The 10 Best Catalog Loyalty Tools

Jun 01, 1999 9:30 PM  By

We won’t waste your time nattering on about why creating customer loyalty is so important, and why loyalty programs are critical. If you’ve made it this far in business, you know that repeat customers are the lifeblood of any catalog. But you may not know what constitutes a loyalty program. Ernie Edelstein, president of Escondido, CA-based catalog consultancy The Marketing Arm, believes that a good loyalty mechanism should accomplish the following:

* Provide an incentive for customers to buy from you regularly.

* Induce customers to spend more money each time they buy.

* Make your catalog the “resource of choice” within its category.

* Provide a perception that the customers have a vested interest in buying from your catalog.

* Provide a vehicle that helps establish a genuine rapport between your company and your customers.

* Provide supplemental vehicles to the catalog through which customers can be induced to make additional purchases.

* Provide customers with the opportunity to preview or test potential products, and an opportunity to purchase off-price products.

* Provide essential product or industry information to customers.

* Provide an extra incentive for customers who have not purchased for a period of time to buy again.

* Ensure that the benefits of membership are designed to bring customers back to the original catalog.

No one mechanism can achieve all these goals, of course. But Edelstein and others agree that the most effective loyalty programs consist of a number of complementary tools.

THE TOP 10 1. Membership clubs. As the advertisement says, membership has its privileges. Membership clubs typically enable customers to pay an annual fee in exchange for product discounts and specials. For instance, gifts cataloger Eximious of London has a Limoges Encore Collector’s Society-members pay a $50 annual membership fee to receive a Limoges porcelain welcome box and a 10% discount on product orders.

In addition to special pricing, some clubs offer members perks such as special telephone hot lines, Website and e-mail promotions, and priority shipping or second-day air at no additional charge. Athletic shoes and apparel cataloger Road Runner Sports charges customers an annual fee of $19.95 to join its Run America Club. Members receive a 5% discount on all regular-priced catalog products plus free subscriptions to Fitness Runner magazine and Runners’ Journal newsletter, and access to the Runners’ Hotline Information Service.

2. Frequent-buyer points. Catalogers such as Performance Bicycle and L&H Vitamins have taken a cue from the airlines and are awarding customers points for every dollar they spend; after accumulating a specified number of points, the buyers can redeem them either for free products or for dollars off the price of a product.

3. Volume discounts. You’d be hard-pressed to find a business-to-business cataloger that doesn’t offer volume discounts, but more consumer catalogers-particularly those that sell consumables such as pet supplies and healthcare products-are providing them as well. Not only do volume discounts encourage customers to order more at one time, but they also give the perception that the cataloger is rewarding the customers for their patronage. Outdoor gear and apparel marketer REI takes the concept a step further and provides its membership club participants with an annual patronage refund based on the amount of money they spent with the company that year.

4. Product panels. Road Runner Sports offers its club members product testing privileges, though there’s no reason other catalogers can’t expand this concept to include their best customers. Based on their interests, Road Runner selects members to test items such as running and fitness apparel, accessories, shoes, nutritional products, and equipment. The product evaluations appear in Fitness Runner magazine, and testers may keep whatever merchandise they test.

5. Newsletters. The advent of e-mail marketing has made it possible for catalogers with an online presence to send regular e-mail newsletters to customers who opt in to receive them. By offering tips, notices of new products, and similar “added value” editorial, newsletters reinforce the bond between cataloger and customers while subtly encouraging recipients to order. For business-to-business catalogers, particularly those that mail only once a year, both e-mail and print newsletters build loyalty by serving as an “in your face” reminder to customers-particularly if they also offer special discounts or incentives.

6. Credit cards. By offering proprietary credit cards, catalogers such as general merchant Spiegel and apparel mailer Chadwick’s of Boston can encourage loyalty and increase spending. Credit cards can also help catalogers implement specials such as deferred billing (“buy now, pay later”), which further promote spending.

7. Reminder mailings. Having trouble keeping track of your holiday gift list? Food gifts cataloger Harry and David, for one, will help: Customers who place holiday orders will receive reminder lists the next year noting to whom they sent gifts and what those gifts were. The advent of the Internet also enables marketers to send customers personalized e-mail reminders. Visitors to the Website of chocolatier Godiva, for instance, can fill out an online form of gift-giving occasions and ask to receive a reminder one or two weeks prior to the date.

8. Continuity programs. These include the food-of-the-month programs, popular among food catalogers such as Harry and David, Mission Orchards, and Omaha Steaks, in which customers typically send gift shipments of various specified products either on a regular monthly basis or on selected months or holidays. These programs, purchased as gifts for others, encourage customers to spend more with a catalog on a regular basis and increase sales, while reinforcing their relationship with a particular catalog brand.

Another type of continuity program is the auto-ship plan offered by catalogers of consumables such as printer cartridges, medical smocks and gloves, and cleaning products. Organic products cataloger Harmony, for one, allows customers to set up a standing order of home supplies to be delivered in quantities and at intervals of their specification.

9. Incentives for second-time buyers. Conventional wisdom says that the sooner you encourage a first-time buyer to make a repeat purchase, the more likely the customer is to become a valuable long-term buyer. To that end, Scholar’s Bookshelf sends first-time buyers a discount coupon almost immediately after fulfilling the initial order. Other catalogers offer free shipping or gifts with a second purchase.

10. Exemplary customer service. Think of it as putting your mouth where your money is: A membership discount can’t compensate for an impatient order-taker, repeated backorders, or misdirected deliveries. Remember, the glitziest loyalty tools in the world won’t keep catalog buyers loyal if your customer service falls short. The best way to reward buyers for their business is to treat them with the respect and appreciation that they, as pivotal elements to your success, so richly deserve.