The 5 per cent club

June 24, 2009
Written by John Stanley
Price has become a major marketing tool over the last few months. The majority of retailers have relied on discounting as a tool to drive sales, but discounting can only be a short term strategy.  New ways of generating sales have to be developed for retailers to prosper in a new economic environment. 
 
Sports Power, the Australian sports apparel retailer, developed a promotion that encouraged consumers to purchase a pair of sports shoes and then purchase a pair of socks. If the customer purchased the socks then the retailer would donate $2 to charity. This campaign was interesting, it was encouraging the customer to spend more and hence increase the average sale, but rather than introduce e a discount offer on the extra purchase, it created an emotional interest in donating to a charity.
 
In today’s market we have a consumer that wants a bargain and yet wants to be a good global citizen at the same time. This can cause conflict, but it can create opportunities for win:win situations for consumers, retailers and charities.
 
Scarvaci's IGA Supermarket is located in Hamilton Hill, Western Australia. It is a family retail business that has been trading at the same location for two generations. Frank, the owner wants to help fight childhood poverty as part of his marketing strategy whilst helping his customers. He has come up with a unique marketing strategy.
 
The supermarket has developed a loyalty club and a Club Card under the banner of The 5% Club. Club members receive a 5% discount on all their purchases including specials in the supermarket over a period of twelve months, which is the life of the loyalty card before renewal is due.
 
The card costs $60 a year and customers pay for the loyalty card up front. Many retailers are offering a similar loyalty club scheme, but Franks Scarvaci’s card takes it to another level. For every 12 members in the club, the store sponsors one World Vision child for a period of twelve months. The club is restricted to 2,400 members; this provides some exclusivity, but not only is this supporting under privileged children, it is also saving each club member on average $200 a year on their grocery shopping bill.
 
As an added bonus the store also contributes $1 for every member to the IGA “Community Chest Fund” which helps the local community. More information on this promotion can be obtained from www.scarvaciiga.net.au.
 
Marketing Opportunity
 
The real key to success in this type of campaign is that it takes the focus away from the customer  solely looking for a good deal and gets them to refocus on the problems of the world and how they can help the planet whilst also helping themselves.
 
The company has selected a cause that is well known to its customers and this gives the promotion some credibility in the marketplace.
 
Frank, the owner hopes to get other local retailers involved in the campaign to make it a community effort rather than a one store promotion. The loyalty card could then become a community loyalty card rather than a store loyalty card.
 
As the economy starts to improve we will see other progressive retailers get involved in similar promotional campaigns. These campaigns could be retail industry specific or applied to a group of retailers in the community.
 
The challenge for all retailers is to develop marketing campaigns that include price sensitivity when necessary whilst also getting the message across so that customers also feel they are being good global citizens.



John Stanley is a retail business coach, consultant, speaker and author.  His specialist areas are customer focused layout, customer focused merchandising, customer focused marketing and branding, and customer focused selling and service.  Email John on This e-mail address is being protected from spambots. You need JavaScript enabled to view it or visit his website www.johnstanley.cc

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