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

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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

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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

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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

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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. Why? Because most firms consider a lost customer a lost cause. With the average company losing 20% to 40% of its customers every year, it's imperative that firms create hard-working strategies, not only for acquisition and retention but also for win-back. Since no customer retention program can be 100 percent foolproof, it follows that every company needs a process for recapturing those high value customers who depart. Think of it as loyalty insurance.

9. Use multiple channels to serve the same customers well (Online and off)

Research suggests customers who engage with a firm through multiple channels exhibit deeper loyalty than single channel customers. But take note: This finding assumes customers get the same consistent service whether coming into the store, logging on the Website or calling the service center. To accomplish this, your firm must internally coordinate sales and service across multiple channels so that customer preferences are accessible no matter how the customer chooses to interact. Today's customers expect to hop from channel to channel and they expect good service to follow. When I was In DAG, I did not have my card and they couldn’t

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Communication Partners Worldwide, Inc. 12/9/17 look me up in the system because the POS system wasn’t tied into the customer database…the system recognized a bar code first and a persons name second…bad!

10. Give your front line the skills to perform (Online and off)

Increasingly, for many companies, the employee 'front line' is a call centre where agents interact with customers. These agents will be the "loyalty warriors" of the future.. Converged call centres that bring together multi-channel access points (phone, fax, email, web) are on the rise. Gartner Group estimates that 70% of North America's call centres will migrate to multi-channel contact centres by 2005. This means these agents need to be as equipped to write a well-written email reply and navigate the company Web site as they are in being helpful and friendly on a phone call.

11. Collaborate with your channel partners (Online and off)

In today's complex marketplace, a firm is often dependent on many suppliers to help serve its customers. Embracing these supply chain relationships for the greater good of the ultimate customer creates customer value that is hard for competitors to match. For example, a European auto manufacturer converted its customer data base program into a system that could be shared by all channel partners. By refusing to hoard the information, the manufacturer helped create a blended- channel strategy that built greater customer loyalty through out the distribution chain. In the end however, this is more a culture and industry decision…sharing data across channels has never been looked upon with a smile. If it was, forecasting purchasing would be easier, but for example, manufacxturers could raise prices accordingly…dangerous?

12. Store your data in one centralized data base

Most firms lack a 360 degree view of their customer because they have no centralized data base. Billing departments, sales divisions and customer service centers might all have their own data bases with no effective means for creating a complete customer information composite. To effectively implement a sound customer loyalty strategy, data from all customer touch points must be combined into a centralized customer database. Without it, the firm is greatly handicapped in its efforts to serve the customer.

The Hidden Enemy:

"OVERINFLATED"? Take the Seattle QFC. On June 14, New Hampshire schoolteacher and president of anti-card organization NoCards.org Katherine Albrecht shopped at QFC and at a local Albertson's that doesn't have a loyalty-card program. She purchased six items -- Kellogs cereal, Cheez-Its, Orowheat bread, Oreo cookies, one pound of strawberries, and a two-liter bottle of Coke. At QFC with her card, Albrecht's bill totaled $16.09 instead of the $20.29 she would have paid without the card. Cheez-Its, for example, cost $2.39 with the card instead of $3.79 without it. Orowheat bread had a shoppers-card price tag of $2.00 instead of a $2.99. Compare that to prices she paid at the nearby Albertson's, which doesn't have a loyalty-card program. Albrecht's total bill was just $11.22, nearly half what she would have paid at QFC without a card. Considering that five out of six of the products are brand-name items that rarely fluctuate in price, such a huge differential is hard to justify in the hypercompetitive supermarket business, says Albrecht. "The card price is regular price, and the noncard price is a ridiculous overinflated price" to punish customers who refuse to join the program, says Albrecht.

NoCards.org's Albrecht is quietly recruiting members across the country that in turn are raising awareness in their communities. In January, NoCards.org staged a well-attended protest in Dallas. Next up: A rally in Denver where No. 2 grocery chain Albertson's is considering launching a shopper-card program. Grassroots rallies are

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important, says Albrecht. To date, most consumers who fear that shoppers' cards will result in an invasion of privacy have simply refused to use them. But that only helps the grocery chains and hurts consumers, says Albrecht. "Fear increases the number of people who will not scan a card and pay highway-robbery prices," she says. We need to educate and change people's habits.

Ken: The above paragraph is probably one of many you and I have both read by the opposition to FSC. My purpose in identifying this is to discuss the relevance in this counter-approach by shoppers. Building a better “mouse-trap” is important, but it’s equally important to keep an eye on the growing voice of the opposition and the consumer and try to take advantage of this opposition or at least mitigate the risks. Professional marketers are also saying we are just starting to peak in the supermarket area as it relates to understanding and working with customer data. CTOWN need to evaluate and capture this growth with an equally important message to your retailers as well as the consumers on how CTOWN handles pricing and data. As you told me, the retailers are given guidelines, but do not have to follow them when it comes to pricing. CTOWN needs to better educate their retailers on the advantage of making a “small” buck vs. really building loyal customers and serious growth in revenue.

What about partnering with other companies?

There are un-partnered loyalty programs, and there are partnered programs (called 'coalitions'). Within the partnered category of program, there are two main types of multi-partner programs that have proved their value time and time again: true coalition programs, and single operator programs that include other partners.

A partner Clubcard is an example of a single operator program that involves other partners. The program is owned and run by CTOWN. However, Clubcard holders can collect points when buying from various partners in the program(Upromise does this and so could CTOWN), such as Hotels, gas and other merchants. For CTOWN, starting with partnerships that help the community is key to store growth.

Many essential goals that any coalition program must achieve if it's going to succeed, and why they're so important. Examples of these goals include:

• Rapid market penetration • Delivery of attractive rewards • Being the first in the market • Building communication channels • How some companies have succeeded?

Case studies of existing coalition loyalty programs across a range of industry sectors and countries: • Fly Buys in Australia and New Zealand • UK's famous Nectar program • PayBack in Germany • GoldPoints and S&H greenpoints in the USA • the BabyMint micro-investment program in the USA • Buy and Fly! travel rewards in the UK • MoreRewards in Singapore • SmartClub in China (let’s look at this one)

SmartClub - Loyalty program in China (Ken, the take away hear is that a partnered loyalty program needs to identify the habits of your overall target target market…inner-city [latinos, hispanics, african americans]…maybe a metro pass partnership, MLB [as

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mentioned] or something local, yet large enough to properly manage the risk vs. reward and tap into a sizeable partner database that matches CTOWN’s demogrsaphics…maybe even several smaller ones at one time…schools (thank a teacher, save a kid, education for all, etc. program).

With 100,000 members, Smartclub is not the largest loyalty program in the region. Asia Miles has 2.2 million. But, with 12-year exclusive contract with Shanghai Public Transportation Card Company, (which is like Octopus in Hong Kong) it might become one of the leading cross merchant loyalty program in China very soon. The program allows our members to collect loyalty points, which they can redeem for gifts, whenever they use their transportation cards for taking the subway, buses or taxi. The most beautiful part of their business model is that they are able to tap into an existing user base, which are already using the transportation cards and make that existing user behaviour more valuable by extending its use. It is a true win-win for all parties involved. With the potential of tapping into all the transportation cards holders, which is pretty much all the middle class in Shanghai, other merchants were interested in joining the program. The company has signed a 5-year exclusive contract with McDonald in Shanghai. Online travel agent, eLong, SMS services company, Linktone and sport good specialty store, Quest Sport, have also joined the program. Recently, a leading online gaming company in China with 400,000 members has also joined. (There are about 20 merchants in total in the program. Members can earn points when they purchase products or services from anyone of them.) But the growth is not without bound. You can only accept one company for each category (Exclusivity). Exclusivity is not a bad thing. For loyalty program, it is somewhat of a pre-requisite if you look at the industry. Some companies such as WebMiles and NetCentives tried to aggregate airline miles, but the airlines themselves do not favor this, as it destroys the number one value proposition for the airlines, which is to be loyal to one airline vs. another. That’s why Netcentives went bankrupt…a colleague of mine in NY bought the technology out of bankruptcy in SF…I’m not sure if he’s uses it at all to date (Charles River Consultants).

Credit card and debit card loyalty:

Co-branded and affinity programs are usually based on a credit card. But, while they are still popular with consumers and card issuers alike, the market in some regions has become somewhat mature (An area, still underdeveloped in the inner-cities). A co-branded card is a the result of a partnership between an issuing bank and a co-branding partner which could be any commercial organization (such as an airline, automobile association, retailer, insurance company or motor manufacturer). An affinity card is similar except that the partner is not a commercial organization, but is generally a non-profit making organization like a club, association, charity (here, CTOWN if the issuer, would get to mine the data while the affinity group would take a piece of the transaction fee…maybe “Meals on Wheels” for CTOWN) professional body. One example is the Amnesty International Visa Card issued by the Cooperative Bank. Affinity cards allow the issuer to mine the potential of the database of members of an already formed non-commercial group. The affinity group itself benefits from extra funds, as a fee is usually paid for each member who enrolls for a card, and then a percentage of each transaction's value is also garnered. Most importantly, affinity cardholders feel good because they are positively helping a cause close to their hearts, so they are likely to use the card in preference to other cards they might have.

Smart Cards

However, chip-based credit cards (smart cards) open up the field for loyalty programmes. The chip used to handle the financial side of the card has enough to space to run other programs on it as well. This means that not only can the card issuer provide its own loyalty program, but the card can be used to carry other programs as well.

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Visa International has already launched a standard, entitled VS3, for loyalty schemes and other applications operating on Visa credit and debit cards. Meanwhile MasterCard International has also taken steps toward the development of standards for smart card applications, and offers development assistance to its card issuers. Although smart cards in the field of loyalty have been discussed openly for quite some time, the market is still young and there's plenty of room for innovators to succeed.

Best customer marketing - 80/20 rule (Online and off…data mining)

Best customer marketing (BCM) is all about directing the major part of your marketing budget and effort toward your best customers - those who bring you the most profit. To many, the principle sounds obvious - perhaps too obvious to even discuss. So why, in reality, are so very few companies actually practising best customer marketing effectively? Best customer marketing is not a new concept - it has been practised since marketing began. It was the cornerstone of the 'mom & pop' stores that were so prevalent until the 1950s. It's plain common sense: look after your best customers really well because they are the ones who generate the most profits. But, in order to identify the best customers, you need customer data. That was easy in the mom & pop stores: the staff knew all the customers personally, knew what they bought regularly, could anticipate their needs, and could reward those who generated the most profit. But in order to identify best customers today, you need customer data, and you need to market to them accordingly.

