your clients into advocates. When your customers sign up for your program it should trigger a “Thank You” mailer. When they make their first purchase it should be ended with a bounce back benefit. Hand them a coupon good for their next visit. Your coupon can include an invitation to complete a quick survey for additional benefits. The survey is a way of coming to understand your customer’s needs. This can be accomplished with a visit to your website or with a simple questionnaire by mail. Every contact and touch point should also communicate your total customer satisfaction guarantee. That is a company you can be loyal to.

Now suppose you up the ante and create your own personal “Purple Cow.” In Seth Godin’s book he explains that it is not enough to be good, you’ve got to be memorable. So what if your customer received a gift card on their birthday? Or a personal shopping assistant? Free design service? How about an express checkout lane? Wow, that would do it during any busy spring weekend! What if you just delivered them an exciting new plant? Can you imagine if you dropped an “Endless Summer” on their doorstep? That, my friends, is for your ‘Platinum Customers’. A good loyalty program is based on managing the data. If you can identify your best customers, then you can reward in proportion to their value.

What if you don’t have a POS system? You could still do 95% of the ideas here! Fill out a form, get a card. Show the card, get the premium. Take the information from the registration form and mail them a thank you card, a birthday card, an invitation, a special offer. You get the picture. As you probably noticed, I did buy some books from Borders. The next step is up to them. Whether you are a monster chain store, or just your friendly, neighborhood garden center, the key to success is the execution. Only promise what you already do.