Where Loyalty Programs Go Wrong

One of the oldest sales strategies is to reward repeat purchases. An old school example would be your neighborhood coffee shop that had a punch card telling you that after you buy nine lattes you’ll get the 10th for free. A more recent example would be when checking out at Petsmart or Petco (or thousands of other retailers) they will ask for your phone number, pull up your profile, and offer the lowest price possible on every bag of dog food.

If you're thinking of running a loyalty program I've put together some quick tips.

Do not call it a loyalty program.
These programs are not the definition of loyalty. These programs are about bribery. You are paying your customers to be repeat buyers. Treat them as such. Don’t paint a happy picture over it. People are smarter than that.

Instead I would brand the program after the business. Donny's Bike Shop Carbon Club or Donny's Bike Shop Deals. 

Make it digital.
Having your customers carry a punch card is silly. Put their purchases in your POS system and track it digitally. When it is time for them to receive their tenth inner tube free, just tell them. Customers will thank you for tracking the little things and will recognize the value of giving you repeat business.

Don’t ignore the data.
The primary value for Petsmart and Petco is not in having a repeat customer, that is a byproduct. The big value is in having thorough data of their customers’ shopping habits. By recording their customers purchases they will have a detailed understanding of what inventory to carry, when people or more likely to buy dog toys, when people are likely to test a new brand of food, and so. No reason why the same data can't work for bike shops. 

Consider having the customer buy in.
Rather than discounting for loyalty, Amazon sells loyalty through their Amazon Prime membership. For $79/year (soon t be more) membership gets you access to all sorts of rewards including free or discount shipping, free streaming of movies, and other discounts.

In a bike shop you could sell a quarterly or monthly membership package that gets people buying now for value given later. 

What are some loyalty program you run? If you have a moment to comment or share it would great to hear from you. -Donny

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Check out the book. Leading Out Retail is a creative look at bicycle retail and teaches retailers simple strategies on how to increase profit through service, what the most important question to ask every customer is, and how to manage the dreaded Timmy Factor.

200 Bike Shops Will Close & Other Predictions for 2014

I thought I'd take a crack at making some predictions for the year. 5 predictions for bike retail, and 5 predictions for the world of retail. In no particular order, here you go.

IN BIKE RETAIL

More bike retailers will move to click-&-collect.
Truly competing with online sales means competing online. Retailers will thoroughly build out their click-&-collect sites.

More bike retailers will become manufacturers.
Apparel and small hardgoods will be the first to be made by the local retailer. Once the retailer becomes the manufacturer, they will no longer be limited by MSRPs or territories.

Bike retailers will experiment with pop-ups.
Instead of waiting inside the brick and mortar, more retailers will open 1-2 day stores where cyclists congregate. Coffee shops, gyms, and trailheads will be the starting points.

200 bike retailers will close.
As some retailers grow, they are not growing the number of cyclists at the same rate. Only way they grow then is through market share.

A major cycling brand will go direct.
One of the top 10 cycling brands in the country will cut out the retailer network entirely. Instead selling direct to the rider.
 

IN ALL RETAIL

Stores will be open on Thanksgiving Day.
This is a no-brainer. For good or bad, the holiday of Black Friday is becoming more relevant than Thanksgiving. Bike retailers will still be closed though, still struggling to capitalize on the holiday.

Apple will update their in-store CX.
The customer experience at Apple is becoming antiquated. They will, again, revolutionize the way people shop. We will all say, “Why didn’t I think of that?” when they do.

FedEx and UPS will announce Sunday delivery.
With Amazon and USPS to launch delivering on Sunday, they will redefine the rules of making a delivery. UPS and FedEx will have to play catch up.

Showrooming will be encouraged.
Retailers are understanding that showrooming is not the death of a sale. They will promote it in store knowing that what the customer finds will match what they have.

Ship-to-store will grow.
Too many UPS packages were late or stolen this year. Customers will opt to ship to the store (or a UPS/FedEx location) giving retailers another chance to convert.

Thanks for taking the time to read this far. If you found value in this piece would you please consider sharing it on social? Thanks again. Donny