Frequent-buyer cards and customer loyalty programs have been enticing potential buyers--or trying to--for the past two decades. From frozen-yogurt shops to airlines, retailers have used points and price as lures for would-be shoppers. Bookstores, too, have been implementing frequent-reader cards. Many booksellers regard them as the cost of doing business. Some booksellers don't even use a physical card, preferring to let their computerized inventory systems do the tracking. Still others find themselves caught up in the age-old shopping dilemma: Paper or plastic? But are frequent-buyer cards worth the time and effort? Do they contribute to the bottom line? Or do they cost too much to offset any public relations value? What about other ways of developing customer loyalty?
Some bookstores have crafted frequent-buyer plans using one of today's most fashionable buzzwords, "membership." At Women and Children First in Chicago, however, customers have had a chance to "belong" for 18 of the store's 22 years. For an annual fee of $25, members receive a 10% discount on all merchandise, except gift certificates. "One of the reasons we decided to do what we did," co-owner Ann Christophersen told PW, "is, frankly, we didn't want to do the paperwork on it. This is a pretty easy program to administer. When we enter the customer's name [in the computer], we give them a card. But it's just a back-up. They have to have something tangible for $25." As to whether the program pays for itself, Christophersen responded, "We can't calculate how many more books people buy or how much loyalty you get. We feel anecdotally that it works both to encourage people to buy more of the books they buy here and to buy more books."
Chris Aylott, co-owner of the Space-Crime Continuum in Northampton, Mass., which specializes in SF and mysteries, is not so sure that membership equals loyalty. "The loyalty effect is debatable at best," he noted, "and the discount is just the sugar we use to attract people's information." He believes the real value of a membership program is to be able to fine-tune buying by tracking customer purchases. "Basically, what I have is a buying pattern of everything that a family has bought in the last five years. It gives us a picture of not just how many books we might sell, but who specifically we might sell them to." The system also helps booksellers recognize shoppers. "We don't use a card intentionally," said Aylott, who has gradually learned each customer's name when they give it to him to qualify for their discount. For Aylott, the $5 annual fee for a 10% discount is "a weeding tactic," he said. "If people blanche when we say $5, and they honestly don't think they're going to spend $50 a year, they're not that important to us. We want the customer who says, 'Five dollars? I'm going to get that back with today's purchase.' "
Membership definitely has its advantages when it comes to chain bookstores, which also use frequent-buyer programs to glean customer information. Because of the relative newness of Barnes & Noble's Readers' Advantage program, which started last November, there is no hard data yet. However, B&N spokesperson Mary Ellen Keating told PW, "It's been very popular with our booksellers. When people have the card, they buy more."
For an annual fee of $25, customers get a plastic card that gives them 10% off at all 900 Barnes & Noble, B. Dalton, Bookstop, Bookstar, Scribner's, Doubleday, Ink Newsstand and Charlesbank stores, as well as a 5% discount at www.bn.com. In addition to tracking purchases both instore and online, B&N uses the card to give members added value. They can read interviews with writers and learn about forthcoming books at the www.readersadvantage.com Web site, as well as sign up for special programs. This summer, for instance, members could enroll in the Great Chefs Series, which offered tours of the kitchens of well-known chefs like Wolfgang Puck and Charlie Palmer, a chance to dine with them, and an autographed copy of their most recent book.
Waldenbooks' 11-year-old Preferred Reader program is even more ambitious, combining both a traditional membership program and a point system. "Airlines were having success creating loyalty, and we felt the same principle could be applied to the purchase of books," explained senior marketing manager Linda Caine. While the airline system is geared to mileage, Waldenbooks offers points for every dollar spent and double points when customers sign up or renew their membership.
As a Preferred Reader, a customer not only saves 10%, but gets a $5 certificate for every 100 points accrued. Customers can earn additional points by signing up for a frequent-flyer-type Preferred Reader Platinum Visa and using it when they shop. The annual membership fee of $10 confers other privileges, including a members-only Web site (www.preferredreader.com), which links to the Borders site, but doesn't offer an online discount. "We direct market to Preferred Readers," explained Caine, "sending them our holiday catalogue and e-mailing promotion announcements to those that have given us their e-mail addresses. We can target category newsletters to a customer's reading interest."
