Communication Partners Worldwide, Inc. 12/9/17 Krasdale Foods: CTOWN Supermarkets Marketing & Loyalty Programs Krasdale Foods, Ken Krasne, CEO Phillip A. Schein, President CONFIDENTIAL 2005 Confidential Page 1 Communication Partners Worldwide, Inc. 12/9/17 Market Segment and Demographics: “Asians and Hispanics are wealthier than expected and underserved. Children also made the news – good and bad. The good news is their buying power is substantial and their influencing role as well. The bad news is they are obese…so selling to them more may not contribute to their longevity as customers”. [1] “Seniors and single-person households were also recognized as viable target groups because of their spending power, fueling interest among manufacturers for smaller sizes”. [1] Advertising to Growing Hispanic Market: “According to the 2000 Census Report, Hispanic Americans constitute a bigger, more dispersed, and more affluent market than previously predicted. The number of US Hispanics grew by 58% in the past decade to 35.3 million…buying power increased 118% to $452 billion (dramatically exceeding the the 68% growth in non- Hispanic buying power).” [1] Convenience and Price Critical: Brand loyalty varied significantly by category and their convenience and price drive store selections: • 37% - 24 hour operations a reason to shop a particular store • 21% - FSP • 52% - sale items and coupons “The challenges for retailers is to keep prices low while maintaining a high-value image and differentiating themselves from each other…and Wal-Mart.” [1] How Shoppers Really Feel About Advertising Inserts and Circulars: “According to Consumer Focus 2002…advertising inserts are effective marketing. Specifically 86% say trhey read inserts…” [1] 1. 92% female are primary readers 2. 85% compare prices 3. 56% compare multiple circulars How Channels Are Perceived: “…although consumers still conduct their primary shopping at supermarkets, they believe they save more money and receive better value when shopping at warehouse club stores and supercenters…although they spend more than they planned by making impulsive purchases.” [1] Action items: 1. Change perception of CTOWN vs. Superstore. 14- Better and more informative circulars 15- Teach shoppers to buy what they need, not impulse purchasing (recipes with sale items in circulars) 16- Educate the consumer on FSP 17- Better trained CTOWN Staff 18- Better and more informative website Confidential Page 2 Communication Partners Worldwide, Inc. 12/9/17 19- Work within community “…60% of shoppers are making fill-in trip of 10 or fewer items at least weekly. 37% of all shoppers say they shop in a warehouse club store less than once a month…” [1] Action items: 1. Market to the weekly shopper. Give them incentive to come in 3 times a week. 20- Sweepstakes – builds card use 21- Educate the consumer on FSP…don’t punish them for not having the card…get them to sign-up. 22- Better trained CTOWN Staff…they should know the frequent shoppers, at least in the system, by their name. 14. Staff needs a training manual and they need to be rewarded as well. 23- Better and more informative website with added promotions, printable coupons, recipes, floor plan of stores, etc. 24- Circulars could have maps of aisles to make shopping quicker. Customer Satisfaction is #1: “In a recent Harris study, shoppers cited lack of checkout staff as the single most important factor affecting their satisfaction with grocery shopping”. [1] Action Items: What control does CTOWN have over stores? Are their corporate guidelines? Do they have to spend “x” in product and marketing? Can you oversee hiring? This is very important in planning a strategy that improves customer service which is the number one factor to improving revenue. Get manufacturers (an owners) to contribute to training dollars (online) which will in turn will give CTOWN a better view and control over CTOWN managers and operations…maybe through a CSM app (2-way street so Managers can see data, consumers can give feedback and CTOWN can see all. In the end, manufacturers will get better put-through of their products, Owners will make more money, etc., etc. Having a great POS system and now a FSP is only as good as the people that operate it. It’s like the new security equipment at airports. If the same staff is operating it, without “incentive training”, do you think security will really improve? [1] Supermarket Strategic Alert Special Report 2003-04 Confidential Page 3 Communication Partners Worldwide, Inc. 12/9/17 Eleven critical factors that lead to the success or failure of any loyalty or relationship-based marketing initiative: 1. Don't aim for a quick fix (definitely #1) 2. Empowering your loyalty team (This goes back to my belief in training the retailers, empowering the retailers and educating the consumers) 3. Making it a long-term project (with smaller, nested goals ands programs) 4. Knowing your customers (Data mining, communication