From sticking with a favorite sports team to only choosing a certain brand name, our loyalties say a lot about us as people—and some of us are much more loyal than others. In the retail world, having loyal customers can mean the difference between success or failure, but in a hot-and-cold environment where loyalties can shift, maintaining loyalty remains a challenge.
The Salesforce 5th Edition Connected Shoppers Report found that loyalty program members often outspend other shoppers, but the number of loyalty programs a consumer belongs to has decreased 21% since 2021.
Whether your store has a current loyalty program you want to improve on or you want to build one from the ground up, Mike Frattallone, senior vice president at Central Network Retail Group (CNRG), shares three ways his operation’s loyalty program brings in new customers and keeps existing ones coming back.
Make Rewards Easy
After converting from Ace to Orgill in 2021, Mike, who is the former owner of Frattallone’s Hardware & Garden, a 22-store operation in Minnesota, understood the importance of transitioning his operation’s loyalty program as well to keep those customers engaged.
Mike used Orgill’s FanBuilder program to launch the Frattallone’s Friends And Neighbors (FAN) Club, which currently has over 232,000 total members and 149,000 active members. FanBuilder allows each retail operation to customize the loyalty program to their own brand, so Mike was able to build the FAN Club using FanBuilder and customize it to the operation’s brand.
One of the biggest differences between the old loyalty program and the new one was the ability to look up customer rewards at every transaction. Mike says having this option as part of the loyalty program has led to a high redemption rate for rewards, nearly 70%, and has offered another outlet to offer excellent customer services.
For every transaction, the employee looks up a customer’s reward information, so they can surprise them if they have a reward available.
“We give them the fantastic news that there is a reward waiting for them, which is game changing for redemption rates,” Mike says. “When our cashiers are able to share with customers they have a reward available, it creates a relationship between the employee and the customer because the employee is able to give something a little extra to the customer.”
Frattallone’s Hardware & Garden customers don’t have to worry if they forget their coupon or can’t find the text message with their reward information because the employee looks it up for them every time they make a transaction.
Every time a customer makes a transaction at a Frattallone’s Hardware & Garden location, they feel rewarded, Mike says.
“When a store just asks a customer for their rewards email or phone number, the customer doesn’t get a full understanding of how the loyalty program works. It doesn’t seem rewarding because they’re not getting immediate benefits,” he says. “At Frattallone’s, we’re giving customers their rewards each time they make a purchase, so it truly becomes rewarding and builds that loyalty. We don’t want our customers to just like us, we want them to love us.”
Offer Small Rewards
By making the loyalty program actually rewarding, Mike says it will lead to customers choosing Frattallone’s over other competitors.
“I want our customers to choose us when they buy items like lightbulbs or grass seed because they know they’ll be rewarded for those purchases,” Mike says. “When our customers walk through a big-box competitor and see items we carry, I want them to think, ‘I buy that at Frattallone’s’ and continue to choose us for those home improvement needs.”
One of the ways Mike makes the loyalty program rewarding is by offering smaller, more frequent rewards. For example, when a customer wants to purchase a grill that is $999, Frattallone’s could offer $100 off the grill or the store could give the customer 10 rewards worth $10 each that be available in their loyalty program account. When that customer comes in the next time and makes a purchase that is closer to the average of $20, their final total will only be $10 thanks to the $10 reward available.
“The customer feels like they got a massive discount on that purchase, and they get that feeling 10 times from just one purchase,” Mike says. “Our goal is to have customers feel like every time they go to Frattallone’s, they are getting a fantastic deal.”
Whether Frattallone’s offered the $100 off the grill up front or provided 10 smaller $10 rewards, the discount is still the same—$100.
“The math is the same, but offering the $10 rewards helps show our customers how rewarding our program actually is,” MIke says. “And it brings customers back again and again.”
Another big part of the Frattallone’s Hardware & Garden loyalty program is utilizing technology. The operation has a Rewards page on its website that provides answers to frequently asked questions and details on the program, a rewards dashboard each customer can access and a rewards app, which is part of the FanBuilder program.
From the rewards dashboard and the app, customers can see past receipts, their current point status and any available awards.
Nearly three-quarters of customers expect companies to understand their unique needs and expectations, so 93% of retailers say they are investing in personalization more than ever before. In two years, the percentage of retailers that claim a full ability to use customer data to personalize shopper engagement has nearly doubled from 32% in 2021 to 57% in 2023. —5th Edition Connected Shoppers Report, Salesforce
Mike says he wants to use customer data gathered from the dashboard and app to send personalized rewards to customers they can access from their dashboard.
“As the FAN Club program continues to grow and expand, we hope to get into micro-segmentation to be able to send specific promotions to specific customers,” Mike says. “We want to build a library of these promotions so that anyone else who uses FanBuilder can access them as well.”
The average Frattallone’s Hardware customer visits 10 times a year, and the loyalty program is helping reach the goal of getting each customer to visit one more time during a year, Mike says.
“One more visit per customer and the math becomes crazy,” he says. “If we can get all of our customers to make one more visit per year, any cost or time spent in running the rewards program is trumped instantaneously with that one visit.”
“The average customer visits 10 times per year and the average ticket is around $20. If Frattallone’s can reach their goal of getting each FAN Club member to visit just one more time, that’s a potential of $4.6 million.” —Mike Frattallone, Frattallone’s Hardware & Garden