Customer Relations & eCommerce Frank Ross on 16 Sep 2007 05:54 pm
An Example of a Good Incentive Program
Where I live, there are two grocery chains - Fred Meyer and Quality Food Centers (QFC). Actually there are several more, but what ties these two together is that they are both owned by the parent company Kroger. That wasn’t always the case; QFC was purchased by Kroger in the late 1990’s.But it’s interesting to note that the two stores have two different card programs. QFC uses the standard grocery card program where they have two sets of prices on many things: a regular price and a member price (member being a person with a card).
Fred Meyer, on the other hand, uses a rebate program. There is a card, but it doesn’t immediately save you anything on the groceries. The prices are the same whether you have card or not. The rebate program is quarterly and the more you spend the more points you earn that quarter. At the end of the quarter, you get mailed dollar value coupons (coupons good for purchase on anything) along with % off coupons (coupons geared toward a department such as apparel). How much dollar value you get depends on how much you spent. It’s scalable!
Interestingly, Fred Meyer’s normal price on standard item such as a certain brand of paper towel and a certain brand of aluminum foil is less than QFC. Where do you think I shop?
The rebate style incentive gets customers to return, the first kind that QFC uses doesn’t. QFC must rely on other things to get customers to return.
What does this have to do with eCommerce? Well I have always felt customer loyalty is not created by showing a lower price and/or bragging about your low prices (WalMart already does that ad nausem). You know; have something like list price stricken out and having another (much lower) price alongside it marked “our price”. I think customers will appreciate a fair price even more if there is an incentive there. After all, what’s in it for me is one of the questions retailers must ask on behalf of their customers.
Tags: Customer Rebates, Customer Incentives, Customer Loyalty, Customer Relations
on 24 Sep 2007 at 4:38 pm 1.Brian said …
I was sent a link to your blog as our service does what you suggest for online/ecommerce sellers.
In addition, as we designed our online reward programs, we struggled to go beyond answering: “what’s in it for me” but also had to ask and answer — how do we get customers back to our listings/site over and over again?
The answer to that second question — online — is much different from a brick-and-mortar experience which presumes you come back to shop.
Asking both questions within the context of online ecommerce is important. Good post!
Brian