The Dymocks franchise has embraced the loyalty initiative and, within a few short months, already has both its franchisees and its customers reaping the rewards.
The retail franchise had a pre-existing, well-established, mature loyalty program that needed to be revitalised. A pilot program was implemented, followed by a full rollout across 14 stores in Australia, New Zealand and Hong Kong.
"We regard customer loyalty as the key to our continued success, with new technologies constantly presenting distractions to reading, and competing for the leisure dollar,” says Don Grover, CEO of Dymocks.
Dymocks’ new Booklover Loyalty Program offers members a wide range of benefits, including:
• A reward of 5 per cent of the purchase value (this is at the high-end of the scale, and is a meaningful reward, further benefiting franchisees, as this is more cost-effective than offering a 10 per cent discount, which doesn’t generate goodwill or long-term loyalty);
• Points are earned electronically and quickly, and redeeming points is done at point of sale (POS), with no nasty messy vouchers with short expiry dates clogging up a customer’s wallet and annoying them;
• There is also no joining fee, which is unusual for such a rich rewards program;
• The program’s catalogue has been replaced with a high quality magazine, featuring editorials, author interviews, book reviews, new releases, exclusive competitions and much sought after travel prizes;
• Booklovers are invited to exclusive VIP shopping nights and events, priority bookings at literary lunches and ‘invitation only’ personal ‘meet and greets’ with authors; and
• Gold Cards for the top 5 per cent to 10 per cent of customers, making them feel special and allowing staff to recognise customers accordingly.
When it comes to loyalty programs, the bar has been lifted. By today’s standards, the benchmark of a good loyalty program is measured by the fact that it should acquire new customers, stop customers from leaving or shopping at competitors and, ultimately, have customers spend more money with you. So says Michael Topper, General Manager of Pinpoint – a specialist in the provision of loyalty programs and services.
He explains: “Customer loyalty is becoming a key competitive advantage. Loyalty programs make people feel important. We know that 65 per cent of customers leave because they feel unimportant, while only 14 per cent leave because a competitor lures them away.”
Interestingly, Topper also claims that discounts are being replaced by points programs – and with good cause. Points offer greater value at a fraction of the cost, and develop a stronger consumer proposition. Most discounts are not highly regarded as customers often receive them automatically. As a consequence, many are unaware of them. Discounts are also offered on the back of a made sale. As such, they don’t guarantee the customer will buy from you again. Points, on the other hand, require the customer to be active – encouraging them to enrol with the program, and giving them a credit to spend with you in the future.
There are a large number of points programs in the world. In fact, in January 2005, there were – for the first time – more points in circulation than US dollars (The Economist, 12 January 2005). However, just as there are both strong and weak currencies in the world, there are both excellent and bad loyalty programs.
According to Topper, the main reason loyalty programs fail is because of a weak value proposition – that is, they take too long to earn a reward and/or offer ‘ho hum’ rewards. The second reason is that the program design has taken a backseat to technology.
These days, loyalty programs are a dime a dozen, making it even more critical to enhance offerings to give customers a good reason to want to add yet another card or voucher to their ever expanding hip pocket.
Pinpoint believes there are seven critical areas that a successful rewards program must address:
1. Focus on what the customer wants – it’s a customer program after all!
2. KISS – the ‘keep it simple stupid’ principle. If customers can’t understand the program, they won’t join it.
3. Give customers a relevant, valuable reward in a reasonably short period of time.
4. Provide both hard (monetary reward) and soft (other special privileges) benefits.
5. Communicate regularly.
6. Use loyalty experts – focus your skills on your core business and let the loyalty expert focus on their key expertise.
7. Set half a dozen Key Performance Indicators (KPIs) and measure the results.
Today, in Australia, all sorts of businesses are utilising loyalty programs to increase their customer base and ensure the longevity of their business. Some of the newest and more unusual programs include ‘My Restaurant Club’, which allows members to earn and redeem points in 200 of Australia’s top restaurants like Forty One in Sydney, Windows On The Bay in Melbourne, and Omeros Bros in Brisbane.
