Loyalty Programs - Group Sharing Footnotes

The following footnotes have been collected by Danny Summers from The Group during discussions on this subject at the time of developing this story. We plan to add additional ideas from others over time. These notes provide important additional Group guidance in developing or evaluating your program(s).

Sid Raisch said, "When I have a new client one of the very first things I dig into is their Profit Rebate Programs, aka Loyalty Programs. This includes Bonus Bucks. The first thing is to change the view to make them into incentive programs that guide the behavior of their customer in the direction they want them to go, with minimal out of pocket cost, or out of profit cost. I do have a few "non-negotiable" requirements.

  1. NO Coupons
  2. NO percent off discounts

So that pretty much eliminates all most of them have been doing and then we turn the focus of their marketing messages to informing and creating interest and desire to own specific products and services. Otherwise, when something people already want to buy is incentivized it does nothing but erode profit. Another basic premise - you can almost never "make it up on volume", pretty much no matter how much more you can sell. The math just doesn't support it."

Steve Bailey said, "As you develop or even review your program, be sure to aimed towards the financial aspects of loyalty programs. My two cents worth is “don’t give away the farm”, and continually reevaluate your offering and it’s effect on Margin Dollars."

JD Boone, Dothan Nurseries, said, "I use to send out postcards with discounts. Now I just send out postcards with cool stories and pictures pf products, things the customers will like but no discounts. Ever since I stopped sending out postcards with coupons I make more money. The same people still come in and BUY stuff, just without a coupon. To be clear I send out 5 to 6 postcards per year to about 4000 people each time. Just not coupons with discounts in it.

I do have a Bonus Bucks program during March, April, and May. I changed from $1 for every $10 to currently giving $1 to every $25 Next year I plan to rise it even more to $1 to every $40 or $50. My average sale is about $65, so nearly everyone will get one and it entice them to come back.

The Unexpected Thank You: For five years now, every Monday morning, I send out a handwritten note to a random customer from the previous week.  I just tell them thank you, hope you like your plants, if you ever have any questions or concerns give me a call.  I put my business card in there along with a $10 - $15 gift card to a local restaurant.  When I saw the birthday cards that Cactus and Tropicals does (at The Fall Event), I liked the idea better to give them a gift card to my business instead.  So now we will send out the same type card with a $5 coupon in it.  I now send out 2-3 a week.  Still a hand written note.  But these aren’t for birthdays, these are just three customers from the previous week that a get a thank you note and a $5 coupon." Here's a sample of our new Thank You Card - PDF.

Ken Lain, Watters Garden Center

: We like Bonus Bucks over other loyalty programs, Punch Cards or mobile app because we love the customer to walk out with our logo on a piece of collectible paper.  We hear stories of BB being magnetically held onto refrigerators, wallets, collected in glove boxes, dressers and kitchen draws, but rarely thrown away.  Customers perceive us as being genuinely generous because of our BB program.



Bonus Bucks are not for everyone.  A customer must be part of Watters Garden Care Club to be offered Bonus Bucks with their purchase.  We also track all their purchase and warranty information within our POS system, provide a weekly garden column useful for their garden that week, a Monday Morning coupon in the season for a featured plant of the week, advanced notice to sales and preferred garden classes unique to club members.  We offer no other discounts and have few sales other than our BB program.  Watters currently has 8600 active 'Garden Care' members because of these benefits. 



Each year we reassess which purchases receive a Bonus Buck.  The goal is one BB per visit.  As our average sale goes up, we raise the purchase price to acquire a BB.  Our current average sale is around $60, so we set this years purchase price at $1 BB per $50 purchased.  It looks like our average sale next year will be about $70, so we'll raise the bar to $1 BB per $60 purchase; each year is different based on average sale.  We never give away the farm, so to speak.  Again, the idea is for each transaction to receive one BB per visit.



[Sid called Ken and asked, what if the half of your customers who don't spend above the average sale also received a BB, as encouragement to return and spend more? Ken is considering this in his approach.]

Watters Garden Center redeems BB year round.  We want to see the customer the next time they want to garden, with BB in hand. Donut marketing, or a Bonus Buck, is about getting the customer back into the store before they visit a competitor rather than clearing out tired merchandise at the end of the season. BB can be redeemed anytime during the current calendar year.



Bonus Bucks do expire at the end of the year.  We redeem last years BB through January of the following year, but hold the line on old BB in season.  We dramatically change the photos so cashiers can identify this year's BB easily.

We redeem BB on all purchase up to 50% of the purchase price, no limitations.  BB can be used on all purchases, sales prices, multiple prices, whenever a 'Garden Care' member presents a BB at purchase they can use them up to half their purchase price.



A good customer never leaves without our logo in hand, so even customers redeeming BB receive more BB with that purchase.  Bonus Bucks are given for every $50 spent no matter the form of payment.  Customer comment about our generosity and how they can never get away from Watters BB program. 



We strategically price Bonus Buck redemption into each department.  Redemption of BB with our current strategy is 1% of gross sales.  We treat BB printing as a marketing expense, but redemption is a margin dollar cost.  We increase plants prices to cover the 1% loss of margin value across all departments. 

An example of Bonus Buck along with Watters Garden Care Advantage application is HERE as PDF. 

Ned Wilson, Wilson's Garden Center: As part of our loyalty program at Wilson’s Garden Center, we started a bonus buck program about 15 years ago. We call them “Hurry Back Bucks” and they are given to customers who are part of our Great-Gardener loyalty program. It is a primary benefit for customers who share their email and postal addresses with us so we can communicate with them throughout the year. We give out one paper Hurry Back Buck (HBB) for each $25 of sales before sales tax. Originally, it started out as 1 HBB for each $10 purchase, then we went to 1 HBB for $20, and now 1 for $25. There has been very little resistance to raising the bar, and it saves us from excessive discounting. People tend to spend the average sale amount whether they have $1 or $20 of HBB’s to redeem.

It’s old fashioned, I know, but we prefer paper HBB’s instead of points generated on a POS system. Our customers view these paper HBB’s as cash to be spent. They store them on refrigerators and in purses and are reminded of Wilson’s whenever they see them. We redeem the bucks for up to 50% of the pre-tax purchase. The rules are printed on the back of the HBB’s and gently states that they cannot be used for gift cards and some other excluded transactions. They can be spent anytime during the year but do expire at the end of the year (which give customers an urgency to spend them). We used to require that they be redeemed during a specific slower month to improve sales of that particular month. We have found that there is more excitement to use the HBB’s if they can be spent on their next purchase rather than waiting for a specified period. People often return very soon after receiving them and spend additional dollars so they don’t burn a hole in their pocket. After all these years we do find these bucks are still a useful tool to generate positive enthusiasm for our business and bring return business. Thanks to Ken Lain at Watters as we have established our system using several of his ideas.

Data from HBB sales (YTD 11/30/18):

• HBB’s redeemed to date amount to 1.2% of our total sales.
• We have a 49% redemption rate on the HBB’s passed out this year so far.
• 20% of our total sales were generated from people when they spent HBB’s with their purchase.
• The average sale of persons redeeming HBB’s was 12% higher than normal average sale for our customer base.

For additional reading there are two other blog posts related to this subject.

Loyalty Programs - To Drive Sales & Customer Engagement

Loyalty Program Or Just Less Profits