Rewards

Reward drives behavior. We teach our pets how to behave by rewarding them when they behave correctly, and by not rewarding them when they don't. Reward the behavior that you want and don't reward the behavior that you would like to discourage, and behavior will follow reward - within reason. But, paradoxically, while a big reward reinforces desired behavior better than a small reward, when rewards are discontinued, those who have received big rewards are more likely to return to the old buying pattern than those who received small rewards. So the warning is clear: never, ever let your best customers feel that you are withdrawing privileges from them. It follows from this that the reward is a crucial part of any loyalty program. It has to be desirable enough to change the behavior of customers. In fact, if the reward is really well chosen, it will be attractive to the target group of customers, and not attractive to customers who are not really valuable to the business. It also has to be affordable, and balancing the two sides of the desirability/affordability equation is tricky.

What data should be collected, and why?

Many of the benefits of creating and operating a customer loyalty programme, or implementing a customer relationship management (CRM) system, come from the collection, analysis, and use of data. The more data we can practically use, the better: customer demographics, preferences, lifestyle and life stage, transaction history, returns, and even customer service event history. The loyalty program gives us a way of identifying specific customers, and tying their demographic records to their transaction records in the back-end database (whether that be an in-house collection of databases, an enterprise-wide CRM system, or some other data warehouse that's being updated, analysed, and used across the whole business). Business intelligence starts with data. The uses of the resultant data, given all the technologies that are now available to analyse it and turn it into useful support for business decisions, are potentially endless.

Instead of going deep into the technical side of databases, data warehouses, data relationships, and structures, it’s more important to focus on the how, when, where, and why of data collection and aggregation. It describes the many uses that customer data can be put to, including:

7. Customer behavior profiling

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8. Customer lifestyle & demographic profiling 9. Customer product preferences and repertoire 10. Customer targeting and differentiation 11. Best customer marketing and win-back 12. Product category relationships & cross-selling 13. Planning and merchandising 14. Online shopping suggestions 15. Pricing policies

Supermarkets and general retail

Supermarkets face intense competition, not only from other supermarkets but also from warehouse clubs, supercenters (like Wal-Mart) and convenience stores. Today, leading supermarkets are among the most sophisticated retailers in the world. They lead most other sectors in customer data collection and analysis, in stock management, in level of customer service and in retail innovation. Which sector will be first to widely adopt RFID technology? Or smart shopping carts? Or self-scanning of purchases? Or in-store kiosk-based information and sales points? Most likely the supermarkets. In general retail (other than supermarkets), the pressing need now is to focus on what drives loyalty programs, what customers actually prefer, and what the future is likely to bring. Most retailers accept that they need to know more about their customers, and that the knowledge should be centrally recorded so that it is available to employees when they need it.

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Programs: Inner City

1. Sweepstakes: Online and offline (builds card use) 2. Donation Programs (schools, churches, sports leagues, libraries, neighborhood stores, etc.)…e.g. 3. CTOWN will match monies… 4. Save Receipts – bundle them up between certain dates and return for 1% of purchase. 5. Customers referral – refer 10 new customers between certain dates and return for 1% of their purchases. 6. Partner Programs: • MLB - Reviving Baseball in Inner Cities (RBI), sponsored by Major League Baseball, is a program designed to promote the game of baseball to teenage boys and girls in disadvantaged areas. In partnership with the Boys & Girls Clubs of America, RBI leagues are maturing in local Boys & Girls Clubs nationwide…endless opportunities with are own Yankees! Bronx doesn’t get more inner city! • As we discussed, it’s important to come up with programs that we can get the Manufacturers to fund. They don’t have to be product specific, but more co-branding a program specific (e.g. Purina and CTOWN are donating 1% of collected and returned receipts during the month of December to be donated to the ASPCA…”Pet’s are family Too”). 16. Circulars: 19. Don’t create a one-for-all circular (circulars can be more direct target to data --- Food Emporium does this well) It might be ALL inner city, but every zip code still has different type/level of shoppers – silver, gold and platinum? 20. Newspaper Ads: As a test run for a couple of weeks, while the competitors to do 4-color product discount, CTOWN can educate the consumer and say that “It’s All In The Card”.Instead of 8 solo ads on a circular, use 4 to focus on the FSC. Need to continuously educate the retailer & consumers on the card. 17. Check Cashing Services? Would definitely drive foot traffic and web taffic…could be tricky/risky in inner- city neighborhood. Maybe a western union partnership (in store kiosks?) 18. Economic loyalty: - Continuity Program: • Give series of gift or toys away for a certain period, it will drive the shopper back. Just McD’s has a series of 6 Disney characters for a month (you know the parent will have to take the child back 6 times at least). 19. You can do this with a manufacturer for e.g. that every month they send a new POS Kiosk with promotion (e.g. maybe Pepsi has special bottle caps and you need to collect all 12 during the month of July,..send them back and get “x”. In addition, if you use your card, you get double the purchase points. This way you get incentives from the manufacturer and retailer and continue to push the foot traffic. 20. Maybe different kind of cards for different shoppers (like AE has regular, business, gold, platinum cards), CTOWN can have different cards as well. Offer upgrades on specific shopping habits (have to continue this shopping level with 30 days to keeps “x” level discounts). 21. Long Term Loyalty Programs - Long term or permanent loyalty programs can be a very effective way of retaining customers. But they must be kept fresh and appealing…Maybe certain days of the week are brand days or product days (e.g Tuesday is soda day…once you build a following, the word will follow and once they are in the store, other purchase are a given.) 22. Catalogue programs: Dagastino does this…An effective alternative to a cash reward and can be designed to meet a number of objectives…reward behavior. Appealing rewards from great brands with a wide choice to ensure maximum customer appeal. 23. All customers don’t behave the same way and shouldn’t be rewarded the same way. Programs are designed around the principle that “the more you shop, the more you get”. That simple principle is what makes our programs more effective than flat 1% reward schemes….behavior follows reward. 24. Cause Related Marketing:: (Great for CTOWN) Most people relish the opportunity to support their local community. Cause related programs not only change the way people behave but also the way that they feel

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about a retailer and their community. One example: Once a shopper has reached a pre-set spend they are given a voucher/coupon. They can donate these vouchers to the nominated cause (a school, church, etc.) and the school can exchange them for free equipment such as computers, musical instruments or sports equipment. The community benefits by gaining free equipment, the shopper feels good about their involvement and the retailer also benefits as consumers are encouraged to shop with them to support their community.

25. A perfect example for CTOWN

with our Giving Back fund raising program. For over eight years, Felpausch has been proud to offer this special program that gives money back to the schools and churches of our community. It’s simple... you get to shop for all your favorite items at your neighborhood Felpausch, and 5% of what you spend goes to your school or church. It’s a great way to raise money for a special cause, or just to give something back to the community we share every day. It’s just another great service for a great community, from the people who care.Felpausch has a tradition of caring for our communities, and that means giving something back. As a family and associate- owned business, we truly care about the educational and spiritual development of our communities. The Giving Back program provides an opportunity with incredible earning potential to raise much-needed funds for our community schools and churches, with minimal time and effort required. It’s easy. It’s rewarding. It’s Giving Back. Schools (Pre-K through 12) and churches can enroll in the program by downloading and completing the enrollment form and then mailing it to our Support Office. Or you can apply online.

A. Organizations place their weekly card order before 12:00 noon each Monday by calling our Giving Back Coordinator at 269.948.3423. Specific quantities and denominations are needed at the time of order. (Cards are available in $25, $50 and $100 denominations.)

B. Card orders will be delivered to the Felpausch location of your choice by Thursday morning of that same week. The church or school may pay in the form of a check upon picking up the order. The amount to be paid would be 5% less than the total amount of the cards ordered. (For example, if the total of your order is $500, the amount of your payment would be discounted to $475.)

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C. Members, families and friends of your organization purchase the prepaid cards from your church or school at face value, thereby giving 5% of their Felpausch spendings back to the organization.

D. Cards may be used toward the purchase of your favorite products and services at any Felpausch location and may carry a balance over multiple transactions until the total value has been spent. Cards have no expiration date.

17. A must in today’s loyalty biz. A good reason to build out the online component.

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* Shop with more than 200 leading online retailers * Refer a new member to AOL * Rent a car from Avis * Buy or sell a home with a participating CENTURY 21®, COLDWELL BANKER®, or ERA® office And there's much more to come!

Start early, save more. With Upromise, the college savings keep coming, day after day, year after year. And the sooner you open a Upromise account, the more you could save for college. Plus, Upromise has teamed up with world-renowned investment firms to give you easy access to tax-advantaged college savings plans. Specific terms and conditions apply for each company's contributions. Contributing companies subject to change without notice. For additional information, visit www.upromise.com.

When you see an item or a store shelf with the Upromise logo on it, buy that product and save for college.* Be sure to use your registered grocery or drugstore card to save for college!

Look for the Upromise logo at the store Many items and stores now feature the Upromise logo on packaging or store shelves, so you know exactly which products can help you save!

(%) = College Contributions

Baby Health and Nutrition Beech-Nut® (3%) Children's Tylenol® (4%) Enfamil® Formula**(1%) GoodNites® Underpants (3%) Huggies® Diapers & Baby Wipes (3%) Little Swimmers® Disposable Swimpants (3%) Pull-Ups® Training Pants (3%) Pull-Ups® Just For Kids Flushable Wipes (3%) More... Bakery Lender's® bagels (3%) Baking Mixes & Ingredients Domino® Sugar (3%) Diamond Crystal® Kosher Salt (3%)

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Fisher® Chef's Naturals® Ingredient Nuts (3%) Gladiola® (3%) Jim Dandy® (3%) LaPina® (3%) Lucky Leaf® Pie Filling (3%) Martha White® (3%) Musselman's® Pie Filling (3%) PET® (3%) Pillsbury® (3%) Red Band® (3%) Robin Hood® (3%) Softasilk® (3%) Beverages Alhambra® Water (1%) Barqs® (1%) Coca-Cola® (1%) Citra™ (1%) Dannon® Water (1%) Dasani™ water (1%) diet Coke™(1%) Disney® Xtreme! Coolers (1%) Evian® Water (1%) Fanta® (1%) Folgers Coffee® (1%) Fresca® (1%) Fruitopia® (1%) Hi-C® Fruit Drinks (1%) KMX™ (1%) Luzianne® Tea (3%) Mello Yello® (1%) Minute Maid® Juices (1%) Minute Maid® Soda (1%) Mr. Pibb® (1%) Planet Java (1%) Powerade® (1%) Nestea® (1%) Seagram's® (1%) Sparkletts® Water (1%) Sprite® (1%) Surge™ (1%) Simply Apple™ Juice (1%) Simply Orange® Juice (1%) Tab® (1%)

Canned & Jarred Goods Apple Time® Apple Sauce (3%) Cremora® Non-Dairy Creamer (1%) Farman's (3%) Heifetz (3%)