Meanwhile, ‘Rental Rewards’, which enables and rewards customers for paying their rent, has been sponsored by VISA and is available in 1,500 real estate agencies. This program has an SMS reminder service so that tenants pay their rent on time, and has solved the debt collection problem for real estate agencies and landlords.
According to Pinpoint research, in 95 per cent of cases, customers redeem the rewards in the store where they earned them. As for the other 5 per cent, Topper asks: “Isn’t it still better that the customer is shopping within your group, and spreading the good word, rather than shopping at a competitor?”
Best-selling brand
Seamless integration of technology
With respect to the Dymocks case, loyalty program technology was selected that would:
1. Be POS agnostic, which enabled the bookstore chain to roll out its loyalty solution into three countries, across a variety of POS equipment, and without making modifications to existing POS software
2. Work independently of the POS system (as a project to provide a new POS was about to begin, the research stage and the loyalty system would need to be compatible with both the old and the new systems)
3. Be real time and have quick response times between the POS systems and the loyalty database
4. Not negatively impact on procedures and time taken at POS
5. Provide a relational database of rich data that drilled right down to a record of each customer’s book purchases so that these customers could be offered books, based on past behaviour, at POS and/or via email
6. Provide electronic sales journals to replace the need for paper ones
7. Provide a customer’s points balance on the top part of receipts so that the sales assistant could say: “Would you like to use your points to pay for this purchase?” and
8. Provide real time redemption of points to pay for books, as if it was cash.
“The Dymocks Booklover Loyalty Program implementation ran exceptionally well and we were very impressed with our loyalty and technology partner’s professionalism and expertise. We were able to iron out the bugs during the pilot, which meant that the rollout of the program ran exceptionally smoothly,” says Michael Gars, Dymocks’ General Manager, Information Technology.
“We recognise that the franchise staff were key to the success of the program. Just as the phrase ‘Would you like fries with that?’ ensured the success of another well-known business model, ‘Do you have a Booklover Card?’ is the single most important question that a franchise staff member can ask. A simple question that can revolutionise our business.“
For Dymocks franchisee, Andrew Whittley of Belconnen in the ACT, being involved in the pilot program has already seen him enjoy the rewards.
“Booklovers love the new program and are showing it by regularly earning and redeeming points. Our staff are extremely pleased with the new system. It has fitted in seamlessly with their normal operating procedures and has simplified the process.”
The process of scanning the customer’s card makes the procedure very manageable at store level and also allows stores to capture vital customer information, ranging from what they’re spending on books to their reading preferences. This information can be used in a number of ways, including identifying ‘best customers’ based on their accumulative spend. This then enables Dymocks owners to offer them additional rewards, assess incremental sales profit, and substantiate the cost of running the program. The customer data also provides a great negotiation tool to use with suppliers to establish strong relationships and develop further soft benefits for the program.
For example, for major releases such as Harry Potter, Dymocks is now positioned to identify the names and contact details of around 100,000 people who purchased the last book, with the view of establishing a waiting list of 50,000 people who would like to be the first to receive the new book.
In addition, the best customers, who have been responsible for the bulk of past sales, also now have:
1. $100,000 worth of points to spend in the store and currently, based on demonstrated past behaviour, are likely to spend around four times the value of these points;
2. When emailed with an offer, 40 per cent of customers are expected to come into the store within one to two weeks to take up the offer;
3. Knowledge of what books they like – information given when they joined the program;
4. A record of books they like based on buying habits, so they can be notified of other books that they are likely to buy; and
5. A comprehensive profile of each and every customer on which to build more personal relationships.
All of which increases the value of your franchise to prospective buyers.
”Dymocks is successful because it has a skilled management team that knows where it wants to take the business. It is focused on customer relationship marketing, and it is supported by a very strong IT team that ensures it has the correct infrastructure to make it happen,” says Pinpoint’s Topper.
Loyalty programs can also measure the effectiveness of various campaigns. In the case of Dymocks, the results were impressive. “We’ve been blown away by the results of the revitalised Booklover program,” says Ruth Wetmore, Dymocks’ General Manager, Marketing and Merchandise. “All KPIs have been met and, in most cases, exceeded. And when the results are compared to the same time last year, there is just no comparison.”
29-May-2006