1to1 Magazine
Newsletters
Web Exclusives
Webinars & White Papers
Events
Resources
The Rewards of Rewards Programs
Much time is spent trying to sell the benefits of a rewards program to consumers. Earn points to get free or discounted products, or get treated to special sales or other events. On the flip side, the benefits to a company can be enormous. Understanding how individual customers shop at a store or experience a brand can completely change an organization's strategy.
Borders CEO Glen Jones explains how his company's new rewards program is helping the company gain valuable customer insight in today's 1to1 Weekly lead story. A new e-commerce site and store experience are some of the changes Borders made after learning about how its customers behave.
How much of a role does customer insight have in your company's strategic efforts? Has customer insight gained ground as a strategic tool at your company?
Reading this article made me think – of all the other times when companies, desperate for sales, have resorted to price strategies. In fact, this IS a price strategy. Borders is providing a substantial DISCOUNT to Borders members (yes, I have a card, too) in order to do three things:
Get sales, even at a loss of profit (half a loaf being better than none)
“Freeze out” competitors by getting “their” sales – in other words, someone might have bought a book from another bookseller, but because they can get it cheaper at Borders, Borders gets the sale
At a substantial expense, gain customer “loyalty” – at least until other booksellers are willing to meet/beat their price
This type of strategy is a function of the ferocious competition that occurs these days on COMMODITY products. Is a book a “commodity?” Yes, it is. When you can get the same exact product at multiple “retailers,” the driving force for customers is “Where can I get it (the product) the cheapest?”
It’s sad to think of books as “commodities,” but it’s true.
As long as the Borders folks are prepared to continue to be the “low cost provider” they’ll get sales – BUT at razor-thin margins!!
Never say never! Especially, when it comes to e-commerce. I think it is still in the early stage and counting. The trick for Borders now is to get their 21 million-strong membership activated into online book shoppers. And there's a good chance for them to make it once the demand is there, and the e-commerce economics is so efficient. One condition is mandatory - reasonably fast order processing and fulfillment. The big thing for them is sure the loyalty program that drives members and a great source for true customer insight. We also take this insight from our customer databases to build long-term relationships with our clients.