CLEMENS EXTENDS ITS FREQUENT-SHOPPER PLAN

DEENA AMATO-McCOY

KULPSVILLE, Pa. -- Clemens Markets here moved its frequent-shopper program into two new stores this spring, bringing the total number of stores to offer the loyalty program to 16.

"We expanded our Value Club into two new stores that opened in March and April," said John Kelly, director of merchandising for Clemens. "We plan to use the frequent-shopper program in all new stores we open, and there are other openings planned before the year is over."

Clemens has 140,000 customers enrolled in its Value Club throughout the 16-store chain. The retailer launched the frequent-shopper program in May 1995. Information gathered on customer demographics and purchase habits is a key part of Clemens' targeted marketing efforts, according to Kelly.

Since introducing its frequent-shopper program in the two stores this spring, Clemens is already seeing acceptance from customers.

"The percentage of volume we see through the members signed up in our new stores is more than the base stores generated when the program was originally launched," Kelly explained.

Clemens attributes this customer awareness to a better marketing strategy for the program.

"Within the last two years, we have refined the program and learned what works and what the customers want -- it has gotten more sophisticated," Kelly said. "We have become better at communicating the value of the program and our customers have responded accordingly."

Customers enrolled in Clemens' frequent-shopper program are issued a magnetic-strip card that entitles them to weekly discounts that are instantly deducted at the point of sale.

As cards are scanned, consumer data such as purchase history and demographic information is transported electronically into the store's front-end system through a dedicated communication link between Clemens and an off-site database.

Customers insert their cards into a terminal at the POS that also processes debit and credit card payment transactions. The terminal reads the card and electronically redeems all discounts and promotions the customer is entitled to during each visit.

The terminal also issues itemized receipts of all discounts and incentives the customer earned for each card transaction.

The database is maintained through Clemens' third-party service provider, Advanced Promotion Technologies, Pompano Beach, Fla.

Though the retailer would not give specific numbers, Kelly reported that the top 20% of its club members visit Clemens stores 2.21 times a week. He added that Clemens is pleased with what the frequent-shopper program has accomplished in a two-year time frame.

"We are above the industry average on profitability through our frequent-shopper program and, similarly, our card holders' transaction size per household dwarfs figures issued by the Food Marketing Institute," he said.

According to the first annual Electronic Marketing Survey of Food Retailers, an average frequent-shopper transaction was $36. The study, conducted by the Food Marketing Institute, Washington, was released in November 1996.

Clemens attributes the success of its frequent-shopper program to its targeted marketing, based on customer data accessed via the off-site database. The retailer learns about its customers' shopping behavior through real-time reports compiled and electronically transmitted via modem by APT.

"It took us a couple of years to understand how to positively use the accumulated data," said Kelly. "The database lets us gain reliable information about our customers. That is what gives us the capability to do our targeted relationship marketing."

By using targeted relationship marketing, Clemens plans to have an effect on its customer spending levels.

"I would like to make our top percentile of customers a larger group," Kelly explained. "Based on demographics and purchase information, we can learn what can be done to make an impact and get those middle- and bottom-tier customers to the next level."