SYRACUSE, N.Y. -- Having leveraged its frequent-shopper program to the point where cardholder purchases account for 90% of store sales, Green Hills Farms here says the next frontier is linking its extensive customer knowledge to its category management information.
With a goal of achieving true one-to-one marketing and rewarding its best customers, the independent retailer plans to make use of a variety of electronic communication vehicles, especially those that allow real-time interactions, in the store and on-line.
It's the data collected at the point-of-sale that has been the driver for the growth of Green Hills Farms' loyalty program, and is the key to the program's -- and the retailer's -- future evolution.
"We look at a card program as something that a company needs to make central to its operation and be committed to," Gary Hawkins, chief executive officer of Green Hills Farms, told SN in an interview. While customer-loyalty programs can bring an initial "bump in gross profit margins," retailers should not stop there. "That's only the beginning," he said.
"The future battleground is how well we, and other retailers using card programs, not only gather customer information, but actually use it to market better to customers," he added.
For the one-store retailer, which launched its frequent-shopper program in March 1993, card-based transactions exceed 80% of the total. Cardholder purchases account for 90% of the retailer's sales dollars.
This high level of card usage has given Green Hills Farms a rich resource of customer information, which in turn has helped the retailer improve its operations.
"By analyzing our data, we have found specific areas that we need to monitor, such as retention rates of different groups of customers," Hawkins said.
For example, Hawkins explained that 50% of new Green Hills Farms customers don't return to the store after their first visit; 70% of new customers are gone after the third visit.
Green Hills Farms is able to achieve this level of detail by data mining its large historical data base using decision-support tools. Compiling a detailed history of at least three to six months' of point-of-sale information is crucial for any retailer trying to differentiate among customer bases, said Hawkins.
Green Hills Farms is putting its customer data to work. With the help of its category managers, the retailer is analyzing category and product movement data with the intention of providing more appealing product mixes on its shelves.
"We are using our information systems to relate to customer behavior and product movement," Hawkins explained. "There is a gold mine of information in the volumes of customer data we are gathering in our card program, but finding those nuggets reveals where the profits lie."
The blend of category management information and frequent-shopper data could be the key to better customer relationships and product sales, he believes.
"This combination is going to be the new frontier," he said. "The key is relating customer categories to the types of customers shopping those categories in our product mix. The question is, do we have on our shelves what our customers want more of or are searching for?
Green Hills Farms is continually on the lookout for the best methods of communicating with its cardholders. According to Hawkins, this usually requires multiple channels.
For example, a color video monitor connected to each lane's POS allows the retailer to communicate with specific customers at the front end. The screen is split in half -- one side showcasing different promotions, and the other showing the consumer which customer group they fall into, depending on their purchase history.
"When an associate swipes the customer's frequent-shopper card, our POS is programmed to distinguish which customer category they are in, and we can recognize the better customers by featuring a free cup of coffee or free soda on the screen," he said.
With Green Hills Farms' detailed knowledge of customer behavior, mass media channels are not the most efficient ways to reach Green Hills Farms' best customers.
"As we move to true customer-specific marketing, television and radio ads won't do the trick," Hawkins explained. "Kiosks, in-store POS messages, the Internet, even direct mail all need to be factors to achieve this. All of these need to be tied together, and though we are not quite there yet, it will be interesting to see how it all evolves."
Knowing the power that the Internet holds, Hawkins is already researching how to target frequent shoppers via the information superhighway.
"I would not be surprised if the Internet became a primary communication channel in the future. It will become a part of our daily life -- as routine as clicking on the television," said Hawkins. "We are developing how to communicate with the frequent shopper [on-line] and provide them with specific information. We hope to have that running by the end of the year."
One of the Internet's greatest assets is its interactive capability, allowing customers to, for example, monitor the status of their frequent-shopper participation.
"Customers may be able to sit at a computer at home, visit a retailer's Web site and access customer-specific promotions each week, or monitor where they stand for a free turkey or another item. They could even choose from a pool of electronic offers or coupons," he explained.
The benefit of in-store communications such as kiosks and POS promotions are a higher level of customer interaction. "Customers like to be recognized, even patted on the back," he said. "A cashier or store manager speaking to a customer, or offering them a free cup of coffee -- those are the little things that make or break customer loyalty."