CRU Awards 2014: Rewarding Customers

Q Marts build traffic and sales with loyalty program (video)

Steve Holtz, Editor in Chief, CSP Daily News

Q Mart Rewards

SHEBOYGAN, Wis. -- Like any good convenience-store chain, Quality State Oil’s Q-Marts is continually on the lookout for new ways to drive more store traffic. Nine years ago, it hit on a formula that’s improved sales and helped the chain build stronger relationships with its customers and its suppliers. It’s Q-Mart Rewards, an RFID keychain-fob loyalty program that rewards consumers with coupons, discounts on gasoline and free products.

“We realized that we needed something that really differentiated us,” said John Winter, vice president of planning and development for the Sheboygan, Wis.-based company. “We felt a loyalty program could do just that, and we’ve been evolving that through the years and created dramatic sales in certain categories because of the loyalty program.”

The program does away with punch-card loyalty programs, but maintains the essence: Buy eight cups of coffee and the ninth is free. Buy 10 32-ounce Gatorades and get one free. In fact, there are more than 70 “clubs” consumers can benefit from—from ice to beer and fuel to taquitos—all through the single keychain fob.

“It took a couple years, but we learned how we could maneuver customers to get them to do some of the things we wanted them to do, which was to purchase more of the products we were trying to promote.”

Over the past nine years, the 18-store chains has enrolled about 95,000 people into the program, and this past December, it recorded its highest all-time rates for usage. And the busiest categories, such as beer and cigars, have seen use rates as high as 72%.

“That means when every one of those items that were purchased [the customer] used the key tags to purchase it, so twice the average of what our 37% average of all the store sales,” Winter said. “They’re earning free gas or an extra free item, and that’s the key. The clubs have been a success story for us. We try to figure out why the consumer shops us, and then give every consumer, no matter what they’re buying some value.”

As news about the rewards program—and its success—began to spread, some of Quality State Oil’s 45 dealers began to ask “what about us?” The answer came back in the form of Badger Rewards, a spinoff of Q-Mart Rewards that provides the dealers with similar reward offers and the ability to create deals of their own.

“John’s work with Q-Mart Rewards has really matured as a program, and I saw the value of the Q-Marts Rewards program,” said Scott Stangel, wholesale marketing manager for Quality State. “There was a real need, and there were requests from our dealer base saying, how do you do those rewards? It was an opportunity from there.”

So far 12 of Quality States 45 dealers have taken on the Badger Rewards program, with more in the works. And those embracing it the most have found a way to make it their own.

In nine years, loyalty has very much become part of the strategy for Q-Marts and Quality State

“Everything we do at Q-Mart revolves around rewards, every marketing program, every partnership,” says Winter. “And that’s the thing that has made our program so strong. I’m very proud that we’ve added almost 100 partnerships and we’ve kept most of those partnerships over the years because it’s successful.”

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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