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Lucky Leaf® Apple Sauce (3%) Musselman's® Apple Sauce (3%) Nalley (3%) Peter Piper's (3%) Steinfeld's (3%) Cereal & Breakfast Hungry Jack® (3%) Jim Dandy® (3%) Jimmy Dean (3%) All Kellogg's® Cereals (1%) Kellogg's® Eggo® (1%) Kellogg's® Eggo® Syrup (1%) Kellogg's® Nutri-Grain® Bars (1%) Kellogg's® Pop-Tarts® (1%) Lender's® Bagels (3%) Martha White® (3%) Deli LAND O LAKES® Deli Cheese (3%) Alpine Lace® Deli Cheese (3%) Dry Pasta, Noodles & Potatoes Golden Grain® Pasta & Noodles (3%) Hungry Jack® (3%) Idaho® Spuds™ (3%) Luxury® Pasta & Noodles (3%) Mrs. Grass® Pasta & Noodles (3%) Mueller's® Pasta & Noodles (3%) Pennsylvania Dutch® Pasta (3%) R&F® Pasta & Noodles (3%) Ronco® Pasta & Noodles (3%) Anthony's® Pasta & Noodles (3%) Martha Gooch® Pasta & Noodles (3%) Martha White® (3%) Film Fujifilm® One-Time-Use Cameras and Film (3%) Fujifilm® Audio (3%) Fujifilm® Video (3%) Frozen Foods Kellogg's® Eggo (1%) Gorton's® Seafood (3%) Lender's® Bagels(3%) Health & Beauty AquaBlast™ Cleaners (5%) Aquafresh® Toothpaste (5%) Aquafresh® Dental Gum (5%) Aquafresh® Toothbrushes (5%) Aquify® Drops (3%) BIC® Razors (3%) Butler Dental Floss (3%) Butler Oral Care Accessories (3%)

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Caltrate® (3%) Centrum® (3%) CIBA Vision® Contact Lens Care (3%) Covergirl® (3%) Clear Care® Solution (3%) GUM® Dental Floss (3%) GUM® Oral Care Accessories (3%) GUM® Proxabrush® Interdental (3%) GUM® Oral Pain Relief (3%) Ivory® Bars & Body Wash (3%) Kotex® Feminine Pads (3%) Kotex® Lightdays® Pantiliners (3%) Kotex® Security® Tampons (3%) No nonsense® Hosiery, Socks & Tights (3%) Old Spice® Deodorant Bars (3%) Olay® Bars & Body Wash (3%) Olay® Facial Cleansing and Facial Moisturizing (1%) Pantene® Hair Care (1%) Poise® Absorbent Products (3%) Polident® (5%) Sensodyne® (5%) Splash'n Go!® Hand & Face Wipes (3%) Super PoliGrip® (5%) Tylenol® (4%) Zest® Deodorant Bars & Body Wash (3%) Household Needs AIR WICK® by WIZARD® (3%) Cascade® (1%) Cascade Complete (1%) Cottonelle® Toilet Paper (5%) Cottonelle Fresh® Flushable Moist Wipes (5%) Cottonelle Fresh® Rollwipes (5%) Diamond Crystal® Water Conditioning (3%) Diamond Crystal® Sun Gems® Water Conditioning (3%) Diamond Crystal® Deicing (3%) Dixie (3%) Energizer® Batteries & Flashlights (3%) Eveready® Batteries (3%) GE Reveal® Light Bulbs (3%) GE Edison™ Light Bulbs (3%) GLASS PLUS® (3%) Kleenex® Facial Tissues (3%) LYSOL® (3%) OLD ENGLISH® (3%) Scott® Towels & Napkins (3%) Scott® Tissue (5%) Snuggle® (3%) SPRAY N WASH® (3%) Tide® (1%)

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Viva® Towels (3%) Spreads Welch's® (4%) Apple Time® Apple Butter (3%) Lucky Leaf® Apple Butter (3%) Musselman's® Apple Butter (3%) Skippy® (3%) Refrigerated/Dairy EGGLAND'S BEST® Eggs(1%) EGGLAND'S BEST® Cage Free Eggs(1%) EGGLAND'S BEST® Organic Eggs(1%) HERSHEY®S Milk & Milk Shakes* (3%) LAND O LAKES® Dairy Ease® (3%) LAND O LAKES® Half & Half (3%) Alta Dena* (3%) Berkeley Farms* (3%) Creamland (3%) Dannon® Danimals® Yogurt (3%) Dannon® Sprinkl'ins® Yogurt (3%) Dean (3%) Gandy's* (3%) Garelick Farms®* (4%) International Delight® Coffee Creamer (3%) Lehigh Valley Dairies® (3%) McArthur Dairy (3%) Meadow Brook(3%) Meadow Gold* (3%) Model* (3%) Oak Farms (3%) Reiter Dairy (3%) Schepps (3%) Shenandoah's Pride (3%) Swiss* (3%) T.G LEE (3%) Wengert's Swiss Premium (3%) LAND O LAKES® Butter, Margarine & Spreads (3%) LAND O LAKES® Cheese(3%) Alpine Lace® (3%) Salad Dressing, Olive Oil & Dips Dean Dips (3%) Filippo Berio® Olive Oil (1%) Marie's Dips (3%) Marie's Salad Dressings (3%) Salt & Seasonings Diamond Crystal® Salt (3%) Diamond Crystal® Salt Sense® (3%) LAWRY'S® Marinades (3%) LAWRY'S® Steak Sauce (3%) Snack Foods

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Cheez-It® (1%) Kellogg's® Disney® Fruit Snacks (1%) Kellogg's® Fruit Twistables (1%) Famous Amos® Cookies (1%) Fisher® Nuts & Snack Mixes (1%) Keebler® Cookies & Crackers (1%) Kellogg's® Rice Krispies Treats® Squares (1%) Murray® Sugar Free Cookies (1%) Sunshine® Crackers (1%) Snyder's of Hanover Products (3%) Stationery Paper Mate® (3%) Accent® (3%) Colorific® (3%) Expo® (3%) Foohy™ (3%) Sharpie® (3%) Uni-ball® (3%)

Other Programs in the Market

(AU) EmailCash - allows users to earn rewards for shopping with EmailCash Preferred Partners, doing surveys, and reading email. Features shopping sites by category and location. * (NZ) Kachingo - offers winners cash prices and rewards when playing at participating businesses. (NZ) onecard - use at Foodtown Woolworths for discounts and to earn rewards points. (AU) Triple A Club - members earn points through the online shopping mall which can then be redeemed for cash, travel vouchers, gift vouchers, and more. Offers a variety of membership types.

Wedding Points - programme in which engaged couples and their family and friends shop within a network of merchants and earn points back for their purchases.

1st-In-Rewards.com - provides a guide to online incentive programmes. Accolades Rewards Program - offers plant/lawn care and pest management professionals an opportunity to earn points and get rewards for selling qualified products from Bayer. Accor Services - provider of voucher solutions seeks to create new ways to motivate and win loyalty of employees and citizens. BonusLink - offering several options for gifts and redemption. ClickRewards - shop at web sites to earn ClickPoints redeemable for frequent flyer miles, hotel stays, car rentals, merchandise, and more. Coast Hotels Rewards Program - rewards and loyalty programme to earn travel points and incentives, holiday packages, free stays, and room upgrades at Coast Hotels and Resorts. CyberGold - earn cash online and use it to purchase products online, deposit to a bank account, pay a credit card, or donate to charity. Dash - incentive rewards for shopping online. Fatshoe - earn money by surfing websites, shopping, participating in surveys, and more. Free DVDS - earn points to trade in for free DVDs. Funny Prizes - provides free prizes by referring friends as well as novelty items and jokes. Get-Cash-Back.com - get rebates and cash back for every purchase made online.

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Givex Corporation - provider of gift card, loyalty, and e-gift certificate programmes to increase brand recognition and customer loyalty. Gold Points - provides ways to earn and redeem rewards through shopping, entertainment, and travel. Greatmail - email provider working with a network of popular online merchants to pay cash rebates on purchases. IncomePad - visit web sites and earn cash. iPoints - earn ipoints from shopping online. Makebuys Buying Club - provides a hub for consumers to get bulk buy prices from manufacturers. Memolink - online direct marketer featuring a points-based loyalty programme. MyPoints - earn points and get rewards. NetFlip - performance-based incentive network. NetShoppers of America - discount programme offers members access to online coupons and business opportunities. points.com - provides a medium to exchange points, miles, or other loyalty programme currencies. Provell - develops, markets, and manages a portfolio of membership and customer relationship management programmes. QDeals.com - offers online coupons, discounts, special deals from popular online stores, and provides cash back rebate on the purchases made. Rainbow Rewards - free loyalty club offering cash rewards with a portion being donated to local charities. Reservation Rewards - offers a programme for shopping, dining, hotel, and movie ticket discounts. Reservation Rewards: Attractions - offers discount theme park tickets and other leisure and attraction discounts to members. Reservation Rewards: Dining - offers restaurant coupons and other dining benefits to programme members. RewardTV - earn prizes and rewards by answering trivia questions about primetime television shows. Includes TV listings. S&H Greenpoints - offering digital rewards currency. Select-Your-Gift.com - full service recognition, and incentive programme provider offering employee gifts, recognition awards, and online incentive programmes. Sony DreamLink - online reward and loyalty programme for loyal Sony electronics, television, music, and motion pictures customers. ThriftyClicker.com - online shopping mall offers shopping redemptions. Winning Rewards - offers cash and reward incentives to shop at brand name web sites. Yahoo! Points - use Yahoo! to earn points and get stuff. YourFreeDVDs.com - offers free DVDs by earning points via trying different products.

18. Inner-city folks love lottery!!! They want the big win to change their life. Creates foot traffic.

* KACHINGO LOYALTY SCHEME COMING TO A COUNTRY NEAR YOU New Zealand's lottery-style coalition loyalty programme, Kachingo!, is to be introduced into other countries by The Atlantis Group, as a result of the acquisition of a 25% shareholding in Kachingo's operator, Global Online Systems. The program is expected to target Australia, the USA, and perhaps the UK at a later date. Other countries may follow in time. Following the share deal, TAG's managing director, Michael Whittaker, is to become the executive chairman of Global Online Systems, leading the company into those global territories in which TAG already has extensive experience. Apart from its new involvement in the lottery-style Kachingo! program, The Atlantis Group (TAG) already provides direct marketing and CRM services, and customer loyalty programs (such as its patented GraphiCard system) to businesses throughout the world. Kachingo is a multi- partner (coalition) loyalty program which rewards members with 'lines' of lottery numbers, printed on separate tickets at the point-of-sale.Each line of numbers represents a free entry into Kachingo's various prize draws. At present, in New Zealand, the weekly jackpot is NZ$100,000 (around US$54,900, or UK£34,300), and a number

