MT. VERNON, N.Y. — If you spend $300 or more per month at one of the nine Foodtown or three Freshtown stores operated by PSK Supermarkets here, company co-presidents (and brothers) Noah and Dan Katz want to know who you are.
These “top spending families” make up the core of the Katz’s longtime loyalty program, which tracks their spending habits and targets them for the most attractive promotional offers, in order to keep them in the fold as well as increase their numbers over time.
“We see gains in the number of top-spending families year on top of year,” said Noah Katz, who declined to provide specific growth numbers. “It’s what we focus on with the technology.” PSK also has a bonus program for store staff based in part on the number of top-tier shoppers the store serves compared with the previous year.
The program is based on software-as-a-service loyalty marketing technology provided by ProLogic’s Consumer Marketing Services division, Delray Beach, Fla. (formerly S&H Greenpoints, acquired by ProLogic last year), which delivers everything from points-based incentives to targeted offers. The platform, also used by other stores in the Foodtown cooperative as well as small chains such as Homeland and Harp’s, is designed “to appeal to retailers that don’t have large IT or CRM departments,” said Guy Keller, senior vice president of sales & marketing for ProLogic.
PSK Supermarkets, whose stores are located within, and just to the north, of the New York Metropolitan area, was one of the first retailers to sign on to the program when it was introduced in 1999. PSK initially wanted the program to produce a 5% to 10% revenue increase over the previous year’s sales; it achieved that goal, “and generally compounded this increase each year since the onset of the program,” according to a white paper published by ProLogic.
In addition, Katz acknowledged that after accounting for the cost of the program, which he did not disclose, his company has realized bottom-line increases of about 1% annually. Keller said ProLogic charges a cost per store per week, plus the cost of points redeemed for gift cards offered via ProLogic.
PSK “has never raised prices to pay for this program,” Katz emphasized, adding, “The program pays for itself by holding onto more profitable customers. It’s a magnet that holds them to the store.”
It also works by increasing the number of visits that shoppers make to PSK’s stores. “The average family shops six times per month for groceries,” he explained. “They come to you three times and go elsewhere three times. What this does is get at least one extra visit to your stores. That extra business more than pays for the program.”
Katz said that promotions are funded in part by manufacturers but mostly by PSK, with markdown funds switched from generic deals to offers targeting higher-spending customers.
In addition to catering to top shoppers with promotions, the technology allows PSK store managers to identify and greet them at the checkout. Alerts indicating the presence of a top shopper used to be sent to managers’ beepers; that system is being replaced with text messages directed to smartphones. “The manager will ask them, ‘Is everything OK? Did you find everything?’ and help them bag up,” said Katz.
“Noah and Dan have done a fantastic job creating a loyalty culture,” observed Keller. “They make loyalty and taking care of their best customers a top priority.”