Garden centers are making innovative use of rebates and loyalty programs.
Many garden centers today are looking to new marketing programs and technology to increase sales, improve loyalty and learn more about their customers. Surprisingly, they are finding answers in new, innovative uses of two old ideas: rebates and loyalty programs.
Loyalty programs and rebates are extremely popular marketing methods that reward the buyer for purchasing products from a particular store or manufacturer. Most often, the loyalty card looks similar to a credit card or key-ring card with a barcode that is scanned at the point of sale. When the card is presented, the consumer is either eligible for a discount on certain items or gain rewards points that can be applied towards a future purchase.
With the advent of new technology, loyalty programs are getting more complex and more rewarding—for both the consumer and the retailer. Consumers want choice in their loyalty programs rewards, something that hasn’t always been available. However, by utilizing software that collects and analyzes POS data, retailers and manufacturers are able to effectively target market additional products and services to their customers. This allows the consumer to be rewarded with items that are more in line with their desires or needs.
For instance, a customer purchases several shrub roses. Utilizing this POS data, garden retailers can now offer discounts on fertilizers or pruners. This form of targeted marketing benefits the consumer in that he/she most likely needs the additional items and is now saving on the purchase of them, and the retailer in that they are boosting revenue through incremental sales.
Rebates reign. With more than $15 billion in rebates being issued in an average year, it’s apparent that rebates are a significant part of the loyalty and marketing strategy of both retailers and manufacturers. Just as the consumer wants choice in rewards they receive, they also want to choose how to redeem their rebates and in what manner they are paid out.
With the implementation of new technology and processes, consumers can now choose to redeem their rebates via prepaid cards, gift cards, warranties, services or merchandise. Furthermore, instead of the antiquated method of mailing in rebates and waiting months for a check to arrive in the mail, rewards and rebates can now be processed online.
After polling consumers, the speed and ease of online rebate redemption is regarded as the most appealing rebate submission method.
Rebates and rewards can now be aggregated. In the past, when a customer purchased a variety of items with differing rebates, he/she had to manually submit the paperwork for each rebated product. However, new technology allows consumers to submit all of their rebates in one application and receive one payment for the total dollar amount of the rebates. The speed and ease of this method of rebate aggregation is appealing to consumers and retailers alike.
Currently, retailers are having trouble sifting through all of their gathered data to find relevant rebate promotion effectiveness. New technology has made analyzing POS data from the use of rebates and loyalty cards easier, and the retailer is able to track the effectiveness of rebates across channels. This allows a rebate’s success to be quantified. If the rebate is not performing well in the eyes of the retailer, it can be scrapped. Seeing as how rebates are utilized by companies to drive incremental sales, with the additional data new technology provides, they can increase sales volume and drive revenue much more efficiently and successfully.
Follow through. A final benefit the collection of POS data provides to retailers and manufacturers is that of post-purchase sales and follow-up marketing. Through the collection of consumer spending habits through reward redemption and spending of rebate dollars, companies have more understanding of what their customers are buying. In turn, the retailer can market more effectively and efficiently after that first purchase. The information gathered in the rebate and loyalty process has given companies the ability to track lifetime customer value and drive incremental revenue through highly targeted promotions.
Garden centers are utilizing loyalty programs and rebates as part of their marketing mix in order to enhance customer acquisition and market expansion. There are four key areas in which rebates drive decisions: Target new untapped product segments, ideas for new products and services, potential partnerships with other companies, and geographical expansion. New technology in loyalty programs and rebates allows these decisions to be made more easily with the results having a higher likelihood of success. As technology advances, so do the varying methods of loyalty program implementation, rebate redemption, and post-purchase marketing. It’s safe to say that by harnessing the power of new software and processes, companies will become more profitable and consumers will see an increase in rebates and loyalty program options.
Downsides of discounting
Markdowns and cash rebates, a strategy of many brands and retailers today, may actually be eroding brand loyalty, COLLOQUY revealed in a report that should serve as a wake-up call for U.S. marketers. When asked if it pays to be loyal to a favorite brand, only 12 percent of U.S. consumers strongly agree and only 17 percent say loyalty programs are a “very influential” factor in determining a purchase.
Rules of engagement. In a white paper titled “The Rules of Engagement: Loyalty in the U.S. and Canada,” COLLOQUY said loyalty programs have fallen into a trap of copying one another with discount and cash-back rewards that increasingly look alike to consumers. The research conclusion: Something new is needed; otherwise brand owners must incur not only the margin losses but also the cost to re-engage their customers.
“Emotional engagement has come under pressure as companies look for quick wins,” said Kelly Hlavinka, managing partner of COLLOQUY, a provider of loyalty marketing research, publishing and education. “The culprit is a general over-focus on hard-dollar economic rewards, discounts, and cash rebates—to the detriment of recognition and rewards that engage hearts and minds and reinforce a specific branded difference. Many loyalty programs are at risk of becoming commoditized discount programs because they are meeting only some, but not all, of consumers’ needs.”
Participation up; engagement down. The COLLOQUY data showed that while consumer participation in loyalty programs is up, the type of engagement that forges long-term brand commitment is down, a victim of the rapidly disappearing unique customer experience. The number of Americans participating in at least one loyalty program grew from 68 percent in 2009 to 74 percent in 2011. For seniors (60 and over), the jump was from 61 percent to 81 percent for the same period.
According to the findings, in the past two years critical interactions that lead to deepening the bonds of emotional loyalty are trending downward:
Learning program information via websites was down to 33 percent in 2011 versus 44 percent in 2009.
Swapping program information via social networking sites was down to 9 percent in 2011 versus 18 percent in 2009.
Reading special offers via cell phone was down to 8 percent in 2011 versus 18 percent in 2009.
Hlavinka sees an opportunity stemming from the commoditization trend. “Marketers who shore up the relevance of their offerings and communications have the potential to differentiate themselves and outgun the competition,” she said.
Hlavinka offers three tactical initiatives to help marketers engage consumers so they’ll stick with brands for better or worse and brag about them to friends:
1. ‘Give’em what they want.’ Just 31 percent of U.S. consumers find reward program communications extremely relevant. Leverage data from programs to determine what high-value customers buy and what drives their redemption. Put customers fully in control.
2. VIP mentality. Engender a sense of insider status for customers. Invite customers to design how rewards are tailored to their needs – this is the new horizon. Consumer-to-consumer dialogue and company-to-consumer-to-consumer trialogue present new opportunities.
3. Keep it simple. Achieve organizational transformation from being product- or channel-focused to being truly customer centric. Ease of engagement is the key. Approximately 64 percent of U.S. consumers told COLLOQUY the main reason they joined a loyalty program was because the program made it easy to redeem for a reward.
Doug Bantivoglio is the business development manager at The Ohana Companies, an innovative leader in rebate and payment processing. To contact Doug, call 302-225-5505, e-mail email@example.com or visit www.everybodywins.com.