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of other, smaller prizes are also awarded each week.Members accumulate game lines by buying goods from participating retail partners, which currently include Woolworths (food retailer), BigFresh, Price Chopper, BP fuels, and Super Liquor stores. At Woolworths, BigFresh, and Price Chopper, a game line is awarded for each NZ$30 spent (or for each NZ$10 spent at any Woolworths located at a Gull Service Station). At BP and Super Liquor outlets, a game line is awarded for every NZ$25 spent. The program allows retail partners to get involved with, and have influence over, the marketing efforts that are made on their behalf. TAG's CRM offering is based on a back-end product called Connect, which was originally developed to handle the processing and analysis of data collected from the group's GraphiCard loyalty program. The GraphiCard system (brought to market through TAG's subsidiary, Visible Results) is based on a thermochromic loyalty card, the front of which is re-written at every transaction, providing a visible record of points balances and promotional offers on the spot. But it soon became apparent that Connect was capable of much more than simply processing data for the firm's GraphiCard clients. The Connect system has grown into a full CRM offering which can be 'plugged in' at the back end of any customer loyalty initiative to drive data storage, processing, analysis, supply chain, marketing, and internal communications. Whittaker continued, "Because it's a web-based, distributed system that's flexible enough to adapt to any situation, our aim is to put Connect behind a number of different front-end technologies. We see the middle-tier market as a huge opportunity." But what of Kachingo's potential export to other countries? At last, we have the definitive answers to the rumours flying around the industry for some time. According to Whittaker, the first export is likely to be to Australia, where Atlantis already has extensive market-place experience. Australia's proximity to New Zealand makes it a logical first target, and discussions and negotiations are already underway with several potential retail partners. The next country to be targeted is likely to be the USA, once again being the home of many of the firm's existing clients and loyalty program installations. As in Australia, discussions are already underway with two major players, and an implementation of Kachingo remains at least a few months away. "Kachingo-style loyalty programs will be a tremendous opportunity in the USA, where around 90% of the major retail outlets have club card programs that are getting stale, having had little real innovation in the past few years," added Whittaker. "Using those programs as a base, overlaying Kachingo on top of them has the potential to reinvigorate the market." So is Kachingo really coming to the United Kingdom, as rumour suggests? According to Whittaker, "It is no secret that there's a UK venture that has been set up to look at that possibility, and to see how the know-how from the New Zealand programme could benefit a UK implementation." He added, "Globally, people are ready for this concept, and acceptance levels are high." Whittaker's direct comment on progress toward a UK version of Kachingo was simply: "In the UK, Global Online Systems has a joint venture with a group of well known marketers, and it is proceeding in a positive way. It is making sound progress." Kachingo's operation in New Zealand has taught its operators a lot about the operational, partnering, and marketing aspects of running such a program. But although all of the know-how gained so far will be included in the development of the scheme in other countries, there will also be some significant changes and additions. The first big change for future Kachingo implementations is the integration of TAG's Connect back-end system. New programs will all be backed by the same systems that currently support Visible Results' GraphiCard programs in the USA, Australia, Japan and Singapore. Another background change will be in the way in which suppliers, retail partners, and non-retail partners are handled. Having the hindsight of the New Zealand program, and bearing in mind the web-based partner-friendly features of Connect, some operational changes will take place to improve the handling of partner and supplier relationships. Until now, the Kachingo program has only taken on retail partners, such as food, drink, and fuel retailers. Future Kachingo launches are likely to also target non-retail partners, such as banks, airlines, household utilities, and mobile telephone service providers. As a behavioral incentive, the program's appeal is in getting an increasing number of free chances to win that all important, life changing jackpot. And while consumers wait to have their lives changed, an array of other smaller prizes will certainly keep them happy and entertained while they shop. "What we have learned from Kachingo in New Zealand has given us a great insight into rolling out in any other market. It's an ideal 'village currency', and our research shows that consumers are ready to accept it," Whittaker concluded.

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19. Dorothy Lane and Superquinn (walk before you run)

Other successful programs that are in-line with CTOWN’s mission “to be the inner-city leader (and more) known for its excellence in food, cost, people and service. It has been my experience that the CEOs whose first priorities are customers and employees tend to run more stable and more profitable companies in the long run. Dayton and Dublin. Two distinctly different cities, each with a unique customer-centric retailer: Dorothy Lane Market in Dayton and Superquinn in Dublin; each company with a world-class loyalty program. Before the introduction of their loyalty card programs, their customer-building decisions were decided in that gray haze of intuition aided by anonymous transaction data. With the launch of their loyalty card programs, their decision- making was radically enriched by customer-specific data. A new epoch in retailing had dawned for them both. Their early steps towards a loyalty card program were cautious - neither wanted to offend any customer. Norman Mayne, the CEO of Dorothy Lane, was so anxious that the night before the program's launch, he called his director of loyalty marketing to see if its introductory newspaper advertisement could be pulled. "Don't worry," he was assured, "if it doesn't work, we can go back to our old ways in 4-6 weeks." Two years earlier, Superquinn had quietly offered its program to its existing customers for five months before its public launch. In the first year of each program, both companies modestly increased their same-store sales - and materially increased their same-store profits - over prior trends. Customer knowledge had quickly yielded better returns than intuition and guesswork. What do these two companies have in common? They've always been customer focused and both are led by passionate, visionary merchants seeking to provide a superior shopping experience. Rather than become "general stores", as have many supermarkets, they concentrate on food. Their point of differentiation in their respective marketplaces is that they are the "food specialists". With the assurance that comes with greater customer knowledge, both have distanced themselves further from competitors and have enjoyed even greater prosperity since their loyalty card programs began. Not entirely because of their loyalty cards, but partly so - the card has simply helped them do what they were doing before, but now even better. Better information has led to better decision-making across the whole business. The customer-focused goals of these two companies are similar, yet they have taken different paths to success.

Dorothy Lane Market and Club DLM

Surrounded in Dayton, Ohio, by three of the best retail giants in the US - Kroger, Cub Foods, and Meijer - Dorothy Lane Market exemplifies how an independent operator can thrive. Over fifty years old, with just two stores, it has built a reputation far beyond its size. Customers from all over North America are drawn to its website, dorothylane.com (they use their website well…even have upromise), to order two of its more famous store-differentiating signature items, Heavenly Ham(R) and its delightfully decadent Killer Brownies. Locals log on to order deliveries of its avant-garde (taste–wise) box lunches. Club DLM members access the site for special weekly deals, upcoming events (eg, a Sausage Cookout or the annual Diaper Derby), to search its well- organized Recipe Archives for ideas, or to enroll for Dorothy Lane's next School of Cooking. Dorothy Lane is a Mecca for food aficionados or "foodies"(the buzz-word in the industry today). In addition to their regular weekly groceries, foodies also accomplish their goal of locating the widest selection of olive oils, fine wines, tasty breads, bakery items, gourmet cheeses, fresh produce, and premium quality meats. Foodies are also tempted by unique offerings such as Artisan hearth-baked baguettes, shiny Alaskan salmon, and comforting lattes. This unique company is also renowned for its friendly, helpful service in every department, where every customer is greeted with a warm smile. To me, Dorothy Lane Market is the "Harrods of the MidWest" in food retailing. So how then does a loyalty card fit into such a distinctive operation? Indeed, why even consider the idea? We will now find out.

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The First Act

After Club DLM's apprehensive launch in May 1995, the lessons - and changes - came quickly. By making all promotionally priced items available only when a Club DLM card was presented, regular customers readily enrolled giving the company its first concrete insights into their behavior. The first two months of data convinced Norman Mayne and his team that Dorothy Lane Market served a wide variety of customers. They ranged from those who were attracted primarily by the company's advertised weekly specials - the "cherry pickers" - to its fabulous foodies. Believing that the future lay more with the latter than the former, the company set off down an unknown and - for retailers - fearful path. Just three months after the card's debut, Dorothy Lane eliminated its weekly newspaper advertisement. It was replaced - with appropriate customer notice - with an in- store "hot sheet" featuring similar items, but at even lower prices. This 180-degree change in its promotional strategy worked! Sales held. Profits rose. Its radical decision vindicated, the company refined its communication program (on and off-line) one step further by launching a monthly Market Report. This eight- page newsletter with food news, recipes, and activities at Dorothy Lane also included a page featuring either six or eight coupons, valid throughout the coming month. The Market Report (which continues today as a key element of the company's marketing strategy) was mailed to approximately the top thirty percent of its Club DLM members (who provide 75% of its sales). But with one twist: recipients were divided into three groups, each group being offered a different price for the same item, with the lowest priced coupons being offered to the highest spending group. A customer-sensitive retailer, who previously had believed in treating every customer equally, had now fully embraced differentiated marketing. Over time, as the Market Report coupon specials were priced even more aggressively for these better customers, the company financed these deeper markdowns by slowly transforming its generally available in-store hot sheet into a less aggressively priced "lukewarm" sheet. Dorothy Lane had evolved from an "all customers are equal" marketing strategy into a Best Customer strategy where the focus was on rewarding, retaining and building the number of its higher spending customers. (80/20 rule) Did Dorothy Lane lose customers in this first year? Yes. Transactions declined as the price-oriented shoppers - the cherry pickers - could no longer compare its prices with competitors' ads while sitting at their kitchen tables. Yet sales and profits increased as Dorothy Lane devoted more of its efforts and rewards towards its regular, better customers (this needs to be conveyed to the CTOWN retailers…as I said, “the retailers need to be educated”). Norman Mayne recently stated that within 18 months of its card launch, Dorothy Lane's annual profits had doubled compared to those in the twelve months prior to launch! "It was like a blinding flash of the obvious," he explained. For years he had tried to look after every customer fairly - yet not all customers treated his company fairly in return. He now sought a more balanced relationship. Some customers, he discovered, made so much noise yet contributed so little to the business. From the reassurance he gained from the data, he realized that he no longer had to "do gymnastics to keep some of them." The information his loyalty card generated had moved him from theory and uncertainty to reality and confidence.

Rewarding customer behavior

What is unique about Dorothy Lane's approach to loyalty marketing is its emphasis on rewarding customers for past behavior. "It's all about integrity and trust," Mayne told me. "It's an insult to a good customer to say to her, 'Spend $x in the next 10 weeks and you'll receive a reward,' when she has already shown how valuable she is during the past quarter or past year. When we ask good customers to jump through future hoops, we are telling them that what they have spent in the past doesn't count. But I know my good customers from my database. I'm just going to look after them." An excellent illustration of this principle in action is seen each year at Thanksgiving. US supermarkets that don't have loyalty cards indulge in kamikaze pricing of turkeys, often promoting them at $0.39 per pound, although it costs them almost twice that. In contrast, many supermarkets with loyalty cards skew the offer in favor of their regular, more profitable customers with an offer along these

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lines: "Spend $500 in the 10 weeks before Thanksgiving and we'll give you a free turkey; or spend $250 and we'll give you a certificate for $5 off your turkey. Otherwise, it's available at the regular price." Dorothy Lane's approach is different, even from that of the typical loyalty card operator. All turkeys are offered at full price in its stores. However, a few weeks prior to Thanksgiving, three versions of a surprise "thank-you" letter are mailed to its better customers. The letter thanks them for being loyal customers and invites them to accept an enclosed gift certificate. Depending on the customer's spending history, the certificate is for a free turkey or for $10 or $5 off a turkey of their choice. To Dorothy Lane, these are rewards to customers who have already shown their loyalty; it's a "trust us to look after you because you have chosen us for a major part of your food business". Another example of Dorothy Lane's reward philosophy was its Anniversary Concert. In 1998, to celebrate its 50th Anniversary, Dorothy Lane rented a stadium in Dayton, and hired the Golden Boys - Frankie Avalon, Fabian, and Bobby Rydell (three popular teen idols of the '50s and '60s) - as entertainment. The company then surprised customers by sending out the first wave of concert invitations to its 500 best customers, allowing them (and a guest) to have the first choice of seats. Invitations to the next level of customers followed. Four thousand of its best customers and their guests enjoyed a free Las Vegas-quality concert, just for being loyal to their food store! (CTOWN does this for employees, owners and vendors, why not customers). This focus on surprise rewards manifests itself in different ways throughout the year. For example, at least once a quarter Dorothy Lane has an unannounced, extra-special customer sale for a week. (Remember, the company doesn't have weekly newspaper ads, so this is a surprise for its regular customers who shop that week.) It uses the best gondola ends in the store to create excitement. There are special items in each department and different extra special offers can appear on different days. These surprise specials are available to all customers using their Club DLM card. A surprise reward may be as simple as a bouquet of flowers while, at Christmas, it's often an invitation to its very best customers to pick up an elegant, food-related gift next time they are in the store. Over the years these gifts have included a bottle of the finest olive oil and a top quality bread knife; a tall, handsome pepper mill; a full set of upscale, imported chef's knives; and a presentation package including a top- of-the-line cutting board.

