Bill Hanifin
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I watched 8 high school travel league basketball games this weekend. From that statement, you can conclude that either I’m a very supportive parent or a bit nuts. Maybe both. Either way, I watched a lot of basketball over the past three days. During the weekend, one truism about the game was demonstrated to me time and again – the team that hits its free throws usually wins the close games. The first team to earn a bonus situation avails itself of more free throw attempts, but that hard won advantage is only realized if the players can make the freebies.
Retailers need to gain an advantage any way they can, and for years we’ve said that loyalty programs can be the “tiebreaker” that influences consumers to conveniently turn right into one store, or wait for traffic to clear and turn left to visit a competitor. When your product is widely available or has become a pure commodity, your brand needs to do something to get the attention of the customer. Floating a daily deal will create temporary lift. Running a price promotion will spark the same result. But only with a loyalty program do you have the opportunity to engage customers on a consistent basis and learn more about their true preferences along the way.
Ace Hardware and AutoZone are each operating in tough businesses offering products that consumers can find in multiple stores, even each other’s. And, each has launched a loyalty program of late. AceRewards was launched last year. Actually, the program was a refreshment of a seasoned program that had lost its luster. As I experienced the program, the integration with point-of-sale systems make enrollment easy and identification even easier on return visits. Whether the value in rebates is motivating enough is in question and I am counting on the Ace Hardware marketers to take advantage of their data and find out more about what I buy and future projects on my “to-do” list. If anyone from Ace Hardware is reading this, please put this goal on your list of personal objectives for next year before your boss brings it up. They will and you might as well look bright and beat them to the punch.
AutoZone launched AutoZone Rewards recently and a visit to their web site gives the impression that it is more vanilla than the best that Coldstone Creamery has to offer. That said, its much better than what competitor Advance Auto Parts has because, well, at least AutoZone has a program. Some of you might object, posturing that not every competitor in a category should have a loyalty or rewards program. After all, then AutoZone and Advance would be just giving away margin with no incremental benefit, right?
Wrong.
Retailers need a way to identify customers, get to know more about them, and have a reason as well as right to communicate with them. Just by having a program, a retailer creates an advantage. Not every program has to become a 1% rebate-fest and the more socially driven and gamified structures are resonating well with Consumer 2.0.
Think about this. A substantial portion of inventory carried by Ace Hardware is available in some form at Home Depot, Lowes, Sears, and others. The same can be said about AutoZone, especially for the inventory held “outside” the service counters.There is competition in different formats and under surprising names. For a retailer to win, they have to be creative, deliver a great in-store experience, and must have a means to track activity and preferences for customers to learn more and improve over time.
Whether you are selling auto parts or hardware, there are lots of choices for consumers to consider. Some will be swayed by the tie-breaking rewards programs and most will not turn away freebies, just as the basketball team should try to make every free shot. As I looked at both of these programs through my consumer lens, I cared less about the small percentage rebate on sales and was more fascinated by the possibilities of how Ace Hardware and AutoZone could use the program as a business intelligence platform.
Can you see now how important execution becomes, both in basketball and in consumer marketing?
