DICK'S GIVES CUSTOMERS CHOICE OF SAVINGS

DAN ALAIMO

PLATTEVILLE, Wis. -- Many retailers are rushing into on-line ventures unsure of how many of their customers are actually using the Internet. Brodbeck Enterprises, under the Dick's Supermarkets banner here, is taking another approach.

From participation levels in its two-and-a-half year old Web site, the retailer has determined that Internet usage among the customers of its eight stores is at about 10% to 15%, well below national numbers. At the same time, the company recognizes the potential e-marketing activities.

This month, Dick's began a sophisticated promotion, believed to be the first of its kind, offering customers in its rural marketing areas Internet service at a reduced rate, said Ken Robb, senior vice president, marketing.

The primary goal is to boost Internet usage among its customers, but the program also has a strong tie to the retailer's Savings Club Card. It is called, 'Savings Club Connections.' Additionally, while promoting 200 items a week, it does so without resorting to price reductions, Robb said.

For customers who don't desire Internet service, Dick's program allows them to earn long-distance telephone card minutes.

"The bottom line here is, in order to grow Internet penetration and to use it to communicate with our customers, and to grow the value of e-mail promotions as well as paperless opportunities like U-pons and ValuPage, it is important that we get more customers connected," Robb said

Ultimately, Dick's might get involved in on-line shopping, but with the low Internet penetration at present, that is in the longer-term future, he said. "To the extent that customers view us as their Internet connection, there are excellent opportunities for communication with customers. We can build upon that involvement to make it easy for them to connect with us for a variety of services," he said.

The Internet service costs Dick's customers $14.95 a month, which Robb said is lower than other comparable local services and is accessible by local or toll-free calls. In this area, access to national providers like America Online is usually a toll call, he noted.

Some free Internet services are in the area, he said, but Dick's service compares favorably because it is a full service, with customer support and no intrusive ads. Dick's does some marketing through the connections, but only with the customers' permission, he said.

Speaking on the day after the program launched, Robb said, "The response has been very strong. There has been tremendous interest, a lot of questions at the in-store sign-up tables and a lot of people calling into an 800 number for sign ups."

The program was set up with the help of two partner companies, Universal Promotions, Pittsburgh, which is setting up and running the Internet service, and Tele-Currency Promotions, Minneapolis, which is signing up brand participation, providing the telephone card component, and tracking customer participation, Robb said.

The way the incentives work is similar to many frequent-shopper card programs. Dick's promotes a product, like Taco Bell Flour Tortillas for the regular price of $2.19, and the customers are offered either two free long-distance minutes or 15 cents off their Internet service bill.

"The whole concept of the bonus minutes and on-line savings is to provide the customer with an incentive that is not price related. It allows us and the manufacturer to promote an item without reducing the price. To maintain retail price integrity and provide an incentive is quite unique," Robb said.

The retailer is supporting the program during its first 30 days with a promotional barrage. For the July 12 launch, the retailer ran a two-page ad in its circular distributed with the local newspaper, as well as with two pages in its Savings Club Card newsletter, which also was included in the newspaper, he said.

In stores, there are banners, ceiling danglers and a sign-up table that also offers a demonstration of the Internet. "For many people, this might be the first chance they have ever had to see what the Internet is like," Robb said. All store employees have been trained to answer questions about the service, he added.

"There are so many questions that consumers have -- it is not your typical 10-cents off approach to things. You absolutely have to have complete understanding on the part of every single person in the store or it will begin to fall apart," he said.

Customers select either the phone card or Internet service component in a sign-up process Robb described as "a very painless procedure" involving a simple application or a few key strokes at the checkout. If they choose the phone-card option, they are sent a new Savings Club Card with the long-distance calling information.

When customers purchase the items in the program, the point-of-sale system relays the information to Tele-Currency, which credits the appropriate amount to the customers account. The on-line discount is taken before the customer is billed. Typical customers might earn $2 to $3 off their Internet bills by taking advantage of the program offers, Robb said.

A secondary objective is to increase the value of the loyalty-card program, he noted. "That is being done by positioning this new program around the Savings Club Card with the bonus phone minutes, the on-line savings, and the tie-ins with the brands," Robb said.

While the Internet service is attracting the most attention, Robb pointed out that it's the long-distance component of the program that will be used by the most customers. "Right now, for 85% of our customers, that's the program," he said.

"But for those people who either have Internet access, or want to have it and are willing to sign up for our new service, they can sign up for the on-line savings," he added. The Internet service comes with four free e-mail accounts, and is set up with Dick's Web site as the home page.

On that site is local news, weather and sports, worldwide and national news, stock market reports, a community events bulletin board, discounts from national retailers, paperless coupon savings with U-pons and ValuPage, free samples, a game called 'Auction Bingo,' the Encyclopedia Britannica, and Platinum Benefits including discounts on air travel, hotels and rental cars, as well as movie tickets.