Loyalty can pay off in big, little ways for retailers
SOMETHING TO SAVOR: Jessica Granatiero, proprietor of the Savory Grape in East Greenwhich chats with longtime customer Paul Beaudette. The store uses loyalty programs to help build a relationship with customers.
When Jon Hyde wants a glass of wine, the resident of the Saunderstown section of North Kingstown favors cabernet sauvignon and shiraz. When buying a bottle, though, he isn’t always sure what brands match his taste.
Using the loyalty rewards program at The Savory Grape, the East Greenwich wine store where he shops, means that he doesn’t have to save the labels for wines he has enjoyed.
“There are so many wines out there, if they know exactly what wine you had, they can offer something comparable,” he said. “[The loyalty program] makes it easier to go back and get wines you might not ordinarily purchase.”
Loyalty reward programs today track customers’ purchases and preferences closely, enticing them to come back with discounts and other incentives. Retailers, hotel owners and retailers, among other businesses, use reward cards to award points for dollars spent toward the next purchase. Around in some cases for decades, these programs have grown in sophistication as more and more data from consumers becomes available electronically.
Besides in-store coupons and email communications, some loyalty program providers, including retailing giant CVS/pharmacy, now use mobile apps to help customers manage their shopping digitally.
“The general notion is to establish dialogue and long-term relationships with customers,” said Daniel Sheinin, professor of marketing at the University of Rhode Island’s College of Business. “By building these relationships, you build not just a loyal transaction history but something more psychological, more emotional. It’s very similar to building a brand.”
In Rhode Island, companies that take advantage of these programs are deepening their relationships with customers and as a result seeing a boost in business.
The Savory Grape, which also has an online store, recently hit 4,200 members in its rewards program, and that increase has a direct impact on the store’s results. In 2011, sales from rewards members represented 39 percent of the shop’s total sales, and a year later, that figure had increased to 49 percent – a trend that is continuing this year, said owner Jessica Granatiero.