The ROI on rewards programs

Attracting customers to your garden center is the first step to running a successful business. The key to maintaining that success is securing dedicated, devoted customers.

That’s why customer loyalty programs are growing in popularity. Incentives like discounts, cash back and gifts are appealing to customers and are good for business. To manage these programs with software, there are a number of options that are already integrated in retail management software.
 

The 80/20 rule

Dave Scott, president of Laurel Oak Garden Center in Marlton, N.J., says the decision to offer a customer loyalty program was based on the company’s desire to stay in front of customers without going “over the top.”

“You can’t stay the same, or everyone will pass you by, so we had to do something to improve marketing and ways that we reach our customers,” Scott says.

Keeping the 80/20 rule in mind — 80 percent of business comes from 20 percent of the customers — and that the best advertising is word of mouth, Scott wanted to find a way to reward those customers.

Terry Esbenshade, owner of Esbenshade’s Garden Centers in Lancaster County and Berks County, Pa., was on the forefront of customer loyalty programs, implementing theirs in 2002. “I was looking for a way to better communicate with our regular customers and increase repeat traffic into the stores,” he says. He also wanted to collect analytical data that would allow more specific marketing based on customer buying habits.

Purchases are recorded in their system with a loyalty number, and customers are issued a card and key tags. “We have a running history of customers’ transactions, which allows us to use that transactional data to understand their purchasing habits and at times, we will run targeted campaigns,” he says, adding that this assists in customer retention.

The Good Earth in Little Rock, Ark. started a loyalty program to replace the “garden bucks” employees used to hand out as they were difficult to track.

“We wanted to use a loyalty program to collect more information and learn more about customers and to offer them a more standard loyalty program across the board so that everyone can get same rewards,” says Jennifer Gibson, a horticulturalist who helps the owners with marketing.
 

The hook

At Laurel Oak, customers who reach $500 in purchases will receive a $20 credit to spend at the sore. Often, a customer will ask where they are on their loyalty club points, and if they’re close to reaching the $500 mark, they’ll sometimes upsize their purchase to qualify. Members receive first notifications of promotions, as well as promotions exclusive to loyalty customers.

At The Good Earth, members earn $25 in “dirt dollars” for every $500 spent — gift cards that they can cash in twice yearly. One fringe benefit is that the dirt dollars never expire and can accumulate. The company also sends out a weekly newsletter via email.

At Esbenshade’s, loyalty members accrue points to obtain rewards. For every $100 they spend, they receive $5 in certificates or coupons.

Additional perks include birthday wishes and a birthday gift: Customers are invited to come into the store and receive a free plant, usually one that is in season and was grown on the premises. An added attraction is that no purchase is required to receive the plant.

“If you get someone in the door, it’s likely they will make another purchase,” Esbenshade says.

Esbenshade’s runs “loyalty club only” specials at times, but on a limited basis, on the theory that he doesn’t want to alienate walk-in customers.
 

More than coupons

The ability to manage these loyalty programs is integrated into the POS software used by all three of these garden centers.

For example, Laurel Oak was already paying licensing fees to use QuickBooks, an accounting software, and it already had a built-in way to manage customer loyalty programs. “We were already familiar with tooling around in QuickBooks; it was easy for us and easier than getting new software,” Scott says. “Marry that with Constant Contact for loyalty club emails, and it’s pretty simple.”

Both Esbenshade’s and The Good Earth use Eagle by Epicor.

“This allows us to manage the type of rewards we want to give, allows us to pull our mailing list, and allows us to look at sales by loyalty customers and see what they purchased,” Esbenshade says. He adds the software also prints coupons at point of sale as well as manages the expiration of the coupons and when they are generated.

This software is also able to track specific figures. For example, last year, 63 percent of purchases made were by loyalty club customers, allowing them to better understand buying habits of these customers and utilizing this data in their marketing efforts.

Gibson says the software makes the sign-up easy, and people can begin to use their membership cards immediately. “It’s pretty seamless,” added Gibson. “We’ve got thousands and thousands of members.”
 

Rewards for the business

For Laurel Oak, there have been no disadvantages to the program thus far, and most customers have opted in. “People are actually kind of excited. It’s human nature: I’m part of an exclusive club, I get these special benefits,” Scott says. Laurel Oak has also seen an increase in sales because of the program.

Esbenshade reported that customers seem to like getting coupons at point of sale. However, the certificate redemptions are generated with an expiration date, and at times, customers want to use them after the time period has expired. “If they’re a good customer, we will make an allowance in some cases to utilize those rewards,” he says.

Customers at The Good Earth love the program, and the lime green card that they receive contributes to brand recognition. Occasionally, a customer may get frustrated if a sales clerk forgets to ask for the loyalty card prior to ringing up the sale, but that is an easily fixable problem, as the purchase can be manually entered into the system and credit given.

“I would say the number one thing is the customers feel like they’re getting something back, that they’re not just throwing the dollars out there. They’re getting a reward for choosing The Good Earth as their shopping destination,” Gibson says.

Regardless of any kinks in the system, which are generally minimal, the advantages to maintaining customer loyalty program are indisputable.

“We know that our 10,000 loyalty customers on average spend 78 percent more than a non-loyalty member,” Gibson says.

Hilary is a freelance writer based out of Pittsburgh, Pa.