A very important part of the Top Dog POS Solution is the "Frequent Buyer" customer loyalty program "Q-Rewards."
This software add-on for Microsoft Dynamics RMS lets you manage your Frequent Buyer program. It saves you the time and effort involved in maintaining a frequent buyer program the old-fashioned way - through stamp-cards, Excel or filing cabinets. Now you can let your computer do all the work, saving you hours every week. But what is a "Frequent Buyer" program in the first place?
Q: What is a Frequent Buyer Program?
A: Frequent Buyer Program is the most recognized name for a customer loyalty program which is common among pet food manufacturers, distributors and retailers designed to reward the customers’ loyalty to particular brands/products. Originally introduced by Nutro http://www.nutroproducts.com/, it has achieved a widespread popularity in the industry. It works according to the formula: “Buy X Bags Get Y for Z”
Q: What are the variations of the program?
A: There are many variations. The most common formula is “Buy 10 Bags Get 1 Free” http://www.nutroproducts.com/fbp.html. However, Holistic Blend www.holisticblend.com has recently changed the program to “Buy 11 Get 1 Free”. We’ve seen some retailers offer “Buy 12 Get 13th free” (e.g. http://www.expresspetsupplies.com/programsfrequentbuyer.aspx). It is possible to use the program without the “free” item at the end. For example, some may use: “Buy 3, get each 4th with 25% off”.
Q: Which brands participate in the Frequent Buyer Program?
A: To our knowledge, all major pet food brands participate in the program one way or another. The list includes Nutro, Science Diet, Iams, Eukanuba, Natural Balance, Pro Plan, Holistic Blend, etc. Some smaller manufacturers such as Naturapet also offer limited support to the program http://www.naturapet.com/tools/faqs.asp?view=buy. However, because of the overwhelming popularity of the program, many independent retailers offer the program on their own terms and include brands and other products which otherwise do not have the manufacturer’s support. Giving each 10th bag for free amounts to just 10% discount to a loyal customer! For example, Bosley’s Pet Food Plus offers an in-store pet bath service (available in certain locations), called “U-Bath”, for which they offer each 7th U-Bath service for free using the same familiar “Frequent Buyer” pattern.
Q; How does the Frequent Buyer program work exactly?
A: According to the manufacturers’ or custom guidelines, all products are split into families, or so called “incentive groups”, in which the items are normally combined by type, brand, size and price and differ from each other by flavor or other less significant variations. For example, an incentive group called “Eukanuba Dog Large” may contain items such as “Eukanuba Large Breen Premium Performance”, “Eukanuba Large Breed Adult”, “Eukanuba Natural Reduced Fat”, “Eukanuba Puppy Large Breed” etc. each of which comes in 40lb/18.1kg bags for about the same price. Purchase of any product from this incentive group qualifies the customer for receiving the reward from that incentive group.
If the program is sponsored by the manufacturer, the pet food retailer receives a rebate for the “free bag”. If the manufacturer does not support the program, the retailer absorbs the cost of the free bag as a product discount.
Q: What are the challenges for pet food retailers?
A: Pet food resellers face a multitude of challenges regarding the frequent buyer program. For example, for most retailers the program is paper-based: all of the customer’s qualified purchases are recorded on a customer card which is kept at the store or in the customer’s wallet. Finding the right card and manually recording the purchase is time consuming. In addition the card may be easily lost which leads to the customer not receiving a free bag - which causes frustration and dissatisfaction.
Secondly, if the program is sponsored by the manufacturer, they require a full report on a regular basis for the retailer to receive a rebate or credit. The reports may require the name and address of the recipient, the date of the transaction, all historical items which have led to receiving the reward etc. Even if the paper-based customer card is properly held, imagine how much effort is required to copy all these cards, manually re-enter all information into a summarized report etc. on a regular basis! The manager of a small pet food store would have to spend 10 or more hours each month preparing such reports.
In fact, the cost of maintaining a frequent buyer program becomes so high that some retailers and manufacturers consider abandoning the program – not a great move in a market that demands the existence of such programs.
Q: What is the solution?
A: The solution is two-fold, but it revolves around using retail technology to maintain the program.
First, the pet food retailers, no matter how small they are, must use a computer-based point-of-sale system that is able to keep track of all individual customer purchases over a time span and report it.
Second, such a computer-based POS system must have enough business intelligence to group purchases from certain item families (i.e. all 40lb/18.1kg dog food bags from Nutro) and count all purchases of products from that group toward the specific “reward” goal.
Such systems exist. Microsoft Dynamics RMS is an excellent POS and inventory management system which runs on any standard Windows computer. It automates all standard customer checkout functions and provides great tools for inventory management, such as physical counts, product ordering and reordering, business reporting and others. What makes Dynamics RMS special is that it provides the ability to create various extensions (called “add-ons”) that enhance the core functionality in many areas.
On top of this, Retail Hero developed and successfully implemented a specific loyalty program called “Q-Rewards” that uses this mechanic with many Pet Food retailers.
You can view demos of the program in action on Retail Hero’s Web site or read more online at www.retailhero.com/qrewards
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