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Specialty retailing is about building a business based on relationships. To do that, specialty retailers must focus on providing customers with an exciting array of products in an inviting atmosphere, while simultaneously offering unforgettable customer service. As a way to say “Thank you” to many of those customers who frequent their store on a regular basis, retailers have created loyalty programs that emphasize the cultivation of their mutual relationship.
However, implementing a loyalty program can exact a big premium of your overall marketing budget, so it is important that you create a program that not only fits your budget, but one that fulfills your customers’ needs. From loyalty cards to birthday programs to discounts for frequent customers, loyalty programs are a great way to build sales using your most valued — and frequent — customers, but be forewarned — they require constant nurturing.

Building a Friendship
At the heart of any loyalty program should be your company’s mission. All of your efforts, whether they’re in-store programs or ones that are marketed outside of the store, should aim directly back to your company’s mission statement and ultimately, reflect it. For instance, if you are striving to be a low-cost leader, then it would make sense for you to create a loyalty program based on low prices. Similarly, if you are focused on creating goodwill with customers and your community, you should identify your loyalty program with these tenets.
Whatever your mission statement, your goal as a retailer is to create relationships with your customers and steadily build those relationships until you have created loyal customers who will always choose your retail establishment over another. The goal is to make friends with your customers, because just as in any friendship, you can always count on your friends to support you in your efforts.
“In any relationship, an acquaintance becomes a casual friend and then a best friend through a gradual series of steps,” explained Jessica Willing-Pichs, director of strategic planning for Trion Communications in Providence, R.I.
To do that, Willing-Pichs believes that retailers must build a sense of goodwill between their retail establishments and their customers by creating an environment in which customers feel good about themselves.
“First, there has to be a consistent delivery of experience that makes the recipients feel good about themselves and the choices they are making,” she explained.
That delivery of experience includes clean and attractive surroundings, bright and friendly staff, reliable high-quality merchandise, in-stock product, and more.
“Without this basic foundation of trust, no acquaintance has the chance to move to a deeper friendship,” said Willing-Pichs.
Once that friendship has been established, you have to maintain and nurture it with engaging conversation and stimulating experiences. The next step, according to Willing-Pichs, “involves exceeding expectations — through delightful surprises and engaging interaction.”
At the heart of a specialty retailer’s relationship with their customers is providing great customer service.
“High-touch customer service is a wonderful competitive advantage for specialty stores and is critical to forging more sincere relationships with customers,” agreed Willings-Pichs.
She explained that customer service can be simply transmitted into little inexpensive details, such as a penny jar at the register, tasty morsels to sample, or more informative details about a product.
“Retailers such as Whole Foods, Wild Oats, and Trader Joe’s present product information, offer cooking tips, and find ways to involve their customers,” she said. “A store that engages all the human senses in a way that provides an emotionally and physically fulfilling experience will leave the customer yearning to repeat the experience.”

Aim to Please
When creating a loyalty program, think about how you would like to be treated. Do you enjoy a store where the sales associates greet you by name, or suggest products based upon your past buying patterns?
At Kowalski’s Market, which is headquartered in Woodbury, a suburb of St. Paul, Minn., the staff is encouraged to give away products to customers. In fact, they’re required to give away an allotted amount of product every month. Employees are encouraged to interact with customers, especially those who visit on a frequent basis to make them feel special. Customers who receive a gift feel special and look forward to returning to the store time and again.
“This program is used mainly to promote new items we have in our store, but it is also a great way to make those loyal customers feel special,” said Mary Anne Kowalski. “Our employees get to know our customers and use these giveaways to build relationships with those loyal customers.”
Employees may give away a couple of steaks to a customer as a thank you for being loyal, but it is also a way to get customers to try a new product or vendor that the retailer is working with.
“It has also proven to be a great way to get our loyal customers to try our private-label products,” she added.
Beyond loyalty programs focused on customers who visit the store frequently, take a look at how you can service loyal customers who are far away from your bricks-and-mortar store. Peetniks, those loyal Peet’s coffee drinkers, can be found across the country, even if there isn’t a Peet’s Coffee & Tea store in their neighborhood. The company’s primary loyalty program, The Peetnik Program, which began as a recurring delivery program in 1991, subsequently became a full loyalty program in 2003, and has doubled in size since its inception.
To reward those customers who are passionate about
Peet’s products, they’vecreated a recurring delivery loyalty program that is built around each Peetnik’s needs. The program’s exclusive benefits serve as rewards for
each Peetnik’s devotion to Peet’s. The online and call center Recurring Delivery Loyalty Program enables members to choose their favorite coffees, set the frequency of shipments, and automatically receive freshly roasted coffee delivered to their door. One key part of the program is the ability of consumers to move their shipping dates, change frequency of delivery, and choose different coffees.
“This program ties together two things for us,” said Brian Platter, general manager of home delivery for Peet’s Coffee & Tea. “It brings together loyalty and an automatic replenishment program and is a program that is focused on meeting each individual customer’s needs. We make it convenient for them to get the type of coffee or tea they want exactly when they want it.”
Other program incentives include special gifts. Occasionally, the special gifts include coffee and tea samplers and often include coffees they may not have tried before. They also have sent out personalized tumblers with the Peetnik’s name on it.
“These little surprises are a great way to let our loyal customers sample new items or some of their favorite coffees,” stated Platter.
Platter also notes the creation of an annual sweepstakes in which the winner receives an all-expenses-paid trip to the Bay area (where Peet’s is headquartered), along with a VIP tour of the roasting plant and a special tasting with Peet’s vice president of coffee. The program is open to anyone; however, the sweepstakes is not actively promoted in the stores since the focus is on the loyal Peetniks who are automatically entered.
Peetniks also have the opportunity to purchase seasonal offerings of special blends before they become available in the stores. And, as an end-of-the-year benefit, each Peetnik receives a preloaded Peet’s card worth 15 percent of their shipping costs for the year that can be redeemed at a Peet’s store. By building a program that truly rewards customers for their loyalty, Peet’s nurtures the relationships with their customers across the country.

