Clubs are an essential component of a highly successful convenience store loyalty program. They can create a lift in your target product sales of up to 50% and even 60%.

A common thread throughout most of the high performing loyalty programs in our network of retailers is a strong club program. John Winter of Q Mart in last month’s Loyalty Monthly, claimed a 35% increase in ice sales just by adding a club. We see common increases of 20% to 40% for snuff and chewing tobacco, 10% to 20% increases for coffee, fountain drinks, and popular energy drinks.

In addition to increasing target product sales, clubs increase overall sales by increasing the frequency of customers with larger average baskets. Greater numbers of bigger sales equal big increases to your monthly yield. Clubs are a very important component of loyalty whether you have one store or 1,000 stores, lots of vendor sponsorship, or none at all. And the good news is, with the Outsite Networks loyalty system, clubs are easy to execute and see the returns.

Calculating Club Lift

Naturally, stores can compare sales of club items before and after the introduction of a club. But how can you be certain it’s the club that’s driving the increases? We measure this using Loyalty % Sales (percentage of sales that came from loyalty member transactions).

Statistics across our entire network reveal that most products without clubs tend to hover within 1% to 2% of the average rate of loyalty sales as a percent of sales across the store (or chain). When a club is measuring 10%, 20%, or 40% over the average percentage of loyalty sales, you are witnessing the mobilization of members by the clubs. The lift can be calculated from the difference.

Example: (note: numbers represent an average site performance for a 20 + store chain . This is an actual club report)

1. Though the average Loyalty % Sales is 23.27% for this chain, this club shows a 58.44% average.
2. We know that the sales of Milk gallons would, like most non-club product sales, likely hover very close to 23.27% without a club. Because of this, it’s safe to assume that the 35.17% increase is due to a club presence.
3. This leads to the results: club-sales of $977; without club- sales of $633. That’s a $344 gain.
4. A $344 gain across 20 sites means a $6,880 gain in sales, which at an estimated 30% margin, translates into an additional $2,065 in margin.
5. We looked at this client’s stated reward costs and found they were only 2.5% of club margin, $175.
6. The additional margin less the reward costs equals $1,889. That’s a gain of nearly $2,000 in monthly margin from one club item. Apply the same math to a variety of your most popular items and you can quickly get a sense for the power of clubs.
7. Additionally, we can see in a separate market basket report that the Milk Club baskets are on average $.64 cents higher than non-member baskets with milk purchases. The 35% lift in loyalty milk sales brings a bonus of $.64 with every milk gallon sold.

The report used here to make the lift calculations is one of the key reports retailers in our network can use to gauge the health and success of their entire club program.

Logic of Club Growth

The great thing about convenience stores is that nearly everything sold is a “consumable.” Beer, tobacco, milk, soda, and coffee are all consumables bought with high regularity – often with greater frequency than grocery store visits. That’s why they are top selling items at convenience stores – where it is more convenient to purchase those items. Consumers often visit as many as three or four convenience stores regularly – one near work, near home, and near their favorite weekend activities. Clubs help consolidate this activity to your stores by rewarding consumers for buying their favorite items from you and giving them something to lose if they buy their favorite items elsewhere.

In addition, because you are rewarding members for buying their favorite items, your store and loyalty program will appear more personally relevant to them. This is exactly the thinking and experience you need to build loyalty.

We know, by comparing market baskets of loyal versus non-loyal consumers, that generally loyal consumers spend $1 more per visit. By helping to consolidate member purchasing to your store and keeping more members active and engaged, a good club program delivers more visits by more members, each bringing in that extra dollar of sales.

Club Strategy

There are as many different successful approaches to rewards programs as there are high performing retailers within our network. Most often high performing club programs include these strategies:

1. Create clubs where you can gain big benefits – high margin items and frequent selling items
2. Always promote your brand specialty items: fresh food offerings, gourmet meals to go, pizza and subs, hot dogs, fountain drinks, coffee, car washes, etc.
3. Include a broad range of clubs so that your program appeals to a majority of your members. If you only have a milk club and a hot dog club, you may only engage 5% of your member base and miss out on the value clubs provide. We recommend your program include between 10 and 20 clubs.
4. Let your clubs be as rich as your vendors are willing to support. If you have limited or no vendor support, you can still have 15-20 clubs and see a highly profitable clubs program. Just frame the offers to require more purchases before awarding the benefit – “buy 10 get 1 free” instead of “buy 5 get 1 free”. However, be sure rewards aren’t so hard to achieve they become unattractive or worse, a disincentive.
5. Communicate club benefits aggressively through audio messages to club members. Remind members regularly to step inside and buy their favorite items.
6. Support clubs sales with in-store signage at the register and pointing to club items on the shelves. Some successful programs even create club racks near the register or as an end cap to further highlight club items. The better you communicate your club offerings, the more club activity you will create.

Join the Club

The ONI system has various mechanisms to automatically enroll members in club. Repeat sales are encouraged when member statements show their club status and remind members that they only have X number of items left to purchase before receiving their club reward.

You can accelerate that growth by driving members into clubs with self-funded rewards. Target members who buy “like” products with special offers to try your club products. You might try, “Donut, any flavor, only 25 cents!!!” Then, when your members redeem the offer, they are automatically enrolled in your club.

In summary, clubs make excellent financial sense for convenience loyalty programs regardless of how much vendor support you have or how many stores you own. Clubs increase sales, keep members more active, and lock them into your stores. If you have a limited club program, now may be a good time to reevaluate it and consider boosting it with additional clubs.

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