5 Ways to Earn Your Customers’ Loyalty

You’ve worked hard to curate a product selection that caters to your customers’ needs. You offer high-caliber customer service. Your store is in a great location. Still, you hear from customers who choose to shop elsewhere for certain items or stop shopping with you completely. Sometimes the issue is price, sometimes selection and sometimes, it’s a matter of customer loyalty.

Customer loyalty is a tricky metric to nail down, hard to measure and yet crucial to a retailer’s survival. In a world that’s constantly vying for our attention, earning and keeping a customer’s loyalty should be a priority for any retailer. With a little creativity and effort, developing a customer loyalty program can go a long way in creating lifelong patrons.

On the following pages, discover best practices for implementing a customer loyalty program at your business. See how two retailers have used their customer rewards programs to build a steadfast base of repeat customers and discover other ideas for building customer loyalty that you can implement in your own operation.

Rewarding Loyalty

For nearly six decades, Lee’s Home Center has served customers with a wide selection of hardware and home improvement products and an emphasis on high-caliber customer service. In 2014, the company added the rewards program available through its wholesaler to show appreciation to current loyal customers and bring in new customers.

Adding the rewards program was a streamlined experience for Lee’s Home Center, as its wholesaler already had all the program specifics worked out and the signage and reward cards ready to use.

“Our point-of-sale system supported the rewards program, and after the first month, it became second nature for employees to always ask customers if they wanted to sign up for the program,” says Dan Vogel, information technology manager.

Reward members earn 5 percent on all purchases, up to $50 a month they can spend in the store. They also receive a free gift for signing up and additional rewards on their birthday and for other special occasions.

Vogel says the motivation to add a rewards program was threefold. The company first wanted to reward its already loyal high-volume customer base of contractors and commercial accounts.
“Our rewards program maxes out at $50 per month and most of our commercial accounts reach that level every month, so it’s a nice bonus for them to do business with us,” Vogel says.

Rewarding Loyalty

For nearly six decades, Lee’s Home Center has served customers with a wide selection of hardware and home improvement products and an emphasis on high-caliber customer service. In 2014, the company added the rewards program available through its wholesaler to show appreciation to current loyal customers and bring in new customers.

Adding the rewards program was a streamlined experience for Lee’s Home Center, as its wholesaler already had all the program specifics worked out and the signage and reward cards ready to use.

“Our point-of-sale system supported the rewards program, and after the first month, it became second nature for employees to always ask customers if they wanted to sign up for the program,” says Dan Vogel, information technology manager.

Reward members earn 5 percent on all purchases, up to $50 a month they can spend in the store. They also receive a free gift for signing up and additional rewards on their birthday and for other special occasions.

Vogel says the motivation to add a rewards program was threefold. The company first wanted to reward its already loyal high-volume customer base of contractors and commercial accounts.

“Our rewards program maxes out at $50 per month and most of our commercial accounts reach that level every month, so it’s a nice bonus for them to do business with us,” Vogel says.

Before it implemented the rewards program, Lee’s Home Center was lacking in retail foot traffic, and the rewards program was a way to incentivize DIY and retail customers to come in the door for their home improvement needs.

Vogel says the average transaction size for rewards members is $33 more than for customers not in the program.

Finally, adding the rewards program gave the store’s in-house charge account customers an incentive to pay on time. The program rules state that any account not in good standing cannot receive rewards.

To promote the program, Vogel says they advertise on the store’s website, social media channels and in circulars, but their annual Best Rewards Customer Appreciation event gives them the biggest bang for their buck. The event is only open to reward members, who receive 20 percent back on anything they buy during the event in the form of a store gift card with a max reward of $200 per family.

“During the event, we allow customers to purchase gift cards, so many rewards customers come in and purchase a $1,000 gift card and walk out with $1,200 worth of gift cards they can use on any future purchase,” Vogel says. “We’ve had up to $156,000 in sales for the three-hour event, which we extended to a five-hour event last year because of COVID.”

In the seven years since the program was implemented, Vogel says they’ve run into some challenges but have found workable solutions.

“We’ve had some technical issues with the best way to handle odd situations, such as when a customer has two rewards accounts open at one time,” he says.

Vogel says they also had an instance when a customer had a rewards account for both business and personal purchases. To avoid confusion and help customers earn rewards faster, the team set guidelines that any person or entity has only one rewards account that they can use for personal or business.

