Rewarding strategies

Feb 01, 1999 10:30 PM  By

Bruce Green is director of finance and marketing for Lady Grace Stores, a cataloger/ retailer of women’s intimate apparel. Annual catalog sales, less than $5 million; annual circulation, 950,000.

We sell the same merchandise throughout the year, so we don’t even offer any holiday or seasonal specials. Special offers and incentives are a little gimmicky. We make continuous efforts to give good deals to our customers, rather than charge full price for items and then offer incentives. Our customers look to us for items that they can’t find anywhere else, so it’s important that we make those items available at low prices.

We’ve been in the catalog business for about three years now. At one point, during our first year, we offered some specials and incentives. But our customers didn’t really take advantage of the offers, so we don’t plan ondoing it again.

Eileen Spitalny owns Fairytale Brownies, a Scottsdale, AZ-based catalog of brownies and dessert gift boxes. Annual sales, less than $5 million; annual circulation, 100,000.

We offer year-round volume discounts to our customers. For example, we give a 5% discount to customers who spend $250 per order, a 10% discount on all orders of $500, and 15% off orders of at least $2,500.

During the Christmas season, we also offer discounts of 3%-5% for orders placed by mid-November on top of the volume discounts. During the holidays-when we do more than half of our annual sales-we try to give them something that says “thank you.” We sometimes include handwritten thank-you notes.

Some of our holiday customers place orders of more than 8,000 brownies, so we’ll include an extra box of brownies in with the order, or we’ll send them an extra box separately. And since customers sometimes place orders for gifts without ever having tasted the brownies, I send samples to the gift-givers so that they know what they’re sending.

During the summer months, we send out special mailers to our catalog customers, and we mail postcards throughout the Phoenix-Scottsdale area offering a free brownie to anyone who visits our bakery. It’s a way to get people into the shop to try our brownies during the slower season. Eventually, we would also like to implement an incentive plan that rewards customers who have placed a certain amount of orders.

Cindy Maynard is co-owner (with her husband, Bob) of Country Walkers, a Waterbury, VT-based catalog of walking and hiking vacations. Annual sales, less than $10 million; annual circulation, 175,000.

We don’t really offer anything for our new customers, but we do offer our past customers a “returning guests” discount. If they sign up for another vacation by a particular date, they receive 5% off the tour price. And when customers take two tours back to back or take two vacations in the same calendar year, they receive a 5% discount toward the price of their second vacation.

Our catalog comes out in late September, and if repeat customers make reservations by Dec. 15, they are eligible for a discount, and their names are automatically entered into a drawing for a free trip. The customer who wins the drawing can then take the vacation he or she had signed up for at no cost.

We offer the specials to our returning guests because we like to show customer appreciation. Also, it gets them to book their trips a little earlier, which gives us an idea as to which trips will be successful. It helps us plan better when reservations come in earlier.

Frank Billings is vice president of F.H. Gillingham & Co. General Store’s mail order division in Woodstock, VT. The catalog sells food and gift items made in Vermont. Annual sales, less than $10 million; annual circulation, 170,000.

If customers order in quantity-that is, if they buy more than a case of merchandise-we give them a 10% discount on their order. We also give a special gift to customers who spend more than $75, before shipping costs, per order. They can choose either an 8-oz. bottle of maple syrup or a weather stick, which is made of porous wood and when hung outside will bend or straighten depending on the level of humidity in the air.

Eventually we’ll offer more free gifts to our customers. We like to do anything we can to generate business.

Liza McCorkle is owner of Accoutrements by Liza, a catalog of tabletop settings and related gifts based in Fullerton, CA. Annual sales, less than $10 million; annual circulation, n/a.

Since it costs me about $6 to ship an order, I never really offer dollars off or free shipping as a reward or an incentive. Instead, I think it’s important to offer gifts that have a high perceived value but actually cost little. It’s also important that they are easy and inexpensive to ship. Once I offered a cookie cutter as a free gift, which cost me only about 25 cents each and was easy to include with orders.

I don’t have a sophisticated system in which I can offer incentives or rewards to repeat customers. I now givea free teapot hot mat to all customers who spend $60 or more per order; because it’s flat, it is really easy to pack and ship with an order. I also give away sugar tongs with orders of $75 or more. I once tried offering a coupon for 10% off the next purchase as an incentive, but it didn’t work. So few customers took advantage that it didn’t make much of a difference in sales.