Sunday, September 5, 2010

Club Program Changes

I try to regularly look at my business with a literal fresh perspective. I was taught I should step outside onto the sidewalk and attempt to view my store like I have never seen it before. Sometimes you get insights after a long weekend or a vacation. Look how dirty the glass is! Why are the war games shelved with the children's games? What's with the Mary Poppins music? It's easy to get into a rut and continue doing things because that's how you always did them, often with some vague reasoning or perhaps very good reasoning that you forgot years ago. Change can be good but it can also be perilous. One item that isn't visible but  always turns up when I look at the store this way is our club program.

The Paladin Club is our frequent buyer program that earns points for every dollar you spend, eventually redeemable for cash off purchases. Most major game stores in the Bay Area have a club program of some sort and I've promoted them myself at trade shows and on this blog. The thing is, they're just .. too ... expensive. Fixed costs continue to squeeze brick and mortar stores and this is an obvious culprit for reducing income.  If I were a new owner, having recently purchased Black Diamond Games for a million bucks and trade for my Maserati Quattroportte (that guy drives a hard bargain), the first thing I would do is cancel the program. I would rip that band aid off quickly and just dump the whole thing.

The club program was designed to do two things: lock in sales from competitors and provide a gateway for marketing to our customer base. The competitor point is still valid, although most of our true competitors are gone or farther away since our move. The marketing point is less valid. After six years, we have about 400 active email addresses from club members (another 400 that need revision), compared to over 1,000 from just a years or so with Facebook and Twitter. I don't want to make light of those 400 people and they do act on our emails, but it's a secondary way we provide information nowadays. Social networking dominates and there's a new desire to learn about businesses, to pull in new information, as opposed to the old intrusive push model, in which I provide you a service (informative email) while apologizing for the interruption. I no longer see the trade off as worth the very high expense.

But how to get rid of the club? We've had a lot of internal discussion about how to back out of the program without alienating our customers. It ain't gonna happen. So here's my plan: I plan to phase it out gradually through attrition. I just won't order new club cards when we run out. We've got about 50 cards left. The existing program will remain unchanged, but when the cards are gone, we won't enroll new people. This has the benefit of keeping everyone who has a benefit happy and even letting everyone know to join if they've been considering it. In the future, you can show off your battered card to your friends and grand children, like some of our customers do now with their first generation club cards.

I can't find a graphic of our club card so here's a Maserati Quattroporte.
Say it slowly, Quattro-port-tay, it's like an Italian vacation in your mouth.

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