GREEN HILLS FARMS FINDING GOLD IN FREQUENT-SHOPPER CARDS

LINDA PURPURA

HOUSTON -- Green Hills Farms is one retailer with the determination to take its frequent-shopper card programs to the limit -- and reap the benefits other retailers only dream about.

A three-month promotion in which customers who purchased $250 in groceries earned 5% discount certificates redeemable at the store, and 10% discounts for $1,000 in purchases, for example, resulted in a 10% sales jump among participating households vs. the same period a year earlier.

The program also allowed the retailer to reduce operating costs by cutting back on print advertising, said Gary Hawkins, chief executive officer of Green Hills Farms, Syracuse, N.Y.

He spoke at a workshop titled "Customer Specific Marketing: What's Hot, What's Not," at the MarkeTechnics Convention here this month sponsored by the Food Marketing Institute, Washington.

A nine-month program that rewarded employees and their households with a 10% discount certificate for each $250 they spent at the store resulted in a steep 12% hike in spending and a 10% jump in the number of employee households using their frequent-shopper cards at the store vs. a year earlier.

These results, Hawkins said, underscore the importance of establishing and building a "card culture" in which the frequent-shopper program permeates the entire organization from top management and employees to the customers.

"Those companies that are most successful with the frequent-shopper card recognize it must become central to the operation. The card almost has to become a religion," Hawkins said.

Green Hills Farms, Hawkins said, has issued 25,000 frequent-shopper cards since launching the program and is now tracking data on more than 13,000 households.

"We presently identify over 85% of our sales and over 70% of our transactions, so we have very good data to work with," he said.

Using that data, the retailer is able to track sales success and customer loyalty tied to frequent-shopper card programs.

Hawkins pointed to the retailer's Church Rebate Program as another example of how an aggressive card program reaps substantial benefits for both retailers and customers.

To participate in the program, customers had to sign up at the service desk and provide their names, frequent-shopper card numbers and names of the churches designated to receive rebates, which consist of 1% of the purchase amount over $250 during the nine-month period.

More than 10%, or 1,500, of the retailer's active households signed up for the program during the nine-month period. The results were an 8% increase in participating household spending in the store vs. the same period a year ago.

The program also raised more than $25,000 for local churches, Hawkins said.

The program data base has also allowed Green Hills Farms to identify its best customers and reward them for their loyalty. The retailer, for example, invited its top 200 customers to a holiday party in the store and at the same time showcased its catering service.

According to Hawkins, the database has helped in providing a highly effective and sophisticated level of customer service. While the retailer responds to all service queries, it is now able to very swiftly address inquiries from its most loyal customers.

The loyal customer program, at its core, involves a multitiered everyday low-price program on 1,500 items, with prices set to reward shopper loyalty. The retailer defines loyalty in terms of both recent and past long-term spending.

On those 1,500 items, loyal customers get a higher discount than shoppers who come in and cherrypick for specials. A loyal customer, for example, could receive up to a 20% discount on all 1,500 items while a cherrypicker might end up paying regular shelf price. Three other discount levels are available as well, he said.