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In the Feb. 1 issue Progressive Grocer ran coverage of its Executive Roundtable Series: Technology and the Independent Grocer, which brought together tech decision-makers from six supermarket operations to share ideas and debate the issues surrounding retail technology. This month we continue the roundtable coverage, and the topic is loyalty programs.
The roundtable discussion features seven executives: Mike Brown, g.m. of retail technology, Unified Western Grocers, Commerce, Calif.; Rob Dornberger, v.p., information technology, Scolari's Food & Drug Co., Sparks, Nev.; Deirdre Gomes, information technology director, and Ron Gomes, wine, liquor, and beer supervisor, Mollie Stone's Markets, Mill Valley, Calif.; Scott Hair, Green Frog Market, Bakersfield, Calif.; Lee Robertson, c.i.o., Andronico's Market, Albany, Calif.; and Tanney Staffenson, director of operations, partner, Lamb's Markets, Portland, Ore.
Progressive Grocer: What are your strategies, if you have any, or opinions on loyalty programs?
Mike Brown: Loyalty programs aren't in high demand from our retail customers. That's not to say that the concept isn't good, but most of our customers have actually gone in the other direction, to what we call an anti-card program where the point of sale is programmed to collect all the promotions and deals, and at the bottom of the receipt an individual line item shows the savings off the regular price.
PG: Like Staples does?
Brown: Yes. Other than that, we have no plans to implement any type of loyalty program with our retailers, because they're so diverse and the market areas are so vast.
Tanney Staffenson: We looked into loyalty programs, but many of our competitors have loyalty card programs, and we noticed that many shoppers didn't like them. They didn't like knowing that what they were buying was being tracked, and they wondered why they needed the card to get the savings. And with so many of our competitors using the cards, we don't use them as a point of difference in our market. So we just used it the other way: We let our shoppers know that we're not tracking what they're buying, and they don't have to have the card. "Just come on in; we're going take care of you." That's been successful for us.
PG: Do you use the receipt to let them know how much they're saving?
Staffenson: Yes. "Simple Savings" is the name that we gave the program.
Lee Robertson: What are the savings relative to it?
Staffenson: Everyday shelf price, whether it's an ad item or a coupon book item.
Robertson: We don't have a program right now.
Rob Dornberger: We have a full-blown loyalty program in our conventional supermarkets -- which we don't use in our price-impact store. It's very complicated. We've actually had to go to two and three different companies to get the software and hardware that we've needed to run it, using S&H Greenpoints and the RMS program.
PG: You use them in conjunction?
Dornberger: Yes. We started out with the RMS system, but because of our POS system and not being able to integrate, we weren't able to deliver rewards to the customers in real time at the POS system with the RMS; that's when we added S&H Greenpoints. Now all of our stores are linked together. We know exactly how much the customer has purchased in all of our stores in real time, and can use that information to market to them.
One of the biggest issues, though, is that there is so much data and we're not really utilizing it to the extent that we could, because it gets very expensive running these different systems. We're looking at trying to get down to one system.
Scott Hair: I think there's a liability issue associated with loyalty programs. A customer once was involved in a hit-and-run accident after leaving the store. The California Highway Patrol found a receipt from our store and demanded information about that customer. We required them to come with a subpoena to get that information. When you're accumulating information about your customers, about their personal health issues, their habits, and everything else, in the state of California, I think it's only a matter of time before it's not only a criminal issue -- I think it's going to be a civil issue [for the retailer].
I think any retailer that's involved in a loyalty program needs to really think through that process, because you're accumulating a lot of information about people that are shopping with you, and I'm not entirely confident that it's appropriate to enter into someone's private life to that level.
PG: I guess you've got to balance that against the benefits.
Dornberger: We're seeing benefits, but we don't give out any customer-specific information -- even our store managers don't have it. There are only a few people in the company who can access the data.
Ron Gomes: We've looked at card programs but never implemented them. I think part of it is that many of our customers don't want to give out their information.
Brown: What I don't get, though, is if the end game is really to collect and understand what your customer is buying, why do some companies have loyalty card programs but don't collect any information? They're not getting any value out of it, so why even have the program?
Ron Gomes: The perceived savings.
Brown: You've got to tailor a marketing program, and you've got to stick with that, if that's what you're going to do. If you're just going to go halfway, why do it?
Staffenson: There are certainly a lot of other ways you can find what your customers want.
Brown: Just ask them.
Staffenson: Or they'll tell you.
Ron Gomes: Our customer suggestion box works well -- we have one in every store.
Staffenson: Well, one thing we do is we have postage cards -- they're postage-paid. They come directly to me. Special-order cakes, a catering-order floral arrangement, gift basket, anything like that which goes out of the building has one of those cards with it. And then there's the suggestion box. We respond back to every one of those cards.
PG: Do they tend to put their contact information on them?
Staffenson: Usually they do. Most of them put a phone number, which I always prefer to e-mail or letter. We pay close attention to these and are willing to bring in any product that a customer requests. The customer will request a product. First we've got to find out where it is, if we can get it. If we can get it on the shelf, you know, we'll put a sign up there saying, "Thanks, Mary, for requesting that we carry this product for you." If it's something that Unified doesn't have, we drive down to Safeway, buy it off the shelf, and put it back on our shelf. If you bring a product in for a customer, you own them.
Robertson: We fulfill special orders, and I think there's a real opportunity there for data capture and potential leads, such as capturing last year's Thanksgiving special-order data and returning to those customers to see if they'd like to do it again.
Hair: We've actually started keeping track of our Thanksgiving dinners that are going out, and we offer early-buy discounts the following year, but, in looking at the ways that we cement relationships with our customers, actually this is the one place where I could see a kiosk making a lot of sense.
Ron Gomes: We receive a lot of customer comments on our Web site. We got an e-mail last week from someone in Atlanta looking for Carmel kosher steak sauce with mushrooms. I FedEx'd her a dozen cans and, boy—she just couldn't believe that I took the time and effort to package it up and FedEx it to her.
Brown: How did she come to this?
Ron Gomes: On our Web site. If you [search the Web] for kosher products, Mollie Stone's will probably come up in the top list.
PG: How does information gathered from the Web compare with what you're getting in the store itself?
Ron Gomes: You receive a lot more complaints from the Web site.
Staffenson: You also get more details. People have time to sit at the computer and really write.
Deirdre Gomes: Every Monday morning Dave Bennett, Mollie Stone's owner, goes over the comments from the Web site and assigns somebody specifically to respond to each comment, if it's not himself. No complaint goes unanswered.
Staffenson: It's the same with us. If it's something that comes off the Web site, or a letter or comment card, I take care of it personally. If I can't, then the store director does.