Surprise postcards (on and off-line)

Every month for the past four years, Dorothy Lane has mailed a variety of postcards to its Key Customers (ie, those who spend, on average, over $25 per week). The postcards are finely targeted to reflect the customer's purchasing behavior. Together with the extreme value offered on the postcard, it aims to trigger upon receipt, a "WOW!" The 50%+ redemption rate reflects the customers' pleasure when they receive individualized offers such as $4 off any seafood purchase (mailed to top seafood customers), free Boston Stoker coffee beans (to heavy coffee drinkers), a free jar of Pine Club Dressing (to heavy salad buyers), $4 off any specialty cheese purchase (to wine buyers), or two dozen free eggs (to most customers). Club DLM members never know when they will receive a postcard. A great feature of postcards is that they are very flexible and low cost. One store's team can decide on an item and a target customer group today and have the postcards in the customers' mailboxes tomorrow. How can Dorothy Lane afford to have a monthly newsletter with great coupon offers, rewards for its better customers, targeted WOW! postcards, and, at the same time, increase its profits? Simple. The company took the total savings achieved by eliminating its weekly newspaper ad and redirected them away from the mass market towards specific customer markets.

Adding value

Rewarding regular customers is a mindset at Dorothy Lane. For those who spend $250 in a year, Dorothy Lane, via its Good Neighbor program, donates just under one percent of purchases to a charity of the customer's choice. (Again, this is good for CTOWN…more community focussed) This is a generous gesture in an industry where the average profits-to-sales ratio is a fraction over one percent. Also, from a business perspective, this approach is a more equitable way of returning profits to the community than writing a check for every

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organization that knocks on your door seeking a donation. To add more value to its relationship with customers, Dorothy Lane has developed, over time, an association with more than twenty other Dayton merchants who give a discount - typically ten percent - to any customer presenting her Club DLM card when making a purchase. Before becoming an exclusive sector member of the Club Merchant Program, each potential merchant is carefully checked by Tom Winter, Dorothy Lane's advertising director, to ensure it is the type of business Dorothy Lane customers would be happy to patronize. Merchant partners run the gamut: from dry cleaners to party stores; from landscaping services to housecleaning services. Customers can check the current list of Club Merchants at any time on the Dorothy Lane website. However, developing customer relationships is not done by special prices and rewards alone. It is accomplished by great service and constant customer contact. As Amy Brinkmoeller, director of loyalty marketing, recently told me: "Our Club DLM is a great tool with which to reward our customers, but we never allow ourselves to forget that the best continuity program we offer our customers is the great service we provide every day in our stores."

Constantly listening to what customers think

Every night, at each store, a senior employee calls five customers who shopped that day to get feedback on their experience. Norman Mayne got this idea some years ago from his dentist who called patients who had major dental work that day. Customers' comments are written on special forms with a highlighted section to record any follow-up action required and, then, taken. Upon completion, these forms are circulated to every manager throughout the company. Every week, each manager and department manager sends a handwritten letter to customers, drawn from the database, thanking them for shopping at Dorothy Lane (and their departments) and inviting them on their next visit to make any suggestions they would like to see implemented. Comment cards are highly visible for customers to take and complete. In addition, cards seeking comments are randomly put in customers' orders. Even the Internet site has a feedback section. At each store's exit are Ask a Question forms. Customers are invited to pin up any questions they would like to have answered. These questions, along with management's answers, are posted for every customer to read. (As I‘ve siad before, feedback is good for any business, especially CTOWN). For continuous feedback with a long-term perspective, Dorothy Lane has a volunteer customer advisory group. It meets regularly with Norman Mayne over a two-year term to give its thoughts on how the stores are doing, the quality and range of products offered, and to make any suggestions for improvement. In turn, the advisory group is used as a sounding board for new ideas being considered. Several years ago, Norman Mayne was leaving a meeting we had both attended to meet his advisory group in Atlanta. Their first day was spent looking at that city's best food stores in order to learn how Dorothy Lane could be improved; the second day was for personal shopping. Dorothy Lane rewarded participants with airfares, first- class hotel accommodations, and an excellent dining experience. It's no wonder that during the busy Christmas season these advisory group members are often seen on the shop floor showing new customers where to find items and answering questions about Club DLM. This is a company that is serious about listening to its customers. With the advent of its loyalty card, its customer comprehension has been richly enhanced.

Information-based differentiated marketing

(IMPORTANT) Being close to the customer, having the city's most accommodating, friendly, and knowledgeable staff, and offering a clearly differentiated proposition doesn't mean that Dorothy Lane can ignore the intense competition from the three food retail giants that surround it. Rather than trying to compete head-on, however, the company practices classic differentiation strategy. In addition to straddle pricing (ie, above a competitor's price for non-cardholders and below it for cardholders) on many items, Dorothy Lane avoids direct price wars with these giants by the frequent use of two tools made possible through its Club DLM: segmented pricing and continuity pricing. When these major competitors indulge in their occasional bloodletting price wars, Dorothy Lane chooses to use its own unique weapons as was demonstrated in one recent city-wide milk price war. A gallon of milk generally costs a retailer a little under $2.00 and is sold for

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Communication Partners Worldwide, Inc. 12/9/17 just a few cents more. One major competitor, followed quickly by another, dropped its retail price to $0.99. If Dorothy Lane had echoed this move, its profits would have been deeply cut. Instead, it introduced segmented pricing. Researching its database, it identified those regular customers who were heavy gallon-milk buyers. Then, with some funding help from its milk supplier, the company mailed postcards offering limited quantities to this vulnerable segment for a mere $0.49 per gallon! A comparable program, aimed at its heavy half-gallon buying segment, followed. The result of this information-based, differentiated marketing response was that Dorothy Lane maintained its company's sales and profits during the giants' summer-long battle! Even though Dorothy Lane offers many items around the store at lower prices for its Club DLM members, its goal is to have long-term relationships with its customers. Thus, the company has a bias towards continuity pricing. Its Summer Steak Club is a good example. Instead of having steak specials each week (favoring the occasional customer), it invites Club DLM members to enroll in its three-month long Steak Club. Each time a Steak Club member accumulates $50 in spending on steaks, the store sends her a $5 gift certificate. This type of sales- building, opt-in program is highly effective because it appeals only to the customer who regularly buys the items offered. This means that the continuity discount can be deeper than normal because the markdowns are given only to those who signed up; they are not wasted on customers with low or no interest. It also encourages those who opted in to visit the store more frequently to take maximum advantage of the offer. Continuity pricing is an information-based program where all the right players win.

The card is the key

Once any business is armed with customer information it becomes empowered to act in its customers' interests. To gain that information, Dorothy Lane is always encouraging customers to present their loyalty card when shopping. This is done in various ways, including: two-tier pricing in every aisle (ie, no reduced prices without the card); reminder signs throughout the store; and regular letters to customers in the monthly newsletter, the Market Report (like we see in Figure 2, below) which set out the diverse benefits of always presenting their card.

(All about the Training!) DEAR CLUB DLM MEMBER Why Should You Use Your Club DLM Card Every Time You Shop?

Our cashiers begin every transaction by asking, "Do you have your Club DLM card?" Most of the time, your answer is "yes," but sometimes we hear, "I'm not buying anything on sale, so I don't need to use it." We want to let you know that there are reasons to use your Club DLM card for every transaction. Your Club DLM account is "credited" with every purchase you make, so we are able to send you offers and special promotions via mail. Remember, the cornerstone of Club DLM is that our best customers will be rewarded the most. The more you use your card, the better savings you will receive. When you sign up for our Good Neighbor Program, your favorite charity will receive up to a 1% rebate on all of your pur-chases made with your Club DLM card. To your charities, small orders can add up quickly. If you haven't signed up already, forms are available near the service booth at both stores. Every time we scan your Club DLM card, you are automati-cally entered into our monthly raffle. We have given away prizes ranging from DLM gift certificates, to a trip to Club Med in the Bahamas, to a new car! Don't forget the other benefits of Club DLM, including the return of lost keys and the Club DLM Merchants Program where you get discounts at numerous other businesses in town. Club DLM is much more than your way to receive our special in-store prices. It is your key to unlocking great savings and benefits at DLM and other businesses, such as Fraze Pavilion and Motorwerks, Inc.

The bottom line

With this focus on rewarding customers, it should be no surprise to learn that customers willingly enroll for their instantly usable, free Club DLM card. Nor that Dorothy Lane captures well over 80% of store sales with

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it, one of the criteria used to identify world-class loyalty leaders. Business success is never the result of any single factor. Dorothy Lane's continued success, surrounded as it is by some of the industry's toughest competitors, is no exception. Club DLM alone is not the reason. However, as we will hear Norman Mayne readily attest, the information it provides has been one of the special gold-tipped arrows in his quiver for building his highly successful business.

20. Boomerang Loyalty

Feargal Quinn, the founder of Superquinn, learned the essence of customer loyalty and retail success in another industry. In his outstanding book, Crowning the Customer, he describes how his summers as a teenager were spent working at his family's holiday camp. Holiday makers came to this site off the coast of Ireland for one or two weeks. Their stay was paid for up front. Nothing more would be spent; there were no "extras" to pay at the end of their stay. Quinn's father had one simple success measure: how many customers signed up to return the following year? This made the role of every family member obvious: make guests happy so that they will want to return again next year. This experience had an impact on the young man. When Feargal Quinn opened his first supermarket in the Dublin area in 1960, the guiding principle he instilled in all employees was - and still is today - Get the customer to return. In fact, the Boomerang Principle as it has since been dubbed, is now a well- recognized mantra in many parts of the retail world. As the company's magnetic North Pole, this principle is manifested in many different ways. Superquinn hires friendly people with a ready smile (CTOWN should control the hiring process). Employees are taught to recognize and greet customers by name and to make eye contact with them. Customer service desks are highly visible and readily accessible. They are positioned prominently on a front gondola end in each store, so that customers can easily ask questions and express their thoughts. Superquinn truly wants its customers to return!

