The company
Home tips and tricks, the latest decorating trends and points for money spent. That’s what Colorama promises its loyalty club members.
Unlike many other home improvement stores, Colorama adapts its merchandise to customer needs and demands. Colorama shops are filled with items that every home decorator needs.
Invitations to themed evenings, home decorating courses and product previews are the rewards for loyal customers – and attract new members to the customer club.
And customers often come in to buy the products they need for a special decorating tip.
“Home renovations can cost a small fortune. So it’s easy to see why our club creates added value – for us and our customers,” says Magnus Strömberg, Manager of Colorama in Lund.
The challenge
Most people renovate their homes several times during a lifetime, and usually on weekends and holidays when they have more time.
“For a durable goods retailer like us, it’s more profitable to keep customers for a whole lifetime than chase new ones,” says Magnus Strömberg.
Customers who join Colorama’s loyalty club know what membership involves. The shorter the lead time – from when the customer completes an application form in the shop or online, until the customer receives the card – the greater the benefits, for both customers and Colorama.
How can I hang wallpaper without bubbles? What kind of tiles should I choose? How can I match the back wall with the TV and the children’s toys?
“We want to be first to answer our customers’ questions – otherwise they’ll turn to a competitor.”
The solution
For Colorama, the loyalty club is a tool for communicating with customers and analysing their buying behaviour.
The loyalty club system is based on a customer database connected to a bonus system. When a customer buys something in a Colorama shop, the purchase is registered. The total bonus points for the year are added together and the customer receives a certain percent of the purchased amount back.
Strålfors checks and compares the registered points with the shop and sends a voucher to the customer’s address.
The results
60,000 customers have joined Colorama’s loyalty club so far.
Last year, 30,000 customers took part in themed evenings, home decorating courses and product previews.
Shop staff say that customers are happy to spend more money when they know they’ll get some of it back at the end of the year.
“According to the readership survey, 5% of our customers save the Direct Mail they receive from us. The customer club is a good way to reduce the margin but keep loyal customers,” says Magnus Strömberg.
The future
At present, the purchase can be entered manually or recorded electronically by swiping the customer card. But registration will soon be completely electronic. All purchases made by a customer will be registered and the information can be used to analyse buying behaviour.
“We are also looking into automatic mailouts of our club magazine to customers when they register,” says Magnus Strömberg.