Keeping them loyal

Loyalty schemes have been the lynchpin of the supermarkets' marketing strategies for the best part of two decades now, and it is clear customers love using them.

And while independents pride themselves on drawing customers back, based on quality and service, incentives such as loyalty schemes can be an effective tool in the butcher's armoury.

According to Douglas Scott of the Scottish Federation of Meat Traders Association (SFMTA) there are several benefits. As well as encouraging repeat trade, butchers can often discover who their best customers are when they notice who is redeeming their rewards quickest. "There are other customers who will slip in every Thursday at 4pm, spend 20-30 every week, and yet the proprietor doesn't know that customer because they are not around at that time of day."

The simplest way to operate a loyalty scheme, he says, is to give out a card and stamp it every time customers spend a certain amount. When they have filled the card, the customer gets a reward, such as a discount or free gift. "It depends on your gross margin and what you can afford to give away," says Scott. "The prize for a full card could be a steak. I know people who give out seasonal items, such as Easter Eggs. Other people give away a knife or a casserole dish something like that."

John Mettrick of JW Mettrick & Son in Glossop, Derbyshire, says his loyalty scheme, which gives customers a stamp on a card every time they spend 10, has been a good tool in drawing back infrequent shoppers. Once customers have accumulated 27 stamps, they get a 7 discount on their next purchase.

Now is a good time to start, he says. "The advantage of having a loyalty card out now and attaching it to Christmas orders is that you can try to encourage customers to come back in the new year, tempting back those who perhaps only use the butcher's at Christmas. That has worked very well for us in previous years."

Whether you decide to run a loyalty scheme for a short promotional period or as an ongoing scheme is your choice, and butchers have had success both ways, but Mettrick says that, in his experience, a permanent scheme is better. "Initially we used to run the scheme at specific times," he says. "But we had customers coming back in and saying, I've filled my loyalty card in, I want another one, and the girls would have to say, 'We're not doing a promotion at the moment.' It was a mistake for us to link it to promotions, because it was very awkward for the girls to say, 'No you can't have a card.'" To make this affordable, he upped the number of stamps that had to be earned before the discount was given.

High reward scheme

Stewart Collins of S Collins & Son in Muirhead opted for a different approach. He ran a high reward scheme, aimed at getting new customers into the shop over a three-month period this year, which he publicised by distributing 40,000 leaflets.

To earn the full rewards, customers had to come to the shop four times over the three-month period. On their first visit, customers would get 1kg of free sausages when they spent 10. On their second visit, a 15 spend would earn them a 5 note. If they spent 20 on their third visit, they would be given 10 back and, on their fourth visit if they spent 40, they would get back 20, a DVD and four bags for life.

The scheme not only brought in "thousands" of customers bearing their promotional leaflets, but it also generated local press coverage.

Although the scheme was costly, Collins says it was definitely worth it. "It was very successful, we got a lot of new customers and I am just now in the process of putting those new customers on to the database," he says. "It is something I am going to look at again in the new year."

At Bonners of Ilminster, Matthew Dyer initiated a similar scheme to Mettrick's, but with a different discount. Customers get one stamp per 10 spent, but when they have accumulated nine stamps, they get a 10% discount on their next order. "The idea is to encourage them to perhaps stock up their freezer and spend a bit more, and you get a nice big purchase out of it," says Dyer.

Bonners decided to restrict the use of the discount to the months outside December to ensure Christmas trade was not affected, and says the only other advice would be to remember that some people don't want to take part. "Some people don't like it because quite a lot of retail chains have loyalty schemes now, and some people think, 'Not another card in my wallet'. I think the key thing is not to push it too hard and be in their face."

Bonners is currently developing a new website that will allow customers to place orders online and Dyer says a loyalty scheme will be integrated. He is convinced thatloyalty schemes are an excellent tool in building customer loyalty and increasing average spend. "You're getting a bigger purchase out of them than perhaps you might have done and, obviously, they are happy because they are getting more money knocked off and it keeps them coming back."

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