Building the Program
A variety of different loyalty programs can be implemented; they can range from data-based programs that track frequent customers and send e-mails or printed direct mailings that give customers advanced notice about upcoming special sales or new products and events coming to the store, to something that doesn’t use technology to track loyal customers, but instead focuses intensely on that relationship.
Kowalski’s Markets has employed the latter ever since founders Jim and Mary Anne Kowalski were getting into the business in the early 1980s. They decided to invite their potential customers to tell them just what they wanted from a grocery store.
“My parents held the first of these consumer group meetings on their front porch,” explained COO Chris Kowalski. “They put their last penny into the grocery store and decided to invite people over to their home to get ideas on what they expected from a neighborhood grocery store. It was an innocent way to find out information, but they felt ‘who best to tell us what they want than those who will shop at our store?’”
The consumer group meetings still exist, although they no longer take place on the front porch of the Kowalskis’ home. Today, some of their most loyal and frequent customers are invited to a quarterly meeting held in a meeting room at the store. They are served dinner and spend the time discussing what they like about the store, the new items, service, etc. with the Kowalskis’ staff. Oftentimes, they are served new signature items and asked for their opinion.
“It’s a great way to reconnect with our customers and let our loyal customers tell us what they like or dislike about our store,” said Kowalski.
Key to the loyalty program is presenting customers with useful rewards. Many retailers create loyalty programs that offer customers discounts, but Willing-Pichs advises that this method may not be the most successful.
“Discounting product through frequent shopper programs can be effective for large retailers, but are often poorly executed,” explained Willing-Pichs. “Instead of acting as a customer reward, they can be interpreted as a discount that the regulars come to expect.”
Instead, she advises that retailers use other ways to show their appreciation for their best customers. They include previews of new merchandise, wine-and-cheese evening events, cooking workshops, or recipe sharing.

Extending the Goodwill
At Kowalski’s where the goal is “to create and maintain a civic environment that allows for individual freedom with an obligation and responsibility to ensure an atmosphere of integrity, growth, and equality for all employees, vendors, consumers, and the community at large,” they grow their loyal base of customers through grassroots methods.
“It may sound like a cop-out,” said Mary Anne Kowalski, “but we have looked into data-based loyalty programs that utilize technology to track customers and send them information through mail or e-mail, but we always come back to something more basic.” As she explains, “We don’t want to be another retailer sending off cards and e-mails and inundating customers with more information. Instead, we want to focus on the internal experiences. That’s what we give our loyal customers every day — new products, new departments, new services.”
And, they extend that goodwill out into the community where they expand their company awareness and give back to the community whenever possible.
One program, Groceries for Good Causes, allows customers to use their voting power to determine which cause will receive a donation from the company. Customers place their receipts in one of several boxes located at the front of the store, with each box representing a different community organization. Then, Kowalski’s will donate money to an organization based on the number of receipts placed in a box.
“We do it for the health of the community around us,” explained Kowalski. “If we don’t have a good, solid community where we are operating, then we will never make it.”
Kowalski’s also allows local institutions to come in and build awareness of their needs with the store’s customers. This approach allows these groups to stand outside the doors and solicit donations while group members, such as the local school band, can come in and bag groceries wearing their school uniform or something that showcases their affiliation.
“We donate a certain amount towards their cause for their time spent bagging groceries,” said Kowalski.

Nurturing Long-time Friendships
A successful loyalty program, large or small, requires nurturing. Just like any friendship, individual needs change. Reconnect with loyal customers and nurture new ones on a frequent basis by inquiring about what they like about your loyalty program and what they would like to see changed. Listening to your customers will result in friendships that will last a lifetime.