the price of loyalty

If there was one message to come out of Convenience Store Decisions‘ loyalty Webcast it’s that there is a loyalty solution for everyone, regardless of chain size and the financial investment.

CSD‘s “Building and Integrating a LoyaltyProgram,” part of its Online RoundtableSeries, brought together multiple retailers,suppliers and industry experts to discussthe loyalty options currently available in theconvenience store and petroleum market,and offered significant insight for operatorsstruggling to find the right loyalty solution.

The Webcast was sponsored by Success Systems, Outsite Networks and Kick Back Rewards.

LOYALTY PROS & CONS

With the influx of technology that has saturated the market over the past decade, loyalty programs have become so accessible that any company can use them. But while these programs can be valuable in cultivating a new customer base, the programs aren’t an instant remedy for low sales.

In fact, said Rick Ferguson, editorialdirector for COLLOQUY, a magazine dedicated to loyalty marketing programs,retailers typically don’t make money with aloyalty program during the first year.

“Loyalty can be expensive and it will not fixa store’s problems immediately,” Fergusonsaid. He warned that too many retailers arelaunching loyalty programs simply becausethey’ve hit some sort of snag, such as losing customers to stiff competition.

The advantage of loyalty programs tendsto be more long-term, such as observingcustomer behavior and then acting upon it.”If you can decipher the data a loyalty program yields and identify which customersare not profitable, but have the potential tobe so, that could give you a strong boost toyour bottom line,” Ferguson said.

Savvy retailers are doing this by collecting and analyzing customer data to develop long-term, interactive relationships. These relationships are crucial to a loyalty program’s success, and it’s very much a give-and-take partnership. Retailers offer incentives to customers, such as coupons and merchandise, which leads to more customer visits and also provides historical market basket information.

MAKING THE PROGRAM YOURS
On top of giving customers a reason to visit the store, there are endless possibilities for promoting store services. Bruce Butler, president of Bridgeport Shell, has been using Success Systems’ loyalty solution to give his small chain a competitive edge in a busy grab-and-go market. His stores began the program by attaching it to the coffee bar.

Not only has Butler found relief byretiring his “punch card” coffee program,he’s also been able to track the otherproducts coffee drinkers buy and offerthem instant rewards for their loyalty.

“The customer buys a coffee and acoupon comes up immediately, delivering instant gratification,” Butler said.Supplementing loyalty with promotionsisn’t the only way to benefit from faithfulcustomers, said Doug Deweese, CEO ofConoco SuperStop! The company, whichuses Outsite Networks, started selling membership tags once it realized it was givingaway nearly 3,000 a month. The programhas been wildly successful for SuperStop!,which calculates 30% of its customers participate in the loyalty program, with somestores topping more than 50%. Deweesehas dedicated much of the chain’s funds tocontinue growing the business.

“We diverted our advertising budget—well over $500,000 a year—to our rewardsprogram,” said Deweese. “This was a morereasonable way to target our customers andthe general population.”

Patrick J. Lewis, partner/CEO of OasisStop N’ Go, took a different approach withhis proprietary Kick Back Rewards program.

“In the beginning, we wanted to createan electronic loyalty program for our convenience stores only,” Lewis said. “Instead, acoalition concept grew from that.”

The program is fueled by what Lewiscalled “hard benefits” and “soft benefits.”Hard benefits rewards users and retailerswith promotions from vendor participationand club programs, as well as by givingmembers rebates and reward points. Softbenefits, such as prizes and sweepstakes,give members something to pique theirinterests to frequently return.

“With margins as thin as they are, we realized we were not going to be able to rewardhuge amounts to customers,” said Lewis.”Instead, we use the soft benefits, whichdon’t cost the store a lot, but still have ahigh perceived value to the members.”

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