Customer loyalty programs have long been a focus for major retailers, but Melinda Oliver finds that independents are tenaciously targeting the trend.
Myer’s customer loyalty program appears to be a winning formula for the company. In its 2009/10 annual report, the department store retailer declared that 68 per cent of its sales are now attributed to Myer One cardholder customers. The program has 3.7 million members nationally and during 2010 it increased the number of email addresses on its database to 1.6 million, up 35 per cent.
This boom suggests consumers are seeking extra attention from the retailers they frequent. Secret sales, special discounts and product arrival alerts are just some of the typical initiatives offered. In return, Myer and its 600-plus business affiliates gain priceless information regarding consumer shopping habits.
Other big retailers such as Witchery, Esprit and Country Road all have highly active initiatives. But a notable shift is in smaller independents, who are increasingly investing in bespoke loyalty offers. Social networking, e-marketing and instant messaging are now making it easier to build communication with customers and create a micro-community around a store.
Adelaide boutique Sydney Street has run a privilege club for many years, but it is constantly reinventing ways to enthuse and engage with consumers. General manager Brett Partington says its 6500 cardholders receive a standard five per cent discount on all purchases. They are also privy to special brand promotions, pre-sales, product delivery notifications and other special events.
“We want our customers to feel attached to the brand. We recently did a warehouse sale – we had over 500 people turn up, it was almost at the point that we couldn’t control it.”
Partington says he is very targeted about which customers he approaches with each promotion, focusing on what will appeal to each.
“With 6500 people, if you contact every single one of those customers you are up for thousands of dollars worth of postage,” he says.
He has dabbled with social media and email marketing for various promotions, but for the store’s slightly more mature target demographic, traditional postcards and phone calls prove most effective.
“I recently did an email with a fantastic promotion on it and it absolutely did not work. A third of the people opened the email, and of that, not many people reacted or haven’t reacted yet, as it was over a week ago.
“Our customer still likes the personal touch and I am honing in on that. We don’t want to treat our customer like a number. Brands can over-email. That is the first way to shut yourself off from your customer.”
Melbourne-based youth apparel brand Nique is also building strong foundations for its VIP program across its four retail stores. Director Nick Ennis says the label targets two main demographics, 17 to 25 and then 25-plus. Inspired by the approach taken by a Melbourne nightclub, Ennis has created a Nique key ring which is given to loyal customers and friends of staff to build a rapport with the label.
“Anyone who has a membership can receive a 10 per cent discount for life. We also email them invitations to parties, fashion shows and occasionally mail them free product.”
Every three months the brand sends emails about new products, collaborations with artists, fashion parades and secret sales.
“We try and keep the emails to a minimum and make them interesting,” he says. “The very last thing you want to be considered is spam.”
Nique's target audience is active with online social networking and Ennis has found using Facebook has helped catch international followers.
“It has been fantastic for us, particularly corresponding with new customers from Sweden or Amsterdam,” he says.
Swish boutique co-director Damian Murrihy has taken a more aggressive strategy with online marketing to build brand loyalty. The dress-focused boutique, with four locations across Melbourne, sends out e-newsletters to its database of 15,000 customers twice per week. In November 2010, Murrihy says this contributed to achieving 40,000 unique visitors to its e-commerce site
“For some of the stronger pieces, something particularly hot, these will lead to a spike [in sales],” he says. “The emails spread virally as well.”
This year, he says Swish intends to initiate even more communication with customers online, with increased styling advice, responses to queries about product and celebrity style inspiration.
“We have VIPs online,” Murrihy says. “It is easier to track their purchases in that regard. We are looking to reinforce the customer service women get in store and reproduce it online. We will introduce the technology to make it happen.”
In the fledgling stages of development, the new VIP Gold Card for Sydney mixed label boutique, Joshua & Sean, has had a mixed start to life. Director Joseph Stellino says the store, targeted at 25 to 40-year-olds, has experienced a strong sign up rate for its program, with a 15 to 20 per cent discount offered on purchases. E-marketing, however, has not yet proven the most successful method of stirring up enthusiasm in this age bracket, he says.
In comparison, Stellino says e-communications for the company’s new loyalty program for younger label Stellino, pitched at under 25s, are vastly more successful. He says implementing technology for the VIP program has been a solid investment, so he’ll keep experimenting with what is most effective for clients.
“[So far] Facebook has been the best investment – and it costs nothing,” he says.
Sydney-based women's designer label store LaLuna Boutique launched in September 2009 and has since implemented a rewards- based two-tier loyalty system. Customers who spend $500 over six months receive a five per cent rebate voucher, while 'Diamond' customers who spend over $2000 in the time frame receive a 10 per cent rebate voucher.
Owner Tracy Collins says she is starting to see the system instill loyalty in the store, flowing through to husbands and partners of VIP customers who come in for gifts. The program has attracted 2000 customers to date, with a 60 to 70 per cent redemption rate on vouchers issued.