The customer is all-important

Superquinn is a company where the customer is all-important; where doing everything possible to please them is paramount; where keeping in close contact with them is vital. For these reasons, Feargal Quinn, early in the development of the company, asked a close business friend to take on the chairmanship of the company so that he, Quinn, could spend a significant part of his time on the shop floor listening to and talking with customers. All top managers are expected to do their own family's shopping at least once a month, either in their own or in a competitor's store, so that they better understand shopping from a customer's perspective. Each is expected to spend at least half a day each week in the stores. To reinforce this mindset, the company has an amusing, albeit serious, lapel pin with the inscription, YCDBSOYA - "You can't do business sitting on your ... armchair!" Employees at Superquinn are encouraged to have fun. As grocery shopping will always be a chore rather than an enjoyable experience, Feargal Quinn encourages the "fun" element of the business. Celebrations are common. There are frequent interstore contests. Trips to the United States are common prizes for a cross section of employees from the winning stores. It is a company where other family members are encouraged to join. (Indeed, one store employs six members of the same family.) The company celebrates achievements, anniversaries, birthdays, and even - as I discovered - the national holidays of visitors. One recent July 4th, I was with them for a day of meetings. As I entered the boardroom, the American national anthem was playing and meeting attendees were holding their hands over their hearts. Draped over my chair was a jacket: one half comprised the US flag; the other half was designed with an Irish shamrock! Fun and business mixes well at Superquinn. So much so that many new stores have opened on Feargal Quinn's birthday! Superquinn is a company where people are important. Employees are called colleagues. As you shop, you see photographs of the farmers who grew the beef that is on sale that week, or those who grew the mushrooms, lettuces, or other vegetable items on display. Further, not just each department, but each section has a photograph of the young man or woman in charge of that particular section. Store managers have an unusually high degree of responsibility and authority. The company's suggestion system readily rewards upward-flowing ideas.

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Superquinn believes that customer loyalty is not the game; rather, it is the result of the game. There are many, many facets to the game, as its approach above suggests, all with one common idea - If we look after our customers they will keep returning and their feeling towards us, their loyalty, will grow deeper.

Why a loyalty card?

Why, then, would Superquinn, a company already obsessed with customers, need to introduce a loyalty card? Frank Murphy, the executive responsible for SuperClub since its inception in 1993 and a member of Superquinn's board of directors, gives four primary reasons:

1. To know better who their customers are 2. To use technology to improve customer service 3. To measure how effective each store is in building customer loyalty 4. To have a vehicle, the card, to more easily offer programs encouraging customers to return

Superquinn is not, however, purely a customer-centric company. It's also a product-centric company. Like Dorothy Lane, it offers an array of unique, specially prepared signature items, which act as customer magnets, drawing customers past competitors' stores to shop at Superquinn. One signature item is the simple sausage, a part of the Irish heritage. Superquinn set out to produce the very best fresh sausages in Ireland - made in full view of the customers. In fact, these sausages taste so good they regularly win special Irish food awards. Superquinn never worries about its sausages being underpriced by competitors, a traditional retail mindset. Rather, it is concerned should any competitor ever dare to charge a higher price! After all, why wouldn't customers want to pay top price for the very best sausages in Ireland? Superquinn has built its business over time so that now more than half of its stores' sales comprise fresh items. Freshness is a fetish. Many of the vegetables on display in its stores are picked early that same morning. Tomatoes and bananas are displayed in two piles: "Good for today" and "Good for tomorrow". If any product made fresh that day (such as their sausages or items in its bakery) is not sold at the end of the day, it is not marked down for clearance, a common retail practice, but is donated to charity. All beef that Superquinn sells is DNA-tested and records are kept of every beef item sold. Several years ago, when Mad Cow Disease caused the sales of beef to plummet in the UK (and at competitors' stores), Superquinn's beef sales rose - because Superquinn, armed with product-specific information, could guarantee the quality of its beef as it knew the origin of each piece sold.

Where listening is an art form

Superquinn has institutionalized listening to customers. At the core of this listening system is its customer panel. Brochures in each store invite customers to participate: Have you got any ideas or opinions about shopping at Superquinn? Have you got any complaints, or any suggestions on how we might improve our service? If you have, you would be more than welcome at our consumer panel, which meets in this store from time to time. We learn a great deal from these meetings about those little things that can make such a big difference to you, the shopper; things we might miss ourselves because we are so close to the operation! If you can spare the time to help us, please put your name and address on the back of this leaflet and drop it in at the customer service desk. We'll be in touch next time we are getting together! Every fortnight, a different customer panel meets in a different store. Typically, Feargal Quinn and a customer relations specialist who takes notes, are deliberately heavily outnumbered by a dozen or more customers. This ratio signals to customers that it's their show; that Superquinn wants to listen to them. The meeting is open-ended. Quinn simply asks the panel what they think about all aspects of the company: The outside of the store? The bakery? The range of fish offered? Checkouts? Shopping carts? The way complaints are handled? His role, he explains, is to sit back and listen. He doesn't try to justify the company's position. He is, as he says, "seeking to hear what he doesn't want to hear." Every

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comment is recorded, typed, and circulated to each store where colleagues can see what customers are thinking about their company. It also reminds them, of course, that they, likewise, will be critiqued. It's a powerful vehicle to help Superquinn keep in touch with what customers are thinking. Not every suggestion is implemented. Some, as you can imagine, are contradictory. But many excellent features of Superquinn today originally were ideas germinated in one of these customer panel meetings, including:

• A children's playhouse where children, after being checked in, are looked after by trained supervisors while their parents shop • Scissors next to the grape and broccoli displays to enable customers to cut large bunches into smaller sizes more suitable to their needs • An umbrella service when it's raining • Apples sold by the unit, not by weight. This means, for example, that as the cost of apples vary, they may be offered to customers as six, seven, or eight for £0.99 rather than, say, £1.80 per pound.

Other customers told Quinn that waiting at the checkouts was the most painful part of shopping - so he introduced seats for customers to use while waiting in a checkout line. Customers are also provided with a selection of the day's newspapers to read while waiting! Superquinn is always wanting to find ways to neutralize the painful points of shopping - as we might expect from a company that truly listens to it customers. Ireland has a population of some 3.5 million people. Among them are ten thousand people who react adversely to wheat-based products. Celiac disease is such a serious problem for those who suffer from it that the Irish government allows sufferers tax relief on any gluten-free products they buy. After learning of this problem in a customer panel meeting, Quinn decided to something about it. The company introduced attractive shelf signs indicating which products were gluten-free and also identified the items on customers' register tapes. Superquinn then approached the Irish Internal Revenue Service and persuaded it to accept the company's recording of sales of gluten-free products to celiac customers. Superquinn now sends these customers an annual statement of the gluten-free products purchased in its stores. The statements are then submitted by these customers, along with their other tax details, saving them the chore of having to collect, sort, and total all of their register slips. It's another example of what Feargal Quinn means when he says that we must "use technology to improve customer service." It also shows the power of listening to customers - of jumping across the counter to learn how they view their shopping experience. Of course, such a program would not have been possible without the information power of Superquinn's SuperClub card.

SuperClub (coalitions – partner programs)

The SuperClub card program, launched in 1993, permeates Superquinn's whole business - and beyond. Its points-based program allows customers to earn points not only in Superquinn's stores but also in 15 other businesses, including the Texaco petrol chain, a national sporting goods retailer, a home improvement chain, and a hotel group. Each partner offers points based upon the amount the cardholder spends. At Superquinn, customers earn points not only on their total spending but also when they buy designated items around the store. Selected customers are also offered points as a reward when certain frequency or spending thresholds are met.

Twice a year, SuperClub issues an attractive catalog containing over 700 items redeemable for points. The range of items offered is diverse. Some of the product categories featured in its catalog include:

• Audiovisual • Bathroom • Bedroom

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• Cameras • Cutlery • Gardening Tools • Giftware • Golf • Kitchen Appliances • Nursery Gifts • Telephones • Toys • Vacuum Cleaners • Watches

The catalog also features a wide selection of extremely attractive travel offers. Along with the redemption of a specified number of SuperClub points, a member can buy special low-priced airfares to most parts of the world, both near and far. Over a hundred diverse destinations are listed, including Manchester, Moscow, and Madrid; Oslo, Orlando, and Ontario; Beijing, Boston, and Bangkok. Another special section offers a variety of partners' gift certificates available in exchange for varying amounts of points. For example, 800 points for a £5 gift certificate at Superquinn; 900 points for a £5 gift certificate at a major book chain; 2,000 points for £20 gift certificate at a major hotel chain. And if that isn't enough, any customer who would like an item that isn't in the catalog can call the SuperClub hotline where she can ask for a quote, in points, for the item. If the customer accepts the quote, the item will be ordered. In other words, the customer decides when, where, and how points are used! A customer even has the choice of passing them on to a friend or donating them to a charity or other worthy cause. Customer pleasing knows few boundaries at Superquinn. As Eamonn Quinn, Superquinn's marketing director and deputy chairman, has pointed out, "We must always keep in mind that points are there to reward the customer for shopping at Superquinn."

Feedback is the breakfast of champions

Superquinn is a very open, yet very accountable company. Every Thursday morning, members of the senior management team from its Support Center visit each store. They go from department to department, sharing with all employees how the previous week's trading and customer results compare with the week's target (flexed for the trading pattern of that week) and with peer performances at both department and store levels within the company. This means that all employees receive both a horizontal and vertical perspective of their department: sales, profits, and customer information. Ever since it began gathering customer information the company has recognized its importance. For example, it has changed its store manager bonus program from being based solely on the store's profits to a combination of the store's profits and changes in the Best Customers count. This was a result of Superquinn finding that changes in a store's Best Customer numbers directly reflected changes in the basic loyalty elements - service, cleanliness, in-stock conditions, etc - of that store.

Using customer information (check cashing?)

Superquinn is not only a company that is warm and friendly but is also smart and strategic. This is demonstrated by its recent development of TUSA, a 50:50 joint venture with one of Ireland's banks. In this venture, Superquinn brings to the banking industry the supermarket principles of high volume, low costs, extra-friendly service, and extreme convenience (deposits and withdrawals can be made at checkouts at any time the stores are open). This development is a natural outcome of a company that knows its customers. Based upon its customers' spending profiles, Superquinn can quickly identify which are most likely to be interested in a banking relationship when they visit one of their stores. Having already experienced Superquinn's superior care and

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service, its customers are, of course, more likely to move their banking relationships to a company where Superquinn is a principal shareholder. Further, to build the synergy between both operations, TUSA debit or credit card holders - who automatically become SuperClub cardholders - earn double points when using their card at Superquinn. TUSA is another example of using technology to improve customer service. Yet another example is Superquinn's Save Your Change program that allows customers to leave their change behind after shopping and have it saved, with their SuperClub card number being their account number. Some customers regularly set aside cash each week to help budget for Christmas and family events. Savings can be easily withdrawn. Just scan your card and enter your PIN number at one of the in-store kiosks (in the same way as one does at an ATM). Superquinn uses its rich insight into customers in various other ways as well. For example, Damien Carolan, Superquinn's top merchandise executive, now checks which Best Customers, if any, are buying a particular product before a decision is made to delete or replace it with another product.