The Yogurt Thing
For many stores, and customers, simple pleasures are the best. That's what Bailey-Coy Books in Seattle has been offering for more than 20 years. "We've done it pretty much since the day we opened," manager Michael Wells told PW. "Our program is a Bonus Book Card. Once a customer reaches 11 books, they get the average price [of those 11 books] as a store credit. It's very straightforward and darn easy to manage. Our bookkeeper, who has been here since day one, says she would walk out if we changed it." Wells views the program as advertising, pure and simple. "It draws people in," he said. "I'm absolutely certain. Literally, every day I give away $150 to $200 in credit. Last year we gave away $20,000 worth of books, which is an advertising budget. We could never walk away from it." To make sure no one misses an opportunity to put a purchase on their card, Wells has trained his staff to ask, 'Do you have a card with us?' each time they ring up a sale.
Five years ago Michael Tucker, president of the 11-store San Francisco-based regional chain Books Inc., created a Frequent Readers Card program that he touts as "simplicity itself. It's like the frozen yogurt thing: buy 10, get one free. Once we put up a sign, it was huge. All it is, is a 10% discount. We go through 10,000 cards a month." Only Books Inc.'s airport store is excluded from the program, and every book qualifies, except for remainders and discounted bestsellers. "There's absolutely nothing to lose with this. People really like it," Tucker told PW. "It's hands on, and they're not asked a lot of questions." At Books Inc., they don't even punch the cards, and they don't collect any information. "We would never use it, and we wouldn't collate it between the stores," admitted Tucker. "I love computers, but on the store level, people like hands-on simple."
Last February, 69-year-old Harvard Book Store in Cambridge, Mass., converted its popular Frequent Buyer card from paper to plastic. Under the paper plan, for every $10 purchased, a customer got one stamp, and received 20% off the next purchase when he or she spent $100 and collected 10 stamps. Now, the computer keeps track of all non-discounted purchases and every penny counts toward the $100 goal. Harvard Book Store, which has been actively growing its Web site, is one of the few independents to integrate online purchases made at www.harvard.com with instore sales. Currently, all Internet purchases are combined with instore buys, although customers can't use their earned discount online. "But we're working on that," said former marketing director Sheri Sable, who helped develop the program. The computer in the store prints up a coupon at the point of purchase.
According to Sable, Harvard's switch to plastic has been very successful--"more than 13,000 customers signed up in the first four months." From her perspective, the plastic card "enables us to better target our audience. We know what books people are buying and what section they're buying from. It really helps us get the books in the hands of customers, and we're better able to promote the books. It's not like Amazon , where a computer makes customer recommendations. Here you have people looking at the records, so it still has a personal touch." Even so, Harvard Book Store is careful to post a privacy statement both in store and on the Web. The store wants customers to know that it doesn't share their information with other vendors.
One-year-old Nonesuch Books in Mill Creek and Saco, Maine, uses a coupon system. Originally part of the Bookland chain, the Saco store was also a Hallmark Gold Crown store, which means that frequent buyers got savings on cards and other Hallmark purchases. For co-owner John Platt, who was forced to leave the Gold Crown program when he reduced the size of the Saco store from 5,000 to 4,000 square feet and shifted the inventory to include more books, the transition to Nonesuch's own Saver's program has been relatively painless. And he no longer has to pay Hallmark nearly $8,000 annually to use the name. At the same time, he eliminated the Bookland frequent buyer program, which was more geared to getting customers to come back frequently. Those who bought a book got a 25% discount on the second book they bought that month.
"Really what you should do is focus on your current customer. You can do more business," said Platt. With the Nonesuch Saver's plan, the customer has the option to have a paper card, even though the computer tracks all purchases using an ID, which is the customer's telephone number. When a customer buys $50 worth of merchandise--everything counts, including remainders and cards--the computer generates a 10% discount coupon, which is valid for two months. "Our system really encourages customers to buy more," said Platt. "We see them add on because of the coupon." He's not concerned with people using the coupon on top of other store discounts. "A customer can double-dip," he said. "We didn't want to penalize 95% of our customers for the 4% who nail us for the discount." He figures that the program costs between 3% and 4% of gross margin. "It's worth it," said Platt. "It's a fabulous marketing tool. We are able to record all the purchases and use that data for author mailings." For instance, when Cynthia Thayer appeared at the store earlier in the summer, Platt printed up mailing labels directly from the Nonesuch Saver's list and mailed out close to 100 targeted postcards. With the Nonesuch Saver's system, "you can say, who is my best customer? Or who bought hardcover fiction last week?" noted Platt. "It's really the way I as a customer like to be marketed to, as opposed to getting junk mail."
