Loyalty Program Cuts Defections

MICHAEL GARRY

NEW YORK — If losing shoppers to Wal-Mart Stores and other outlets remains an ongoing anxiety for food retailers, Green Hills is gaining a measure of comfort from its SmartShop loyalty program.

The program was launched at the one-store independent, based in Syracuse, N.Y., last May. Since then, “our annualized customer defection rate is the lowest we've seen in the past five years, and it's continuing to drop,” said Sterling Hawkins, son of Green Hills owner and industry consultant Gary Hawkins. Both described the SmartShop program last week here at the National Retail Federation's 96th Annual Conference & Expo.

The SmartShop program is one of the first loyalty programs in the nation based not on plastic cards but on flesh-and-blood fingertips. After signing up for the program, shoppers place their fingertip on a biometric finger-scan reader at a kiosk positioned near the front of the store. Identified in this way, the shopper then receives a printout of about 20 personalized offers, which change weekly.

Offers can also be accessed via email or the Green Hills website (www.greenhills.com). The store plans to send the offers via cell phone text messaging. “Once content is created digitally, there is no added cost to sending it to multiple digital channels,” Sterling Hawkins said.

At the checkout, shoppers again identify themselves biometrically and receive discounts for products listed on the kiosk printout. Additional communications can be printed out at the checkout. The finger-scan is also linked to a payment vehicle so the shopper can pay without using a card of any kind or cash. Both the biometric technology and loyalty system are provided by Pay By Touch, San Francisco, which is a client of Gary Hawkins' consulting firm, Hawkins Strategic.

SmartShop customers can also check their progress in Green Hills rewards programs online, as well as create shopping lists at greenhills.com and print them out at the in-store kiosk.

Green Hills still offers a loyalty card, which it introduced in 1993. “We didn't want to force anyone into [SmartShop],” said Lisa Piron, director of MIS for Green Hills. Loyalty card users receive standard store discounts but don't get the 20 personalized offers earned by SmartShop participants.

Gary Hawkins said he regards loyalty cards as “an ineffective way to accurately identify shoppers” because of the use of cashiers' cards or miscellaneous cards at the checkout. Biometric ID eliminates those issues, he added.

According to Sterling Hawkins, Green Hills now identifies 50% of transactions via the SmartShop program, up from 35% last July; the store's goal is 80%. More than 4,000 shoppers are enrolled in the program, with 100 more enrolling every week. SmartShop participants are spending 6% more than non-participants and shopping 10% more frequently, he said. That compares with 2.5% and 4.5%, respectively, reported last July. “The goal is maximizing an individual shopper's lifetime value,” Gary Hawkins said.

Redemption rates for SmartShop offers continue to range between 20% and 50%, Piron said.

Green Hills is also steering SmartShop participants to paying via the ACH network, a much lower-cost form of payment compared with credit transactions. “We're moving 7% of our business through ACH,” Sterling Hawkins said. Other payment methods are offered as well, including credit and debit. The retailer has also been able to reduce its mass advertising costs as a result of deploying SmartShop.

Gary Hawkins observed that the personalization offered by SmartShop is in sync with other cultural trends, such as shopping online and the personalization of music via the iPod. “Consumers are used to having things their way,” he said. “Brick-and-mortar stores need to adapt to this.” He also noted that though two-thirds of purchasing decisions are made in the store, “the retail industry is not reaching shoppers at that point.”

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