STORES Magazine - August 2008 - (Page 78)

NUTS AND BOLTS / LOYALTY PROGRAMS Timely Incentives Drug Fair finding success with continuity loyalty program BY LIZ PARKS W ith front ends that typically sell staples and convenience items that shoppers can find in many other retail channels, drug stores are discovering that continuity loyalty programs provide incentives to lure top customers back more frequently. And, as a result, these top customers (the 10 to 30 percent who spend the most) will spend even more. Drug Fair Group, a 55-unit regional chain based in Somerset, N.J., is moving into the second marketing phase of We Care, a customer loyalty continuity program it launched last August. Continuity loyalty programs offer rewards, not just discounts, to encourage consumers to shop more frequently. Drug Fair decided to implement one be- he says. “So if a customer wants to come in and buy $5 worth of milk or shampoo, they can and it’s as if they are getting their products for free.” Following the lead of drug chains like Duane Reade, Drug Fair is using Morristown, N.J.-based Cartwheel and its technology partner, New York Citybased 1010data, to provide shopperbased marketing expertise and to gain access to powerful data storage and processing capability. 75% of the growth that comes from a continuity rewards program is the result of increased frequency of visits By having Cartwheel capture, analyze and store customer data and provide strategic input, Drug Fair is able “to drive a major marketing objective, which is [to] increase the frequency of our shopper visits and, to a slightly lesser extent, attract new customers,” Pouliot says. At the same time, our staff can stay focused on the goal of managing the business and looking for new growth areas.” Interesting, significant growth Drug stores have a great opportunity “to increase frequency, and as soon as you start increasing frequency, that is really where the growth becomes interesting and significant,” he says. Duane Reade doubled the number of trips made by its most loyal customers within six months of implementing Dollar Rewards, its continuity card program, in March 2005. It also saw same- cause it wanted to use purchasing information to increase the frequency of visits by offering incentives and rewards that would be relevant to individual shoppers, says Robert Pouliot, Drug Fair’s senior vice president of merchandising. Customers using We Care cards get points for each dollar spent at a Drug Fair store; 150 points earn them a $5 rebate reward. To ensure that the rebate does increase shopping frequency, customers must redeem their $5 reward within two weeks. “We’ve found that once we can engage them to that level, we can increase their spending meaningfully,” Pouliot says. “The bottom line is to increase the frequency of their visits, and the beauty of this program is its simplicity: All our customers understand it very quickly. “And what’s neat is that there is no minimum purchase [for redemption],” 78 STORES / AUGUST 2008 store sales rise from -3 percent to 8 percent by the end of 2006, and “the only significant change we made was implementing Dollar Rewards,” says Gary Charboneau, who was the chain’s senior vice president of marketing at the time. Drug Fair needs to get a year’s worth of data from the program before it can accurately quantify how frequency and sales have been impacted, but initial results show that, among “the folks who visit us regularly, the basket is increasing,” Pouliot says. Average store sales also are increasing, and that growth is accompanied by “a lot of positive feedback from the customers.” WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - August 2008

STORES Magazine - August 2008 Contents Executive Editor's Page President's Page The Lure of Free Shipping Walmart’s New Look What Shoppers Think Will Widgets Work for Wheat Bread and Wasabi? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Store Design Industry Economics Hot 100 Retailers Concept2Watch Mobile Technology Small Store Technology Website Optimization Site Selection Mobile Payments Recycling Merchandising: Cool Sells Merchandising: Merchandising in Mexico Store Construction & Development Human Resources Loyalty Programs Mobile Marketing Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - August 2008

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