Green Hills: Loyalty Maven Ups the Ante

MICHAEL GARRY

Since launching one of the industry’s first loyalty marketing programs in 1993 at his one-store independent operation, Green Hills, owner Gary Hawkins has become a loyalty maven.

His advanced loyalty marketing strategy earned his Syracuse, N.Y.-based store national recognition in 2001 from Inc. magazine as “The Best Little Store in America.” The basis for that strategy is data. “Many retailers gather loyalty data,” Hawkins said. “The key difference is we not only gather loyalty data; we understand it and we use it.” And he uses it in everything from merchandising and product allocation to management reporting, down to the department level.

The strategy has enabled Hawkins to maintain sales at about $18 million per year despite a declining population in a highly competitive marketplace.

Hawkins has also published two books on loyalty marketing and launched a second career — which now takes up most of his time — as an international consultant. Some of the largest chains in the U.S. and abroad call upon him for advice on how to gain value from their loyalty programs.

Yet for all of these accomplishments, Hawkins, 47, is just entering a new phase of his career that may have the greatest impact of all. Green Hills has been set up to be one of the first stores in the world to employ biometrics as a form of shopper identification for both payment at the point of sale and loyalty marketing. It is using the Internet and biometric-enabled kiosks to facilitate the loyalty program, which will include some of the most shopper-specific offers yet seen in the supermarket industry, Hawkins said.

“This is all driven by wanting to increase our relevance to shoppers,” he said.

For Hawkins’ pioneering work in loyalty marketing and his new, industry-leading program, Green Hills has been selected as the winner of SN’s 2006 Technology Excellence Award in the independent category.

January Launch

Earlier this month, Green Hills, a 22,000-square-foot, family-owned business started by Hawkins’ great-grandmother in 1934, launched its “SmartShop” loyalty program. Managed by Hawkins and Lisa Piron, director of information technology, the program will present loyalty club
members with about 20 weekly personalized specials based on a detailed analysis of past purchases, down to the brand, package size and flavor. Shoppers only get offers for what they’ve already purchased. Other personalized targeting programs tend to match previous purchases only at the category level, Hawkins said.

However, instead of using a loyalty card to receive offers at the POS, shoppers sign up with the store’s biometric fingerscan identification system, provided by Pay By Touch, San Francisco. This enables them to identify themselves at the POS and at three kiosks in the store by merely placing the tip of their index finger in a scanning device.

At the kiosks, shoppers can access and print out their personalized offers as well as a shopping list downloaded from their home. The offers are also sent to them via e-mail or are available on a “personal page” at Green Hills’ Web site. Another unusual feature is that to reap these discounts at the POS, a shopper has to view them either online or in the store. “Why should I give someone a dollar off on an item if they don’t see the offer and are going to buy it anyway?” Hawkins said. “We wouldn’t get credit for the discount because they weren’t expecting it.”

Shoppers in the Smart-Shop program are also able — but not required — to pay at the POS by linking their finger- scan to an electronic form of payment such as debit or credit. Hawkins expects most program participants to pay biometrically. The biometric system is also being used to verify a shopper’s age in the event of such purchases as alcoholic beverages.

Green Hills will continue to offer a conventional card-based loyalty program, though it eventually hopes to phase out cards altogether. Loyalty cards do not offer the same level of accuracy that a biometric-based system does, Hawkins said. “We wanted to move in this direction for years.”

In the initial phase of the SmartShop program this month, Green Hills signed up more than 150 employees who also shop in the store. It was expected to be open to the general public by the beginning of February.

Personalized Flier

Hawkins is perhaps most excited about the highly individualized offers each loyalty shopper will be receiving. “We are producing a personalized front-page ad flier each week for our customers,” he said. The offers come from a library of hundreds of items selected by Green Hills. Those items, and shoppers’ individual shopping history, are analyzed by a next-generation targeting engine, from 7th Street Software (now part of Pay By Touch). Green Hills also uses MarketExpert from VRMS, Shelton, Conn., for analysis.

This process automates what would otherwise be a very labor-intensive process of selecting the “relevant” items for each shopper, Hawkins said. Three consumer packaged goods companies are participating in the initial pilot, he said.

In the past, Hawkins was known for developing a tiered-shopper system based on their level of shopping at the store, starting at the top with a diamond classification and moving on to ruby, pearl and opal. Diamond shoppers get the best price on an item, followed by the other designations. The same system will be employed in the SmartShop program. “We’re focused on recognizing, retaining and rewarding our more valuable customers,” Hawkins said.

“In the past, diamond and ruby shoppers would get the best price on shrimp that was on sale for everyone,” he said. “Now only shrimp lovers will get the offer.”

Hawkins acknowledged that the biometric system may raise privacy concerns, though only a fingerscan, not a fingerprint, is being used. “There’s an education component,” he said. “If there’s value in the process, consumers will use it.”