What Furniture Retailers Need To Know About Loyalty Marketing
Furniture World News Desk on
7/8/2016
By Chad Burwell
Why doesn’t customer loyalty exist within our industry?
Retailers can have knowledgeable sales staff, fantastic administrative staff, attentive delivery people and provide amazing customer support and yet, your customer may choose to never return.
Why?
The answer is simple. In the furniture industry, we have not given the customer an incentive to return. Everywhere we turn, there is an incentive to become a loyal customer. From buying groceries at the supermarket to car rentals, hotels, coffee shops and everything else in between, consumers are continuously incentivized to return. But with big ticket items like furniture, mattresses and appliances it essentially doesn’t exist. Most retailers have the opinion that “Loyalty and rewards programs don’t work in the furniture industry because customers don’t make regular purchases”. Why would a retailer provide an incentive on a purchase which occurs every 3 to 8 years? It doesn’t make sense!
Or does it?
Would your customer return in 3 to 6 months if you gave them an incentive? Would they come back to the store even sooner? What are you doing to shorten the timeline between visits to your store?
Furniture, appliance and mattress retailers are beginning to embrace the idea or a Loyalty/VIP program. What is truly exciting is the fact that it is proven to work! In theory, there are two kinds of loyalty programs in which a retailer could offer. The first being the traditional rewards model where the customer accumulates points at the time of purchase to be used for additional purchases in the future. This model is similar to most rewards programs found in almost every industry out there. The second model is the VIP membership in which the customer pays for their membership to enjoy the benefits of being a VIP. The most obvious example of this program is Costco. Currently, the most recognizable name providing a VIP program is Restoration Hardware. RH charges their customers an annual fee and provide a significant discount to all of their members.
So, which model works?
Both actually, depending on your store. A nationally recognized retailer started a traditional loyalty program by offering various levels of in-store credit for the customer’s purchase. Simply put, the more you spend, the more you get back in credit. The store added in a couple of parameters to ensure the success of the program by having a 30 day waiting period on point redemption and having a limit on the amount of credit used for redemption. The program in its infancy has shown tremendous success! Here is just one example; a customer made a purchase and received $275 in-store credit. She waited 30 days and went back to the store, directly to her original sales person and said she wanted to use her credit. Not only did she spend her $275 but continued shopping and spent an additional $3000! Now that is how a loyalty program works at its finest!
When is the last time you had a customer return for an additional purchase in 30 days?
The second model is based on having a membership. A small independent store in the Prairies with a population of roughly 22 000 people started a VIP membership program late last year. They charged a $49 fee for a two-year membership which gave their customers the opportunity to shop at reduced VIP pricing along with additional savings and coupons over the remainder of the term. In five months, they have over 500 VIP members! Furthermore, they had a VIP event in which 300 members were invited and over 180 people attended!
The approach to the program is very different but they both had two things in common. Number one; they recognized the need to create a loyalty program which created excitement and commitment from their customers. Two; they were the first in their market to offer the program. By being the first to market, they have set the standard for their competition. It lends the question; would a customer join two furniture loyalty programs? Probably not. By being first, they have given their customers an incentive to continue to return. Retailers need to ask the question, “What are we doing for our customers to want to return?” Most retailers focus on the sale and rarely follow up on a regular basis with their customers.
So, if you ever hear the question, “Would a loyalty program work for a furniture store?”
The answer is yes, without a doubt.
Chad Burwell is the owner of Rewardslp.com, a company which specializes in the development of customized Loyalty and VIP programs for furniture, mattress and appliance retailers. For contact details, go to www.rewardslp.com.