Nearly half of customers who shop at independent bookstores do so because they are locally owned businesses. It is important, Domnitz continued, to "leverage" that feeling into loyalty.
Loyal customers have many attractive qualities, Domnitz noted. They are less likely to switch to other stores and are less price sensitive than the average customer. They tend to stay customers unless given a reason not to. They are much less expensive to maintain than a new customer is to acquire. Booksellers need to recognize, however, that "you earn loyalty. You don't get it." It's important to "meet customers' needs as well as provide good service and programs and pricing."
Another quality of longterm, loyal customers is that they "tend to use the bookstore for more than just book needs," Domnitz went on. "They go there because of the way they feel, the way they're treated, the ambiance, the staff." He quoted Starbucks head Howard Schultz, who has said, "If we greet customers, exchange a few words with them and then make a drink exactly to their taste, they will be eager to come back."
Domnitz recommended that rather than focus on price, loyalty programs should focus on value. "If an independent thinks he is gaining loyalty simply by giving money back to the consumer, it's a slippery slope. In the end, you need your margin," which allows stores to create the values that customers want.
Domnitz made some very specific recommendations to help build and keep loyal customers, noting that stores "have to have some device to create customer loyalty, whether it's a loyalty program or not. It generally involves something psychic or physical":
- Develop some kind of "catch program" to identify loyal customers. "We need to turn potentially loyal customers into loyal customers."
- Because people live in a 24-hour-a-day world, stores need to sell online and need to market their Web sites. "I'm shocked at the number of you who don't market your Web site."
- Pay attention to changes in marketing: "E-mail [as a marketing tool] has started to decline and texting is going up, especially among young people."
- If there is something newsy about a store's loyalty program, promote it to local papers.
- Train staff to be evangelists for the loyalty program and be able to explain it in "a sound bite."
Nicole Magistro, co-owner of the Bookworm of Edwards, Edwards, Colo.,
outlined her store's loyalty programs--a 10% individual discount to
members of book clubs on their clubs' choices and a $10 store credit
for every $200 spent. Some 72% of gross sales are affected, and the
store redeems 2.7% of gross sales. "Sometimes the line item stands out
as a lot of money but it's absolutely worth it," Magistro said. "It
helps me get through the shoulder season, and it brings in customers'
relatives at Christmas. Sales have increased plenty enough to justify
it."
She added that emembering customers' names and their last purchases help to make a loyalty program "authentic."
Daniel Goldin of Harry W. Schwartz Bookshops, which has five stores in
and around Milwaukee, Wis., discussed the store's two Schwartz Gives
Back programs. For the older of the two, Schwartz donates 1% of
purchases made by participants to local or local chapters of arts and
science organizations. The other, introduced four years ago in response
to customer requests, is "virtually the same program" that the Bookworm
of Edwards has; a customer receives a $10 coupon for every $200 of
purchases.
Since its founding 13 years ago, the donation program has contributed a
total of $380,000 to local groups. (The organizations change a little
from year to year and usually include about 30 at a time. They're
required to do some marketing involving Schwartz and participate in
occasional shopping night events at Schwartz.)
Goldin noted that in the past because of competitive pressures,
Schwartz had been "a little more aggressive discounting" than it should
have been, but has phased out a lot of discounting.
Other suggestions from the floor for "loyalty gestures" included making
deliveries of purchases and selling tickets for other organizations'
events. One bookseller observed that "a smile and
warmth is probably the cheapest and most authentic way of building
customer loyalty."--John Mutter