I spent my formative years working in the retail industry for Golf Galaxy. It was an awesome gig because I got to cut my teeth learning what it takes to create great customer experiences in a category that people were nuts about.
One of the most successful initiatives we conducted at Golf Galaxy was our loyalty program, Advantage Club. It was born out of a desire to create direct relationships with our customers and decrease the cost of reaching them (back in the ol’ days of marketing, we used other forms of inefficient marketing like print ads and it was a super expensive media when only 5% of the readership played golf).
But here’s the thing.
A simple economic reason for being (make our marketing more efficient!) was the start, but we couldn’t imagine at the time the other benefits that the program would bring. Here’s what we discovered.
Advantage Club allowed us to better understand our customers. Prior to having a program, we didn’t have any good sources of customer behavior data. Our POS system allowed us to run transactional reports, but nothing that described behavior patterns down to the customer. With the program in place, we had a customer database that showed us what the lifecycle of a customer looked like as well as helped us describe the different types of customers we encountered so we could communicate to each in a personalized way.
It grew into an advertising asset that rivaled other industry options. In a matter of only a couple of years, we grew the program to the point where the number of members was greater than the subscription size of the major industry publications (like Golf Magazine or Golf Digest). The implication was that we could now turn around and partner with our vendors to effectively sell advertising in our own program. The economic impact of this was no small deal, in fact, it was equivalent to our EBITDA in most years. Without the impact of the program, Golf Galaxy wouldn’t have turned a profit.
The program was a petri dish for data science and creative marketing. We built an analytics model to score customers based on their predictive future value to Golf Galaxy. This allowed us to invest in marketing down to the customer and to the degree appropriate based on a customer’s predicted value. In addition to that large scale model, we also did some crafty smaller data initiatives that drove value. For example, we knew that, on average, customers bought golf balls every 7 weeks. Based on that knowledge, between weeks 5-6 from your original purchase, we served you a meaningful promotional offer for golf ball products in your desired class (premium balls for good players, value balls for less-advanced players, etc.) from brands that we wanted to sell. The tactic was simple and the economic return was huge.
Advantage Club was a well we could always go to for a sales pick up. There were many times when we were in danger of missing a quarter or a month and timely communications to Advantage Club saved the day. We had actual customers in our database who already liked us and we knew their behavior and preferences. Because of this, our marketing communications were personalized and relevant – and yielded results.
The program turned into a community of like-minded golf nuts. What’s fun about running a program like Advantage Club in an enthusiast category, is that people want to join anything that is about their avocation. Golfers are nuts about the sport and are always looking for ways to engage with others like them. A program like Advantage Club gave them another formalized community for them to engage with. We found them creating their own golf leagues, attending our in-store events, and setting up their own Facebook groups – all because they found each other through Advantage Club.
At Sprocket, we dig enthusiast categories (like our friends at Columbia Sportswear) because people actually want to engage with you as a brand. It’s also in these categories where we see impressive returns on loyalty program and CRM initiatives.
Do you find yourself working with an enthusiast category? Do you have a solid customer loyalty strategy? If not, give us a holler.