“Now those customers who have personal and business accounts get credit for purchases on both accounts, and they also reach our max $50 reward per month,” Vogel says. “We have created our own customer-facing FAQ sheet and a sheet for our employees to reference that has general instructions and tips on how to handle odd situations. Both documents really help out when new employees start.”

The rewards program has brought new customers in the door and has created loyal customers who come back again and again to spend more money. Even when customers just come in to redeem rewards, it still benefits the store because they spend time on the salesfloor, seeing what other products the store offers and possibly making impulse buys.

“There have been customers who have looked for more than an hour figuring out what to ‘buy’ with their rewards,” Vogel says. “We love it because it gets customers to shop and see what we offer. Some customers have even driven from an hour away to use a $10 reward.”

Selling gift cards at the appreciation event also guarantees many repeat trips, and the money from the gift cards has already been added to overall sales.

“The rewards program also makes it easy for customers to shop because we can look up past transactions and see what size filter they bought last time, what type of paint they used for a particular project or when they bought a drill to check if it’s still in warranty,” Vogel says.

Lee’s Home Center encourages loyalty in other ways, including allowing returns without receipts and offering the ability to reprint or email any receipt.

“Customer loyalty shows we’re doing things right and ensures future sales with repeat visits,” Vogel says. “It helps with word-of-mouth advertising, too. The more loyal a customer is, the more likely they are to recommend us to their family and friends.”

Service and Selection

At Buck’s Ace Hardware, loyalty is earned by stocking the home improvement products their customers need and providing a welcoming environment that is easy to shop. The company opened its first store in the Hurricane Valley in 1982 and now has three locations in Utah.

Owner Buck Hurst believes customers make a particular business their first choice because of the assortment of products offered. He makes sure his stores are stocked deep and wide enough to meet his customer’s needs with multiple choices available.

“If they want six of a particular item and we only have three, then we haven’t met their needs.

So, the assortment needs to be deep and the order points sufficient to meet the goal of never having something out of stock and never missing a sale,” Hurst says. “Having an assortment within the category is essential, as well. The customer will return again and again if they have learned from their experience that the inventory meets their needs every time they come.”

Hurst has found that well-trained staff who are committed to the business and its goals also lead to customer loyalty.

His employees are trained to greet customers by saying, “What can I help you find?” and close with, “Is there anything else I can help you with today?” to assure they’re fully meeting the customer’s needs.

Merchandising is also key in maintaining customer loyalty at Buck’s Ace Hardware. Hurst makes sure each store has a clean and neatly organized presentation with every aisle merchandised to easily show each store’s assortment.

“Merchandising is both an art and a science. It’s an essential part of the culture that invites customers to return to our store again and again,” Hurst says. “Merchandise should always be front-faced, neat and say, ‘Welcome, we are ready to serve you.’”

Buck’s Ace Hardware’s company culture stresses that every customer is important and essential, and the rewards program the store uses through its wholesaler is a way to show appreciation to their customers.

“Our customers enjoy the benefits from the excellent rewards program,” Hurst says. “We have found from all the analytics that the rewards program adds significantly to the overall financial success of our business.”

Buck’s Ace Hardware was an early adopter of its wholesaler’s rewards program, implementing it in the Hurricane store in 2001 and adding it to the St. George store when that location opened in 2018.

Over 70 percent of customers use the rewards program in the St. George store and 65 percent in the Hurricane store. Rewards customers come to the store on average nine times a year and spend over $31 each time they come, Hurst says.

The company advertises the program through its circulars, direct mail, email and SMS messaging, but the main way it promotes it is at the registers. Employees are trained to always ask for a customer’s rewards card and if they don’t have one, they assist them in signing up for it if they want one. Hurst appreciates that the program was easy to implement and is easy to maintain. Any time there are any issues, Hurst’s co-op is quick to resolve the problem. He also takes advantage of the additional programs offered within the main rewards program to help build more loyalty.

“Those additional programs are aided in their success through the data we provide to our wholesaler, which they use to develop a more strategic market approach for the rewards programs,” Hurst says. “This is a great benefit to us, allowing us to reach a larger group of our customers with a higher redemption rate.”

Combined with a deep and wide product offering and a commitment to well-trained employees and thoughtful merchandising, the rewards program has helped build loyal customers for Buck’s Ace Hardware.

“The rewards program brings in new customers, creates repeat customers and establishes loyalty within our current base of customers, letting every customer know they are valued and rewarded,” Hurst says. “The program is a win-win for both customers and the business itself.”

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Rewarding Loyalty
See how one retailer serves its contractor customers with a painters rewards program here.