Even in upscale communities like Hudson, Ohio, customers want to stretch their dollars and hear the siren's call of Amazon.com's discounts. At least that was the case before Learned Owl Book Shop owner Liz Murphy initiated the Wise Shopper Program. "For every $100 a customer spends in a calendar quarter, they earn a 50% off coupon for any one item that's in stock. Our whole point," she said, "was to really make a good incentive. There's no cost and no card to carry. There's no downside." Unlike Aylott at Space-Crime Continuum, Murphy gave up trying to track shoppers by name. "We track by phone number. At first we did it by name, but everyone assumed we knew their name. It was embarrassing." And like most busy booksellers, although she has had good results with targeted mailings using customer data, she seldom has time. "Occasionally," said Murphy, "we are organized enough when a new David Baldacci or Anita Shreve comes in to send out postcards. And it always works. But we don't always get around to it."
Chuck Korkegian, book buyer at Aztec Shops Ltd. at San Diego University, questions the value of frequent-buyer programs alone. His store began its Book Club program about 10 years ago, when deep discounting by chain superstores threatened many booksellers. "We were concerned that we would lose our large-volume customers," explained Korkegian. "We instituted a program where people save the receipts. After they make 10 or more purchases, we give them a gift certificate of 10% of the average. We're just now revising that program. We've come to the conclusion that customer loyalty is not a way to look at this. It's about choice."
To convince students and faculty to choose Aztec Shops, the store is testing its services by doing targeted postcard mailings about new books to specific Book Club members. "No kind of marketing that's too generic has much of an effect," said Korkegian. "We're looking to cut back on the number of people we target." Of course, targeted marketing can be labor intensive, and most booksellers don't have a lot of staff. But Korkegian believes that he can find a way to combine e-mail, a digital camera and cash register data without hiring an army of booksellers to make it work.
For example, Aztec Shops has always put a lot of energy into its displays. It will decorate an entire floor for Black History Month or to celebrate Latinos. "It's like doing a party and not sending out invitations," said Korkegian of past under-publicized efforts. Now once a display is up, Korkegian takes a picture with a digital camera, and makes sure that all relevant faculty books are in the photo. Then he uses the computer to see who has bought books in that area and sends an e-mail about the display with an attached .gif file. "Normally we run a promotion for two weeks. When we've done outreach after the initial spike, we've gotten a second spike that's bigger than the first."
Book People in Austin, Tex., also questioned the value of having a Book Club, and last Christmas ended the program after just a year. Book Club members who bought $500 worth of books received a $25 gift certificate. "We ended it," explained floor manager Stephen Pettinga, "because it got so huge to take care of. If somebody didn't mention they were a Book Club member and came back the next days and said, 'I bought $50 worth of books yesterday,' there was no easy way to add it to the system." When dealing with glitches meant hiring a full-time person to work on the Book Club, the store decided it's just not worth it. "The Book Club didn't have a lot to do with people deciding to shop here. It's discontinuation hasn't noticeably affected our sales. There's no gimmick that can compare to customer service," said Pettinga, who believes that what draws customers is "community."
The store recently adopted the tagline "A Community Bound by Books," and has begun displaying community selections alongside Book Sense '76 picks. "We're going around to local businesses," explained marketing director Jeremy Ellis, "and asking them to write community recommendations. just like we do staff recommends. We're starting with 20 organizations like Hyde Park Gym, Austin Wine Merchant and Waterloo Records. I feel like that really builds customer loyalty. The people who live here and work here want things that are unique to Austin."
For a store that discounts heavily, frequent-buyer cards don't necessarily make financial sense. So five years ago, when the Harry W. Schwartz Bookshops in Greater Milwaukee, Wisc., thought about creating a customer loyalty program, it settled on Schwartz Gives Back. It's a membership program that uses a phone number as the ID and allows customers to donate 1% of their purchases to a nonprofit organization. At present, members can choose among 29 arts and service organizations, ranging from the ACLU of Wisconsin to the Milwaukee County Zoo and the Milwaukee Women's Center. "Since 1996, we've donated $175,000," said marketing director Nancy Quinn, who estimates that over 100 customers sign up every week, either in person or online at www.schwartzbooks.com. The organizations help promote the program and arts groups often give mini-performances in the stores. Quinn views it as a win-win program. "The customers feels good. They identify with us and the organization. It's been one of the most rewarding programs we have," she said.
While no one PW spoke with questioned the value of customer loyalty, for some, like Book People, it came at too high a cost. Or it wasn't crafted to achieve the desired effect, as John Platt found when he switched his stores from Bookland's program to his own. If a frequent-buyer program is too expensive to administer, it just won't work. And if getting customer data is really the goal, for many stores that's not always successful, either, because of limited staff. Other options, like Aztec Shops' targeted marketing to all customers, not just frequent buyers, or Schwartz's charity program, can also prove effective in getting customers for life. Sometimes, as Michael Tucker at Books Inc., discovered, simple pleasures--and customer loyalty programs--are the best.