How to “force” repeat customers to buy from you over and over again – Interesting business and pricing model:
Today, an interesting take on getting repeat customers, used by a conventional bricks and mortar store.
Hope your Easter was great. I spent the day with my wife and kids, watched the NBA playoffs, and sat out back and read. It’s a great time of the year to be enjoying the Florida weather.
But late last week, I needed to run into GNC. Here’s why:
I work out and try and stay in shape, and I’m pretty fanatical about my diet. You know, the typical “bodybuilding” deal where you have to eat “X” amount of grams of protein every day, and stuff like that?
And since I’m pretty much a vegetarian, I usually use a pretty tasty brand of vegetarian protein, called Plant Fusion, which I order from a company called Vitacost.com
(They ship out immediately and provide great customer service, by the way… and their health catalog is enormous, just in case you’re into this stuff yourself.)
Anyway, for some reason, probably because I have too many projects and clients to work with… and not enough time to do it all in… I forgot to re-order when my supply of protein powder was running low.
Which meant, I’d be without protein powder for a few days… which is the why I needed to go to GNC. I needed to pick up a bucket of protein powder to tide me over until my new shipment arrived.
So I grab a can of whey protein powder (chocolate, of course), and walk up to the counter.
Based on experience, I’m expecting to pay somewhere between $35 and $42 dollars for it, at most. But the nice young kid behind the counter rings me up and says, “OK, $62.99.”
I was floored when he said this.
But then he follows up with, “But if you have your Gold card, it’s only $47.99.”
So upon further investigation, I find out what’s going on. And here’s what GNC does:
Most, if not all their products, have two prices: A higher price for people who don’t have this Gold Card, and a lower price for people who have the Gold Card.
It costs $15 a year to become a Gold Card member.
I think this is an exciting, and extremely effective business model. And here’s why:
1. MOST people who shop at a place like GNC, shop there regularly
I’m not sure you can do this in a business where these two dynamics aren’t happening:
Regular consumption of non-durable goods… which necessitates routine and repeat purchases from your customers.
Because if you’re trying to contain your customers and get them to “earn” a discount… it’s a LOT easier to make this happen when your goods are a necessity, rather than a luxury.
And since frequent consumption creates habits… and habits create the perception of necessity… this is a perfect fit.
2. MOST people want discount pricing
3. Similarly, NO ONE wants to pay more, especially if they have a choice not to
Now pay attention here, because at first blush, you might think, “Hey isn’t that a different way of saying what you just said in $#2?”
And the answer is, “Not really.” Tere’s a bit of a distinction here between #3 and #2, and here’s why:
It’s one thing to get discount pricing. It’s another thing to see the non-club higher price GLARING at you in bold red numbers on the shelves.
This makes you uncomfortable and incentivizes you to RESIST those prices, as well.
It’s the difference between “getting” a discount… and having the “option to” get a discount.
4. MOST people want to be part of a club
Especially one that gives you money-saving deals and easy to understand “club privileges.”
Although… almost every retail store in the world has some kind of small keyring or digital tag membership nowadays… so to “some” extent, this has lost is lustre.
But if being in the club gives you access to deals on goods you routinely consume… then overall, the appeal is still valid.
5. MOST people like getting notices of “inside deals”
It makes you feel special to belong to this club. It’s kind of like, how the stuff I talk about in my Maximum Money Club and my Seductive Selling Newsletter, is different than the stuff I talk about in my e-mails and on my blog.
It’s a little more intimate and in-depth… more personal and more personable… and I discuss and share business and marketing information I don’t share in these posts. And this is why I’ve had literally hundreds and hundreds of people stay members in this Club, for years and years and years.
6. It encourages repeat purchases.
Look, even if you get your $15 club investment back on your FIRST purchase… the mindset is, “Hey, I paid for this discount and I’m going to make sure I take advantage of it as much as possible until my membership is up.”
You kind of want the ROI on that membership, to be as high as possible – even though it’s “costing” you to increase it.
Are there challenges?
Yes, for sure. What business doesn’t have challenges?
For instance, reselling memberships to people who don’t shop there a lot, is probably a bit of a challenge. They will no doubt lose a few customers because of this.
However, I think these lost customers are more than made up for, by the strays who wander in during the year, like I did. (I didn’t get the membership but that’s because I am NOT a retail shopper. I order mostly online for convenience and speed, and to save time and typically, a few bucks as well – especially on commodity items like protein powder.)
You do lose some business from the guy like me, who will only stop in there once every year or two. BUT… for every guy like me who comes in there and doesn’t get the Gold Card, it’s pretty likely that you’ll also wind up converting another similar customer INTO a Gold Card member. And a portion of these folks will be stopping in and shopping more frequently.
So in a sense… instead of PAYING for these one-off customers… or, instead of these stray customers having a lead acquisition COST attached to them…
In a sense, they pay you for the right to do business with you.
So, who can use a model like this?
Well, why don’t we discuss it?
If you have any ideas post them below, and I’ll respond to, or comment on them.
In the meanwhile, I hope you like this and…
Have an awesome week.
Now go sell something, Craig Garber
How To Make Maximum Money With Minimum Customers:
This Will Be Our Year – Zombies (1968)