Green Hills Farms has good reason to be loyal to its new loyalty program.
Among the preliminary results of the three-month-old initiative:
Up to 50% redemption rates on select featured products.
Shopping frequency among participants has increased 4.5%.
Spending among members has grown 2.5%.
Green Hills has 8% more customers now than it did this time last year.
"People are shopping more often and spending more," said Gary Hawkins, chief executive officer, Green Hills, Syracuse, N.Y. "Plus, we're attracting new customers."
It's all part of SmartShop, a unique technology that provides customized savings based on individual buying habits. Participants receive about 20 personalized offers each week once they sign up with the store's free biometric fingerscan identification system, provided by Pay By Touch, San Francisco. This enables shoppers to identify themselves at the checkout and at in-store SmartShop kiosks by placing the tip of their index finger in a scanning device. (Pay by Touch does not use actual fingerprints; rather, individually unique finger measurements.)
Once registered, members can create and access a personalized shopping list via email, a dedicated Green Hills Web page or a SmartShop kiosk. Averaging about $1, savings are electronically delivered into the shopper's transaction when she makes a qualifying purchase.
SmartShop offers come from a library of hundreds of items. Computer software from Pay By Touch aligns the right product with the right consumer.
"This is about providing relevant offers to individual shoppers with the goal of maximizing lifetime shopper value," Hawkins said.
Along with the individualized SmartShop offers, there's also a "SmartShop" item of the week, available to all SmartShop members and promoted in-store and in the retailer's ad flier. Among recent offers: Best Yet butter, 1 pound, and Byrne ice cream, half gallon - 99 cents each.
About 3,000 people have enrolled since the program kicked off in May, representing 35% of the retailer's transactions. Hawkins' goal is to have SmartShop account for about 80% of transactions by the fall.
Redemption rates of the promoted products range from 20% to 50%, depending on the item. Hawkins said that while 50% redemptions are very high, even 20% is positive, he said.
Hawkins attributes the increase in shopper frequency and spending to the relevancy of offers. So while SmartShop provides discounts to people who may have bought an item anyway, it gives them good reason to be loyal to Green Hills, rather than hop from store to store to get the best deal.
"We're providing offers on products that people like to buy, which encourages them to do more of their shopping at Green Hills," he said.
While Pay By Touch is being used in 2,000 retail locations, Green Hills is the first retailer to use it for one-to-one marketing, according to Shannon Riordan, vice president, marketing, Pay by Touch, which is also a client of Hawkins Strategic, Skaneateles, N.Y., a retail think tank that Hawkins runs.
The concept works, Riordan said, because consumers receive offers where and when they want them - and for products they truly want. So if a person buys Pampers, she won't receive offers for Huggies. Rather, her SmartShop list will include related baby items.
"The idea is if you give customers what they want, they'll come into the store more," Riordan said.
The one-to-one marketing that SmartShop provides is the future of retail marketing because mass-marketing vehicles like television ads have become far too expensive and ineffective, according to Hawkins.
Likewise, Hawkins said many traditional loyalty programs don't work well because there are too many cards on the market, encouraging consumers to sign up at multiple retailers and use them essentially as discount cards. Plus, many retailers will scan dummy cards for shoppers who say they forgot to bring theirs, consequently tainting the data.
"Many large retailers will readily admit that about 30% to 50% of the data is worthless," he said.
Jon Robertson, managing director, Ogden Associates, Morristown, N.J., a retail systems consulting firm, maintains that loyalty cards are still valuable and capture good data.
However, he agreed that the biometric system improves the accuracy of the data.
"It starts to clean up the data file and provide richer data," he said.
It's also beneficial in that it can prevent shopper cherry-picking, Robertson said.
"If the offers are relevant, meaningful and targeted carefully, it can eliminate cross-channel shopping," he said.
Green Hills Adopts EDLP
SYRACUSE, N.Y. - As part of its new SmartShop initiative, Green Hills Farms is working toward an everyday-low-price strategy on major brands in competitive categories like laundry, cereal and paper goods.
The goal is to provide shoppers with EDLP pricing on the things they need, plus personalized savings via SmartShop on the things they want, said Gary Hawkins, the retailer's chief executive officer.
"We are concentrating on an EDLP strategy on key categories/brands around the store, and then redirecting other deal items into the SmartShop system," Hawkins told SN.
Green Hills is also working to get manufacturer support of SmartShop.
So far, it has partnered with a large cereal manufacturer, which it declined to name, to target certain products to specific shoppers. In doing so, it has shifted that manufacturer's trade funds from traditional ad placement to the SmartShop system. That means offers are put into the SmartShop offer pool and distributed to customers most likely to want them.
Green Hills is in discussions with several other manufacturers, including one that Hawkins would only describe as being active in the paper goods and laundry categories.
Hawkins is confident more vendors will come on board, saying SmartShop is a win not only for Green Hills, but also marketers, who benefit by receiving a higher return on investment from their marketing dollars.
"Manufacturers and retailers have needed a system that allows them to create differentiated marketing strategies and initiatives for different shoppers and shopper segments, communicate those initiatives cost efficiently to consumers, and then deliver them electronically at the POS," Hawkins said. "This is what SmartShop does and what SmartShop represents to the industry."