Loyalty cards, rewards help snag customers

Dorothy Lane Market latest local stores to enhance programs. Plans become big part of chains’ marketing.

Dorothy Lane Market became one the earliest adopters of electronic customer loyalty programs when it introduced its Club DLM card in 1995, but the program remained fundamentally unchanged in 17 years — until last week.

“I felt like we needed to go another step,” said Norman Mayne, chief executive of the three-store grocery chain that on Wednesday unveiled a new loyalty-card rewards program that allows customers to accumulate and redeem points in exchange for price breaks on everyday items. In an increasingly competitive local grocery market, “We think this will allow us to be more attractive from a price perspective,” said Calvin Mayne, Norman’s son and DLM’s chief operating officer.

It’s a decision more businesses locally and nationwide are making as loyalty cards and rewards programs become an integral part of marketing strategies for an increasing number of retailers.

“Today’s consumers need a whole lot more to prove why they should be loyal to your brand,” said Liz Miller, communications and marketing programs for the Palo Alto, Cal.-based Chief Marketing Officer (CMO) Council, which links 6,000 corporate marketing officials at many of the world’s largest companies.

Loyalty cards, along with rewards programs tied to the use of those cards, can offer the incentives needed to capture and keep customers.

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Loyalty programs go back to the early and mid-20th century, when a handful of retailers started handing out “trading stamps” to consumers who dutifully filled pages of booklets that could be exchanged for merchandise.

But today’s loyalty cards harness new technologies such as mobile-phone apps and social networks to help retailers tailor their offers based on each consumer’s buying habits, Miller said.

The poor economy has accelerated the trend, forcing consumers to search out — and even to expect — bargain prices, customized special offers, at-register savings and other deals, she said.

“The consumer is in the driver’s seat now,” Miller said. “It’s changing retail.”

Grocery stores in the East and Midwest appear to be embracing rewards programs at a faster pace than grocers elsewhere, Miller said. And grocery competition in some pockets of the Dayton area — especially in the south suburbs, where Dorothy Lane Market’s three stores are located — has heated up in recent months, with Cincinnati-based Kroger announcing it will build a new store in the Austin Landing development in Miami Twp. shortly after opening its largest-ever Marketplace store five miles away in south Centerville.

Grocery competitors have taken divergent views on loyalty cards and rewards programs. Kroger introduced its Kroger Plus loyalty card in 2001, and customers can earn points for grocery shopping, eligible pharmacy prescriptions, gift cards and gasoline, said Kroger spokeswoman Rachael Betzler.

Customers also can download digital coupons to their cards and receive notification of products that have been recalled.

Kroger in turn benefits from the ability to tailor coupons it sends to consumers’ homes to include items they buy most, Betzler said.

Michigan-based Meijer does not have loyalty cards, but does offer an “mPerks” digital coupon program in which customers with a mobile phone that can receive text messages can sign up to download coupons to their phone, according to Meijer spokesman Frank Guglielmi. Customers can then redeem those coupons at checkout by entering their cellphone number and a personal identification number, which applies coupon savings to their grocery bill.

Guglielmi said the chain’s program, launched about two years ago, has been well received, and is attracting 5,000 new enrollees each week.

“We do believe customers want to be rewarded for their loyalty, but they do not want to have to use a specific card or credential,” Guglielmi said.

America’s largest retailer, Wal-Mart, which has been expanding its grocery offerings in the Miami Valley and elsewhere, does not offer a loyalty or rewards program.

But the CMO Council’s Miller said an increasing number of businesses are finding that the ability to collect detailed data about their customers’ purchases is valuable — and worth the effort.

“Why not tailor your offerings to the types of items that I buy, or even to the exact items I buy?” Miller said. “There’s a reason why I am an American Airlines customer — I keep buying from them, they give me something in return. It’s almost Pavlovian.”

Contact this reporter at (937) 225-2258 or mfisher@DaytonDaily News.com.

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