The company has embraced customer information because of its power to help it understand the customer better and, through that understanding, make it a better retailer. Customer information helps the company:

• Measure its effectiveness in building loyalty • Measure its appeal in the marketplace (including word-of-mouth recommendations) by monitoring the rate of new customer additions • Detect early any adverse below-the-surface changes in store or company trends by noting changes in weekly customer indicators • Target different customer segments cost-effectively • Evaluate the attractiveness of each department's weekly features by measuring how many households shopped in each department

The bottom line

Because of Superquinn’s innovation and dedication to customers, vendors and employees, it’s become one of the world's best retailers. It is customer-centric, with an overriding goal of getting its customers to return. Its focus is reinforced by the inclusion of Best Customer measures as a key component of its bonus program. The company seeks to use technology to improve the customer experience. Management listens to and communicates with customers and colleagues alike. Sales, profits, and customer performance results are shared with all employees. Superquinn is a wonderful example of how a company can have fun and be highly successful at the same time.

Their mission statement - To be a world-class team renowned for excellence in fresh food and customer service - reflects both its vision and their customers' experience.

- Relationship Loyalty: Other than financial motivation: The POS system and it’s CRM app should empower the sales force at the store to give each and every customer the personal touch.

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Visible Results: Changing the Face of Relationship Marketing

Visible Results was formed in 1997 as the Customer Relationship Management (CRM) arm of The Atlantis Group, an Auckland, New Zealand-based company that is a leader in database management. Visible Results provides innovative CRM solutions for retailers, and other consumer-facing branded businesses, offering a full scope of services and technology applications for managing cards, POS integration, and back-end operational processes. These services are designed to provide merchants with meaningful and actionable consumer insights to better understand - and therefore better service - their customers, cultivating loyalty and, more importantly, bolstering the bottom line. Visible Results holds a number of international trademarks and patents for its products and business processes. Visible Results currently serves a broad spectrum of retail clients across the specialty retail, mass merchandising and shopping center sector, as well as service stations and related convenience stores, restaurants and service industries. Services are executed directly through our own offices in the United States of America, United Kingdom, Japan, Singapore, Australia and New Zealand, as well as through authorized distributors across all continents.

Products & Services

Visible Results is a proven solution provider in the relationship marketing arena, providing tools and services to help organizations improve their relationships with their customers. We offer a range of product suites to both support and execute relationship marketing initiatives, and which encompass:

A broad range of card solutions for identifying customers and recording their transactions, as well as the unique capability to communicate both directly at POS and on the face of our proprietary loyalty card, the Graphicard™. Visible Results is the world’s largest marketer of read/write loyalty cards. Connect™, a complete relationship management system for the management of customer information. Customer Knowlogy™, a data warehousing, reporting and data mining system to help understand customer transaction patterns and buying behaviors and create actionable strategies for customer growth based on granular customer profiling and segmentation; and

Campaign Manager™ – a campaign management system that is used to manage marketing to customers through multiple touch-points such as direct mail, email and SMS messaging. Furthermore, we offer a comprehensive range of support services based on our extensive deployment of relationship marketing programs worldwide. These services include program design, campaign development and data mining, as well as logistical support such as fulfillment, installation, and technical support.

Graphicard™

The Graphicard™ is our unique, patented ‘smart’ card and is a cornerstone of the Visible Results solution. What makes it unique is that the card face is re-writeable – that is, it can be updated with a new message, ‘real time’ points balance update, your promotional message/customer reminder and/or a ‘match+win’ game each time the card is used. It can also be used as a stored value ‘gift voucher’ providing auditable, secure tracking of transactions. The super-slim Graphicard™ loyalty card is swiped through a freestanding compact counter-top unit at the point-of-sale as the sales transaction is completed. Unlike other loyalty cards, GraphiCard™ has a cutting-edge thermo-chromic coating on its surface which enables a new message and/or content of your choice to be printed onto the face of the card as part of the transaction. Printing of the up-to-date loyalty balance avoids the very real overheads of regularly informing consumers of their balance. The face of the card can also provide media space for vendor advertising. Specific programs are designed to target each client's customer base, and

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Communication Partners Worldwide, Inc. 12/9/17 the changing look of the card gives it unparalleled consumer appeal. It is also important to note that the image/graphic design of the card is directed by you, the client, to fit the unique positioning of your brand/s. Adding to the uniqueness of the Graphicard™ is the "read/write" capability of the terminal which allows the magnetic stripe on the back of the card to be updated every time it is presented, which makes it, in effect, a self- contained database. Consequently, the Graphicard™ may be used at any terminal throughout a retail network without extensive network communication expense and point of sale integration on the retailers' part. Visible Results' Graphicard™ terminal instantly prints out customized coupons and other special incentives. The unit's plug-and-play connectivity renders it extremely affordable to operate; retailers need only connect it to a power source and a non-dedicated telephone line. The use of "print-on-the-spot" coupons, gift vouchers and incentives can reduce or indeed eliminate the need for a fulfillment house, and is a uniquely cost-effective and timely marketing tool for retailers.

The Connect™ customer management system is a proprietary and highly flexible web based CRM solution that captures all customer data and customer relationship details such as contacts, transactions and purchase behaviour; in short, all customer touch-points. Connect™ supports: The data entry of customer information (including data hygiene such as address correction, deduplication, casing and gendering) The storage of all customer information, including customer profile (interests, preferences and other demographics), past transactions, all customer contacts, along with loyalty/promotional program information such as offers given to the customer (noting to which the customer did not respond, for future reference), rewards redeemed, major prizes and similar All business processes required within the call center, including card management, sending out letters or emails, inbound phone support, task management and the like Campaign management – that is the creation of outbound campaigns – including full workflow management, campaign execution and group selection using a simple “SQL for marketers” interface, setup of control groups, ongoing campaign ROI calculation and profiling of responses (as input to consumer segmentation and formulation of future campaigns).

Customer Knowlogy™ Visible Results have long recognised that one of the greatest benefits of a relationship marketing program is the information it yields about customers. Making that information accessible, and providing genuine customer insights that can be actioned is critical in maximising the value of customer information. Visible Results have developed over 60 standard reports that provide deep insight into customer behaviour. These reports include:

- Customer segmentation and profiling of segments - RFM and customer latency reporting - Changes in customer segments over time - Basket analysis - Customer profitability modelling and segmentation - Trend analysis – average spend, frequency, basket composition, number of stores visited, prize redemption - Campaign performance analysis

Along with customer analytical reports, there are a number of reports for program operation, fraud management and detection, and standard operational reports. In addition, bespoke reporting is developed to meet any specific client requirements. Visible Results recognise that reports often do not of themselves serve up answers, but provide clues as to where to look to find the real answer. Consequently Visible Results uses MicroStrategy as a reporting tool (other users include Coles, Kmart, Target, Boots The Chemists, eBay, Estée Lauder, Revlon and L’Oreal). This allows you to use reports not just as a static view of the data, but to follow your own hypotheses, drilling down into data, filtering on dimensions, pivoting tables, performing multi-dimensional cross tabs, graphing data, and creating derived metrics, or using report builder wizards in order to discover the real meaning in your data. Services Visible Results serves as an end-to-end solution provider and supports all

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products with an extensive range of services, including: Program design, ranging from consultation and advice on loyalty marketing to complete configuration of structure, rules and technology. Complete technical support Complete program support, including account management and partnership management. Setup of customer call centers, to handle consumer questions and problems pertaining to retailers' specific loyalty programs. Design of marketing and collateral materials, such as cards, program application forms, catalogues, gift coupons, in-store signage and more. In short, the Visible Results organization holds itself accountable to its clients for the results of the programs it designs, implements and manages for them. Additionally, to maintain and enhance our global responsiveness, Visible Results has developed several centralized operations centers charged with servicing its offices and distributors around the globe. Database management and technical development functions are handled from a New Zealand hub, while global procurement is handled from the United States. This structure prevents infrastructure components from being duplicated and, in turn, enables Visible Results to maintain cost efficiencies that are passed on to its clients. Clients Many retailers with established brands have already turned to Visible Results to implement CRM programs, successfully utilizing the company’s approach across multiple retail segments and national boundaries. Visible Results clients range from ANZ Bank in New Zealand (entire Qantas ANZ Visa card program), petroleum/convenience store players such as Caltex in Singapore, Dymocks Booksellers in Australia, New Zealand and Hong Kong, and fashion retailers Pumpkin Patch in UK, Australia and New Zealand. These companies and others have achieved their goal of recognizing and leveraging the value of existing customers while broadening their consumer base by introducing fun, excitement and rewarding programs.

Visible Results clients and their programs include:

Caltex (SG) Corner Pantry (USA) North Star BP (USA) Double Kwik (USA) White Castle (US) Phillips Brothers Management. McDonalds Franchisee (US) Hungry Jacks (AU) Denny’s (NZ) Hoss’s Steak and Sea House (US) Pandoro (NZ) Taisho Restaurants (US) EVOS (US) Sheridan’s Frozen Custard (US) Progressive Enterprises – Foodtown and Woolworths (NZ) Wisk (NZ) Wing Tai Clothing (SG, Malaysia) Pumpkin Patch (NZ, AU, UK) Phuture London (SG) JSM Entertainment, Blockbuster (NZ) Dymocks Booksellers (NZ, AU, HK) East Hills Mall (US) Novena Square (SG) Las Palmas (ESP) Tower Place (US) Centro (SG) Bodyshop (Indonesia) Guardian Pharmacy (SG)

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Bioskin (SG) LifeCLub (AU) California Home & Garden (NZ) Garden Magic (AU) Tru Serv (US)

An example of their success is Visible results operating a real-time loyalty program for some McDonald’s restaurants. The GraphiCard tracks points, sweepstakes, and other information – all on the face of a thermal graphic card. Swipe the Visible Result’s Graphicard loyalty card though a POS terminal, and it’s updated with transaction information. The card tallies reward points, alerts instant winners, makes special offers, and even delivers ad messages (Martin, 2002). The face of the card serves as ad space.

Another RFID – not as well known, but maybe acquirable?

