Why is Ace Hardware trying to buy my loyalty?

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Settergren'sNo neighborhood is complete without the local hardware store. Ours is Settergren’s, an Ace Hardware that’s been in business for over a hundred years.

Like most of it’s compatriots, it’s the anti-Home Depot. You get a good selection at a decent price. But what really matters is the convenience and the really good advice from people with dirt under their fingernails who know what kind of nail to use and can recommend the best caulk for your situation. We stop by there not just to get tools, but to ask for advice on a job or to look for a contractor.

Settergren’s is a neighborhood institution. On a Saturday afternoon it’s crowed with people coming for paint, nails, mulch or a shovel. They’re active in the community and neighbors regularly talk about how much they love Settergren’s.

So it surprised me when they came out with a loyalty program. You earn points by spending money with them which comes back in the form of a card good for $5 in purchases.

Who thought THAT was a good idea?

I understand why hotels and big box retailers create loyalty programs. Marriott hotels look remarkably like Hiltons. I dare you – kidnap a friend, put them in a hotel chain and take down the signs. What are the odds they can recognize the owner? Zero.

So hotels need a “loyalty” program to buy your future stays. Giving away free hotel stays is actually a good way to change behavior. Customers aren’t really loyal to the brand, but they will go there to earn points for future stays.

This is clearly not the case for an Ace Hardware. I’m not going to drive to the next neighborhood hardware store to save $5. The only reason I’ll go there is if they offer better advice or different services. And $5 won’t impact that.

Somebody at Ace is confused about what loyalty is really all about. Your local hardware store doesn’t need a new loyalty program. They’ve had one in place for over a hundred years.

Their loyalty program is their staff who tells you what product you need when you accidentally put non-paintable brown caulk on all of your fence posts (don’t ask). Or who can give advice on what to do when you spill yellow paint all over your rust-colored shingles (Really don’t ask!).

Look, I’ll take the $5. But you’re better off using it to retain your staff. Because they’re the ones earning true loyalty.

Republished with author's permission from original post.

Jim Tincher
Jim sees the world in a special way: through the eyes of customers. This lifelong passion for CX, and a thirst for knowledge, led him to found his customer experience consulting firm, Heart of the Customer (HoC). HoC sets the bar for best practices and are emulated throughout the industry. He is the author of Do B2B Better and co-author of How Hard Is It to Be Your Customer?, and he also writes Heart of the Customer’s popular CX blog.

2 COMMENTS

  1. Excellent. This might be a case of a great company getting too big for its overalls. I don’t know the back story on this one, but it might be a case of marketing folks who confused fad with function. Wonder how many customers guiding them through this affinity decision making process? Wonder if there was some customer loyalty driver research that said, “saving money” is the main reason why customers go to Ace? I suspect there was no driver research behind this, or flawed research, or some executive who proclaimed, “I don’t care what the research says, we need a loyalty program and this is what we are using!”

    You are right, what the big boxes and the “all look alike” enterprises need to do to retain customers and grow loyalty is different than what is needed by a Joe Phillipshead who sits by you at Rotary and sings in the church choir. The Ace Hardware store I go to is a little closer than the Home Depot. If I know exactly what I want, I go to Home Depot and deal with Whatshisname. But, if I need advice or just a second opinion, I go to Ace and talk with Harold or Josh. People don’t buy from brands; they buy from people. And, the valued emotional connection can be a far stronger attraction than a Starbucks card or $5 dollar discount.

  2. Unfortunately, (too) many b2b and b2c companies institute loyalty program in the mistaken belief that, automatically, this will serve as a surrogate to having a customer-centric culture and set of processes: http://customerthink.com/mckinsey-thinks-bland-generic-loyalty-programs-are-killing-business-and-they-may-be-right/

    Ace should also be aware that some retail organizations with well-established loyalty programs have eliminated them: http://www.targetmarketingmag.com/blog/marketers-loyalty-programs-we-don-t-need-no-stinkin-loyalty-programs

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