NOB HILL HAS QUICK START IN ROLLOUT OF LOYALTY CLUB

DEENA AMATO-McCOY

GILROY, Calif. -- Nob Hill Foods here has made a fast start with its customer loyalty club, issuing approximately 250,000 frequent-shopper cards since the program's chainwide launch last month.

The new program is already having a positive effect on sales, according to the retailer. "We have already seen significant results within just a month," said Susan Kennedy, director of advertising and public relations for Nob Hill. "For example, we did better weekly sales this year as compared with the same week last year, and we credit the card program for that."

Though the program is still in its early stages, the retailer is already gathering customer purchase data at the point of sale to compile a database for targeted marketing.

Nob Hill, which was acquired by Raley's Supermarkets, West Sacramento, Calif., this month, reportedly will begin analyzing the data and launch a targeted marketing campaign to loyal customers by April.

"By evaluating and understanding customer purchase mixes and basket sizes, we will understand what [products and incentives] are important for us to provide to customers enrolled in the program," said Kennedy. "We plan to use the database to create a targeted mailing for those cardholders."

Nob Hill expects to see a reduction in advertising costs through targeted marketing. "It becomes expensive for us to send mass mailings to customers, and not know whether anyone cares about the promotions," she said. "Sending targeted incentives to those consumers we do know shop with us makes us more efficient with our budget, and helps us continue to analyze what products move out of the store with what consumers."

The frequent-shopper program was tested in one store in November. Within the first few days of the program's launch, Nob Hill's percentage of card-based transactions at this store reached approximately 80%.

"Even though that was only in the first store and not chainwide, we feel that is a positive card transaction percentage for the initiation of the program," said Kennedy. One month later the retailer rolled out the loyalty program to all 27 stores in the chain.

The retailer expects the program will be popular with its shoppers. "I can see about 95% of our transactions being card-based within a year," she said.

This is not Nob Hill's first attempt at a customer loyalty program. Last March marked the retailer's first try at securing customer loyalty through monthly coupon-book mailings. "Our books reach 600,000 households in the marketplace and we plan to continue sending the coupon books in addition to the frequent-shopper program," Kennedy said.

The retailer will offer extra benefits to members of the frequent-shopper program. "Customers are expected to bring these coupons to the store to earn the discounts, but cardholders are entitled to these specials electronically -- without using the coupon," she explained.

While there are no intentions of eliminating the book, "we hope to evolve the program to incorporate the coupon book with the card program, entitling only cardholders to the discounts," added Kennedy. Such a change, however, would not be implemented for at least a year.