(Ken, thisd is a letter sent to me) I am an angel investor. One of my companies, which we call Visible http://www.visibletech-knowledgy.com/, has a fundamental keystone patent position in the RFID field. Due to the lack of qualified management team, we have not been able to get VC funding. In June of 2005, the preferred shareholders will have the option of exercising their put. This will place the company into bankruptcy. The preferred shareholders believe that the IP is quite valuable and would like to emerge from bankruptcy with the ownership of the IP. An option without bankruptcy, would be to restructure the company prior to the exercise of the put with favorable conditions for the preferred. Since I have never been involved in a bankruptcy or a restructuring I would like to get a general overview of what is involved, possible outcomes and costs. I would like to better understand what services your firm could offer the preferred shareholders.

Background John Ason

John Ason ([email protected]) is an angel investor specializing in early stage pre-revenue companies, usually consisting of one or two people working out of a kitchen or garage. He has made thirteen investments in the areas of e-commerce, 3D technology, internet publishing, smart labels, advertising and entertainment/media. Some of his companies are Xlibris.com, Spatial Labs, MakeUsAnOffer.com, Bikini.com, AdPilot.com, Phlatball.com, VisibleTech-Knowledgy.com and Geometrix.com. John is very active in the early stages focusing on getting the companies into hyper growth. Prior to being an angel investor, he was at AT&T Bell Labs for over 25 years. The first half of his career was devoted to software and technology development. The second half of his career was devoted to marketing and business management of large software projects sold by AT&T to foreign telephone companies. He is a graduate of the Illinois Institute of Technology. He is on the Board of Directors of the NJEN and a Charter Angel of NYNMA. He is a guest lecturer at the Rothman Institute of Entrepreneurial Studies at Fairleigh Dickinson and at the Wharton School of the University of Pennsylvania. His hobbies include golf, go (Oriental game of skill), travel, and mentoring companies.

Product

VisibleTech-knowledgy, Inc. is New Jersey-based corporation which has a fundamental enabling technology called Visible Labels™. Visible Labels™ are digital electronic labels that can be changed via wireless transmissions without requiring batteries or external power sources. Because the alterable display media is pixel addressable, anything can be displayed (bar codes, product descriptions, prices, customer specific messages etc.) and changed as often as necessary.

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Features Benefits no power needed to maintain message is always visible reflective media greater viewing angle pixel or segment addressable displays text, graphics and bar codes thin malleable bends, flexes and holds a shape wireless communications remotely addressable microprocessor chip intelligent memory stores data and encrypting algorithms inductively powered no batteries or power chord required affordable reusable or disposable

Retail Electronic Shelf Labels

Electronic shelf edge labels give stores the ability to change prices quickly and frequently without the time and expense of a clerk manually changing prices. A retailer can selectively change price labels in one or more stores from a central location over a network connection (Intranet or Internet) or manually via a wireless transmission from a hand held device. All of the information transmitted to the label will be stored and all or a subset of the information, including the name of the product, the price, the size and even a bar code, can be displayed on the Visible Label™. Visible Label™ will receive price and product information from the same IT source that is connected to the scanner at the check out, so prices on the shelf are guaranteed to match the prices charged at check out. Real time updates will also allow stores to pass through manufacture prices changes to the customer, rather than waiting until a clerk is available to re-price the items or restock the shelves.

Key Features

1. Inserted directly into the groove of the shelf, Visible Labels™ conform to the shape of the shelf and do not add any additional thickness. 2. The pixel addressable display allows for text, graphics and bar codes. 3. Information remains displayed and stored without power chord or batteries. 4. Wide viewing range, visible from all angels.

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Stored Value Cards

Visible Labels™ enable consumers to see the cash value remaining on an electronic cash card, electronic gift certificate, transit pass or any other type of stored value card. The value is updated and the balance remains permanently displayed after every transaction. Customer specific messages can also be displayed.

Key Features

1. Balance always visible no matter where you and your card are. 2. Contact or contact-less transaction. 3. Manufactured into card. 4. One-to-one marketing opportunities.

Management

Director of Technology, Visible Tech-knowledgy, Inc. Dr. Franz R. Grob, State of New Jersey Commission on Science and Technology, Kate Holdsworth, VP Marketing and Business Development, Visible Tech-knowledgy, Inc., Alex Gelbman, Founder and CEO, Visible Tech-knowledgy, Inc.

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Web Site: I believe it’s very important that we talk about taking this to the next level…see printed e.g.’s

Building any degree of customer loyalty online - whether through web sites or e-mail - is a challenge. Although many loyalty programs have a web presence in the form of an online account management interface, a reward redemption catalogue, or a sign-up form, those do not represent truly internet-based loyalty. For example, the UK's Nectar coalition loyalty program has a very useful and consumer-friendly web site but the program itself is essentially a bricks-and-mortar retail program. In contrast the online auction site, eBay, is an online business that has set up a number of loyalty and incentive initiatives which aim to drive desired patterns of behaviour through its web site. Both are successful within their respective fields.

Web Site Loyalty and more

Having built a number of internet-based businesses from the ground up during the past decade, I have established what I consider to be the three most important factors for smaller businesses wanting to acquire and retain customers online. Of course this should largely be a matter of good business management practice but it never hurts to take a good look at the basics again.

1. Build and establish your market credibility.

One of the biggest problems we all face when selling online is that the internet is usually perceived to be a very anonymous place - an obstacle which must be overcome. Unlike a large, established online merchant (such as Amazon), your prospective customers have no obvious reason to trust you. But if you can make them feel like they know you, and you can demonstrate that you are an expert in your field, it will be much easier to acquire new customers.

There are a number of ways to establish credibility online, including:

26. Display testimonials from satisfied customers. These are usually easy to obtain. Simply e-mailing existing customers and asking for feedback is all it takes. Once you have some good feedback, you will need to ask the customer's permission to quote them (and use their name) on your web site.

27. Connect your stores with your online marketing, contact points and daily info.

28. Provide useful information on your site. This can be as simple as honest product reviews or articles that relate to your services. An e-shopping site that only gives the product's name and price is useless unless the consumer already knows exactly what they want - at which point they're only shopping based on price. It's better to give carefully checked specifications, full manufacturer descriptions, and open, honest reviews.

29. Give consumers an easy way to contact you. Open up as many potential channels as possible: E-mail, online contact forms, telephone, mailing address, and perhaps even a fax number if appropriate. I prefer to use online contact forms, linked to an auto-responder that acknowledges their contact and tells them when they can expect to hear from you. Always follow up quickly. If you don't know the answer to a customer's question, let them know that you are looking into it and will contact them again shortly.

30. Use real photographs. Real photographs hold a level of credibility that studio shots can't achieve. In some cases it can be appropriate to display a photograph of the CEO, a group of employees, your premises, or delivery fleet, depending on which aspect of the business you want consumers to connect with most readily.

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This psychological 'show of force' reassures your web site visitors that they are dealing with real people. Many successful sites even include an isolated page that presents more personal information about key personnel (a short biography, for example). CTOWN collateral that I’ve seen to date is very family oriented…this needs to trickle down to the website…and into the stores.

2. Over-deliver wherever possible.

When you provide a product or service online, try to over-deliver on your promises. For example, provide a bonus that the customer wasn't made aware of at the time of purchase. In my particular field, e-books and electronic reports, I provide bonus reports that cost me virtually nothing - but they frequently bring strong and positive feedback. When you over-deliver, people are more likely to tell their friends and co-workers about you, and word of mouth (or word of e-mail, as I call it) does much of your marketing work for you. Over delivering often secures repeat business. I generate a relatively high volume of back-end sales as a result of my over- delivery. As long as the bonus you hand out doesn't cannibalise your margin, and is a predictable cost of sale, financial allowances can be made for this practice in advance.

3. Keep relevant communication flowing.

Keep in contact with your customers but keep the content relevant. Even if the only information you have to work with is the knowledge of which products and services a customer has purchased from you, it's a good starting place. Don't talk about chocolate or restaurant meals if all they buy from you is slimming products. I have email lists of customers indexed according to which products and services they have purchased. When I have relevant updates or news, I let my customer base know. Better still, obtain geographical and social demographics at every opportunity, and store them in a database. Categorise locations (even by postal code or zip code is a good start), and categorise family sizes, income levels, car ownership data, and any other information that's relevant to your particular market. You can obtain these details by asking simple questions at order time, or in product registration procedures. But how often should you contact your customers? You don't have to communicate with your customers on a weekly or monthly basis, although it's wise to send something at least once a month so they will remember who you are, what you offer, and why they dealt with you in the first place. Incidentally, although e-mail is my first choice, many online businesses support their electronic campaigns and branding with paper-based marketing such as direct mailing and small media ads. And the bonus that's usually missed? Apart from product information, there is usually some relevant news - related to your market sector or product types - that would interest your customers. If there are frequent changes or developments within the sector (such as the computer hardware trade), consider publishing a weekly, bi-weekly, or monthly e-mail news bulletin.

Permission marketing

Customers aren't generally opposed to relevant business propositions. What they tend to oppose are bad service and invasive, off-target marketing. Permission-based marketing - the opt-in scenario - is how to keep customers on your side, and start that vital supplier/customer relationship that keeps the channels of communication open.

Five key success factors for e-marketing are absolute gold to anyone who wants to market their brand, product, service or company online:

1. Ask nicely. The consumer's permission to communicate with them counts for everything. A good e- marketing campaign will be very vocal about clear, honest, opt-in propositions. Pitch it to lists of people who've already visited your site, visited your store or mailed in your response card.

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2. Grow your list the hard way. Here's the bottom line: You want more e-mail addresses to hit with your message, while consumers increasingly want their privacy. The web-savvy consumer is realising that his personal data is valuable to you, so on your website you have to propose a transaction: You have to offer information, value or privileges in return for a little initial consumer input. And for each extra item of data you want from them, you have to offer more. Again and again. You acquire customer knowledge one fact at a time.

3. Lead with your brand. Go for recognition. Use the brand name in the subject line to jog the recipient's memory and remind them that they authorised this communication. On the increasingly forbidding e- landscape, trust and trusted brands are becoming the only acceptable coin of the realm. 4. Serve your customer's agenda. Make offers that should logically appeal to the target audience. Avoid making offers that differ from their prior interests, or lean on too little history.

5. Be driven by customer lifetime value. It's a mistake to think that tricking consumers into dealing with you will build a long-lived business. A misleading offer, or a coercive and confusing website experience, may score a few visits in the short term - perhaps even a few dollars earned - but repeat business is better. The world wide web is good at maintaining and deepening relationships, if it is used correctly. Craft your opening messages and introductory pages as if the whole future of your business depends on their tone - which, in fact, it may do.

Opt-in lists are the future

The real secret for marketers is to send their offers whenever possible to consumers who have already said they'd like to receive them. Such 'opt in' lists can only be operated by openly and honestly obtaining a consumer's permission to send them news, product updates and offers. When you're trying to build your opt-in e-mail list, it's absolutely vital that consumers feel their contact details aren't going to be abused or sold to other companies. Almost everyone has had a bad experience with mailing lists at some time, and earning their trust can only be done by being open, honest and up-front about how you're going to use their personal data, and by rewarding them for initiating a relationship with your company.

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