Customer Loyalty Programs That Work: Moosejaw Rewards

mike lewis

• June 01 2009
• 2 comments

Founded in 1992 in Keego Harbor, Michigan, Moosejaw has been making rapid inroads into the action sports online market place through moosejaw.com. While numerous building blocks have laid the foundation of the company’s success, perhaps the biggest piece that has kept people coming back is the online community it has created and its customer loyalty program, Moosejaw Rewards.

The program works like this: customers receive ten percent of all regularly priced purchases (five percent on sale merchandise) back as points they can redeem for product online. As customers spend more, the rewards climb, topping out at 20 percent back and free shipping on all orders.

We recently caught up with Moosejaw VP of Marketing Eoin Comerford to learn more about what goes into creating and maintaining a successful customer rewards program.

How long has Moosejaw Rewards been around?
The program has been around for five years. We just relaunched it on our new Web platform about two months ago.

What changed with the relaunch?
We moved our regular site to IBM Webshare, their commerce platform, back in August of ’08. We wanted to do the same thing for the Rewards site as well so it’s a seamless buying experience. If you look at our Rewards site and our main site they mirror each other almost exactly - you can get the same product.

How does this program translate between online and brick-and-mortar?
I think we’re one of the few that do it well in multi-channels. Whether it be brick-and-mortar, online, or catalog for that matter. All of the purchases track to the same rewards process. It’s a great way for us in the retail environment to capture email addresses. You need an email address to set up a rewards account. I think a lot of retailers struggle with; “How do I effectively email my brick-and-mortar buyer?” This really allows us to give them an incentive to give us their email. We also will email them their receipt as well for their records.

How many physical stores do you have?
We have seven. It’s a small part of our business. It’s maybe a quarter of our total revenue. We’re fairly regional, at least right now, mainly here in Michigan and in Chicago.

How many people are enrolled in your rewards program?
I believe the number with a positive balance is over 400,000.

How did you land on giving ten percent back?
It’s a good number to make people sign up and say “wow, that’s something that’s worth doing.” The other important piece was going to our vendors and telling them about our program and making sure they can support it, and it’s not in violation of any pricing policies – make sure that everybody sees the value. It’s brand building for us as well as our manufacturing partners.

Did you get any push back?
Once we talked through it, how it would work, and they understood that it was a long-term loyalty program, which we wouldn’t be promoting specifically against their brands, we didn’t.

What  benefits have you seen from this?
Certainly it builds that ongoing repurchase intent. It helps to move people through that loyalty channel and rewards them for being loyal customers.

Explain the levels of your program.
Depending on your purchases the prior year you reach different “high altitude” status. Aconcagua is the first – if you spend $1,000 with us, then that gets you an extra 25  percent reward accrual rate. Basically 12.5 percent overall. At the highest level, Everest, you get double rewards. You also get free ground shipping on all orders.

What other benefits does the program provide?
It gives us an internal currency to incentivize our customers to interact with us. You can get 100 points for writing a review, or a gear in action photograph, or you with your Moosejaw flag. We do text messaging campaigns, which are things like, “text us back ‘shuttlepuck’” or whatever and we’ll send you 122 points. Most every email has some kind of interactivity built into it.

It’s not only [good] for that kind of stuff but for customer appeasement. If, God forbid, we do mess up, we always fess up to mistakes and we do whatever it takes to make it right. Part of that sometimes might be some more rewards.

For our loyalists it really is a big deal. Rewards points have been battled over in divorce court.

How do you measure the success of this program internally?
Looking at our repurchase rate. Looking at the degree of interactions that we get when we go out with these rewards pieces. With our text message approach, for example, we’ll get 25-30 percent response rates. Those kinds of things are great.

We’ll also look at the number of inbound emails from promotions. Occasioinally we’ll do a promtion like triple rewards, basically 30 percent back. That was one of our best weeks so far this year, at least from a pure profitability perspective, because it’s a much more effective program from an ROI perspective than just doing a straight discount.

Because of who it targets?
Because of the way you account for the points. In some ways its similar to some of these bounce back gift coupons that are becoming popular. Things like “spend $100 dollars and get 25 off your next purchase”’ From an accounting perspective – the $25 they get back from their next order is $25 that they’re going to spend on goods that you’re making your margin on, versus just taking 25 bucks off a hundred dollar order. That’s $25 of actual cash you have to spend [off your margin] to make that purchase.

This spreads it out over multiple purchases?
Exactly.

What are the costs of programs like this? How much of an impact do they have on margins?
We view it as basically a marketing expense. We track the costs, but they’re [confidential].

Has the repurchase rate been increasing over the five years you’ve offered this?
It certainly increased over the first few years. Now we just view it as a core part of our loyalty. If we were to some reason drop it, our loyalty would definitely take a step backwards.

Sounds like you’d have 400,000 upset people on your hands. What are the essential pieces of the program?
The most important piece is the system to track it. You have to have the backend system that ties to the account, accrues all of the points, awards points, and that basically needs to be integrated into your process. It has to be automated based upon purchases.

Then there’s the redemption process. We’re able to leverage our E-commerce infrastructure so that we don’t have to totally maintain two different platforms, but you have to have that customer friendly redemption process where they can get something that they want. It’s important to have the same products. So that the rewards are something that people want.

You definitely want to make it easier than using airline mileage.

Right, that you can’t use easily without restrictions. Also, if it’s on sale on the [retail] site, it’s on sale on the rewards site.

The other key piece is the promotion. Making sure people know about it, are excited about it, and sign up for it as well.

How do you do that?
If you interact with Moosejaw it’s hard to miss. Whether it’s through our email campaigns or on the site itself. It’s right on the homepage. It’s in the shopping cart, telling you how much you’re earning. We send out points updates about once a month. It’s integrated into pretty much everything we do. It’s on our receipts.

For an in-depth look at how to create a customer loyalty program that works, pick up a copy of the June issue of TransWorld Business.