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Catering to Big Boys' Toys

STORES, August 14, 2008 by Shawn Nelson

There was a time when loyalty programs were the exclusive domain of large retailers. They had the means to launch customer-retention plans as well as the infrastructure to support and market them. Now, however, third parties can provide smaller retailers with their own cost-effective loyalty programs.

Car Toys is a Seattle-based retailer of mobile entertainment, performance accessories and wireless phones with 52 stores in Colorado, Oregon, Texas and Washington. It is just coming out of a test period and is introducing a program that includes loyalty management, promotional offers, account management and targeting.

The solution is On-Demand Retail CRM suite, a web-based application from San Francisco-based Loyalty Lab that requires no software or hardware to implement and no changes to the POS, other store systems or a retailers' website and no maintenance of technology.

"We host everything" for the retailer, says CEO Mark Goldstein, who co-founded Loyalty Lab two years ago.

The retailer transmits customer transactions to Loyalty Lab, which tracks and collects the data across all channels – bricks-and-mortar, online and catalog.

The Loyalty Lab solution organizes the information it receives and prepares profiles for the retailer's marketers.

"We're taking their SKU data and transaction data," Goldstein says. "We're helping them figure out who their best customers are, and we're making it really easy."

Car Toys' marketers access the profiles by logging onto the Loyalty Lab website and pulling up the hosted program. From there, the marketers can manage customer accounts and use templates to create targeted promotional offers.

Prior to contracting with Loyalty Lab, direct mail was the closest thing Car Toys had to a loyalty program, says senior vice president of marketing Theron Andrews. "We really had no program to reward customers for making multiple purchases," he says.

When logged into its Loyalty Lab client domain, the retailer can set the parameters for its loyalty program. The retailer can make changes, generate coupons and e-mails, or target specific customers for rewards, and because the solution is web-based, it is easy to users to maneuver throughout the site.

"It's been pretty simple navigating and learning the system," Andrews says. "It's one of those situations where the more you work with it," the more you learn. "Everybody sits down and looks at it and gets the basics."

Tiered Rewards

Car Toys Customer Rewards has two basic components. The first is the ability to reward customers on a tiered basis. If a customer spends $500, he receives a $20 reward; if he spends $5,000, he gets a $200 reward.

The second component is the capacity to conduct one-to-one marketing. If a customer purchases a CD player, for example, Car Toys can e-mail that customer with a special on the speakers that would sound best in his vehicle.

Customers sign up for Car Toys Customer Rewards in the store or online. Membership is free, and the retailer issues no membership card. "Part of the Loyalty Lab solution that is so nice is the customer doesn't have to carry a separate card," Andrews says. "It's all through the customer's credit card."

The Loyalty Lab solution is "tremendously powerful," says Andrews, who managed loyalty programs for other retailers prior to joining Car Toys. "It's a quantum leap beyond what retailers had available to them three years ago."

Car Toys uses its program to build relationships with and retain customers. In the auto aftermarket space, "people are always seeking to upgrade," Andrews says.

Customers who bought audio systems two year ago, for instance, now receive promotions for satellite radio. As cell phone customers approach the end of the contracts, Car Toys sends out e-mails, coupons or promotions – any kind of reward – informing customers about the offerings at its stores and on its website.

Using Loyalty Lab to launch a loyalty program means the retailer can be up and operational quickly. Program costs begin at $5,000 per month, and the solution offers up to five features and capabilities: loyalty management, promotional offers, account management, targeting and integrated communications.

Rebates Included

Loyalty management enables retailers to create programs using management point accrual strategies, multiple award types ($10 off, 5 percent off) and rebates. It also lets the retailer include rules-based bonus points, activity-based points, referrals, tiered-point structures and reward inventory management.

The promotional offers feature allows retailers to provide time- and category-specific promotions, event invitations, triggered communications, sale and in-store promotions, integrated sweepstakes, self-contained thematic clubs, concurrent promotions and relevancy scoring.

With account management, the retailer can provide online access to point balances, profile and password management, credit, loyalty and gift card registration, reward redemptions and fulfillment.

Integrated communications is part of Loyalty Lab's premium service and enables the retailer to perform multi-channel campaign management, design and send personalized HTML e-mail, provide shopper-specific offers on its website and real-time POS and cart capabilities.