and surveys) 5. Acquiring new customers (and retaining existing customers) 6. Attainable, affordable rewards (making the customer feel like they can achieve…especially in the inner city market) 7. Measuring your costs & returns 8. Recovering your costs 9. Communicating properly (training) 10. Create barriers for competitors (first mover advantage with EXCLUSIVE partnerships like…) 11. Keeping it simple (old saying…KISS – Keep it simple stupid) The Laws of Loyalty to live and build upon: 1. Build staff loyalty (Online and off) If CTOWN wants customer loyalty than we have to earn high levels of staff loyalty (In NYC and I’m sure in the neighboring boroughs, it seems like there is a new face every day and nobody cares…it’s just a schmooz-fest or sleep-fest between staff). It's near impossible to build strong customer loyalty with a staff that is in constant turnover. Why? Because customers buy relationships and familiarity. They want to buy from people who know them and their preferences. Key rule of loyalty: Serve your employees first so they, in turn, can serve your customer. 2. Practice the 80/20 Rule In building customer loyalty, the 80/20 Rule is alive and well. Roughly speaking, 80% of your revenue is being generated by 20% of your customers. All customers are not created equal. Some represent more long-term value to your firm than others. A smart company segments customers by value and monitors activities closely to ensure high value customers get their fair share of special offers and promotions. Unlike many firms who simply measure overall redemption, these savvy loyalty builders pay close attention to who redeems. 3. Know your loyalty stages and ensure your customers are moving through them. Customers become loyal to a company and its products and service one step at a time. By understanding the customer's current loyalty stage, you can better determine what's necessary to move that customer to the next level of loyalty. Our Profit Generator Loyalty System comprises six stages: suspect, prospect, first time customer, repeat customer, client and advocate. If your customer relationship processes and programs aren't moving customers forward, rethink them. 4. Serve first. Sell second Today's customers are smarter, better informed and more intolerant of 'being sold' than ever before. They expect doing business with you to be as hassle-free and gratifying for them as possible. When they experience good Confidential Page 4 Communication Partners Worldwide, Inc. 12/9/17 service elsewhere, they bring an "if they can do it why can't you?" attitude to their next transaction with you. They believe you earn their business with service that is pleasant, productive and personalized and if you don't deliver, they'll leave. Don’t be fooled…It’s not an ongoing price war, but rather a service war. People are loyal to people, not dollars. 5. Be receptive to customer complaints (Online and off) For most companies, only 10% of complaints get articulated by customers. The other 90% are unarticulated and manifest themselves in many negative ways: unpaid invoices, lack of courtesy to your front line service reps, and, above all, negative word of mouth. With the Internet, an unhappy customer can now reach thousands of your would-be customers in a few keystrokes. Head off bad press before it happens. Make it easy for customers to complain, and treat complaints seriously. Establish firm guidelines regarding customer response time, reporting and trend analysis. Make employee complaint monitoring a key tool for executive decision making. 6. Get and stay responsive (Online and off) Research shows that responsiveness is closely tied to a customer's perception of good service. The advent of the Internet has changed the customer's perception of responsiveness. More and more, customers are coming to expect round-the-clock customer service. Moreover, customers now arrive at Web sites time-starved and eager to locate answers. Technology tools such as customer self service, email management and live chat/web call back are proving increasingly critical for companies as they address the demanding customer's responsiveness needs. 7. Know your customer's definition of value (Online and off) The loyalty password is "value". Knowing how your customers experience value and then delivering on those terms is critical to building strong customer loyalty. But knowing your customer's true definition of value is not easy because your customers' value definitions are constantly changing. Invest in customer loyalty research (online surveys to existing customer-base) that enables you to understand, through the eyes of the customer, how well you deliver value. 8. Win back lost customers (Online and off) Research shows that a business is twice as likely to successfully sell to a lost customer as to a brand new prospect. Yet, winning back lost customers is frequently the most overlooked source for incremental revenue in many firms.