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SEARS CLUB: TEN YEARS AND COUNTING
Linked to the store's proprietary card, the Sears Club's only regularly-scheduled communications to members is the point balance appearing on the member's monthly credit card statements.
Even though Sears Canada's Sears Card had more customers than any other retailer, bank or specialty-card issuer in Canada, it wasn't enough to combat the 1987 launch of Club Z, a frequency-marketing program by the department store's rival, Zellers. It was then that the retailer launched the Sears Club. While participating in the Sears Club is available only to Sears credit cardholders, enrollment in the program is not automatic. "The major goal for the Club is to sell more product, not necessarily to raise credit card sales," says Kim Christie, national account executive for Sears Credit Marketing. "Linking the program to the Sears Card was just the easiest way for us to launch the Club."
Sears Club members earn one point per dollar spent using their Sears Card for a more than 50,000 products and services the retailer offers in its stores and catalogues. Specialty services available from Sears such as Sears Portrait Studio, Optical, Income Tax and Sears PhonePlan (the second largest long distance retailer in Canada) also provide members the opportunity to earn points. In August 1996, the retailer announced the nation-wide relaunch of the Sears Club with a mailing to the 6.2 million active account customers. The mailing also included the new, no-fee Sears Club credit card exclusively for members. (At the program's inception, members got a sticker placed on their Sears Card making them easily distinguishable from those who were not Club members.) With a new, more contemporary logo and the addition of partners to the program, this step proved pivotal in establishing the Club as a 'force' for the department store and distinguished the Club according to the retailer, the "strongest loyalty programs" in Canada.
Today's Sears Club provides more opportunities for members to be rewarded for their loyalty. New program partners where members can earn points include Budget Rent-a-Car and Shell stations across Canada.
Members convert their points into Sears Club certificates (1,000 points = $15; 15,000 points = $600) or to AIR MILES travel miles. Sears is also an AIR MILES sponsor (1,000 points = 55 AIR MILES with partner airlines Air Canada, American Airlines, United Airlines and USAir).
The only regularly-scheduled, personalized communication is the point balance statement appearing on the members' monthly credit card statements. Aside from the annual Holiday Season Bonus Certificate for a free gift, other promotional offers arrive only on a quasi-regular basis. "We are able to look in our database and say, 'Gee, they've shopped us for fashions but not for hard line items,' so we send an incentive to shop hard line items," Mr. Christie explains.
"Partnerships not only provide Club members with more ways to earn points, but they also help to enrich our database."
According to Mr. Christie, the program is a success: 75% of memberships are active; at $650, the average annual revenue per member is slightly higher than non-members; and 60% of total sales come from Club members. As of August '96, more than $350 million Sears Club certificates have been awarded and more than 24 billion points have been issued.
Future plans include signing up more non-competing partners to deepen the relationship with members, and to help them earn points faster. Mr. Christie would especially like a partner in the drugstore business to serve baby boomers as they grow older.
"Partnerships not only provide Club members with more ways to earn points, but they also help to enrich our database," he says, which is also next on the agenda for the Club. "When the Club was launched in 1987," Mr. Christie admits, "we really didn't know much about database marketing. Now we're getting into our database and capitalizing on its strength."
Since the most effective frequency-marketing programs rely heavily on personalized communications with members, Sears Canada's efforts to exploit its database will serve the retailer well. It's an opportunity to better identify its high-value customers, to analyze purchase patterns ... and then, to establish a solid communications strategy, one that allows for a real dialogue between Sears and its Club members for even further added value. Sears might also consider a customer-driven strategy rather than a credit card-driven strategy, opening up enrollment to the segment of customers who prefer to pay by cash or an alternative credit card. Mr. Christy notes that, in 1993 when Sears began accepting third party credit cards, "We were concerned about how the Sears Card would hold up under the pressure." But to his surprise, "It turned out to be a blessing in disguise. When a customer offers his/her Visa, MasterCard or American Express for payment, "we offer a deal on the first purchase to the Sears Card, and we have another Sears Card holder." And he claims, many of those new cardholders have become Sears Club members.
Still, in 1996 it was reported that 10% of purchases at Sears were made on third-party cards. And if that's not incentive enough, the chance for Sears to track all its best customers rather than just those who use the store card might prove to be well worth the effort.
Volume 6, Issue 2, 1997.