It's safe to say the last thing a family-run grocery store wants to see lumbering into its backyard is a massive chain-grocer. But that's precisely what happened a few years back to Gary Hawkins, CEO of Green Hills Farms, an independent grocer based in Syracuse, NY. Only Hawkins' nightmarish situation came in bulk quantity: Within a week, not one, but two major competitors opened up within five miles of Hawkins' relatively small, 22,000 square-foot store. All this might sound like a story from the retail obituary pages, but the results say otherwise. By focusing on customers and not products, Green Hills has posted consistent gains in sales volume since the competition's arrival, netting $18 million last year alone.

Slugging Goliath with a Database

How has Green Hills gone from corner grocer to a multi-million dollar enterprise in the face of overwhelming competition? Hawkins realized early on that a rich customer database was the most effective weapon in his arsenal. Since 1993, the company has built detailed customer profiles via its customer-card program. Green Hills' size allows Hawkins to pinpoint exactly where every one of his customers lies along the profitability continuum. So when the Goliaths moved in, instead of trying to beat them at their own game by offering heavy discounts across the board, Green Hills concentrated on what it does best: customize its products and services to meet the expressed needs of its customers.

Green Hills' strategies for cultivating customer relationships reads like a family of nine's grocery list. A key ingredient is sending personalized thank-you letters to each department's Most Valuable Customers (MVC). Managers show their appreciation by including a certificate for a free gift basket redeemable at each customer's favorite department. The gesture gave department managers an opportunity to meet their best customers face-to-face -- a perfect opportunity to increase loyalty and move customers further up the value chain.

Customer Centricity as Strategy and Process

Hawkins -- who's gone from stock-boy to CEO at his family's 67-year old store -- is a firm believer that moving a business toward one to one is a continuing process. "We've really tried to focus on what we do well," he says, "knowing our customers, and continuing to build relationships with them." Indeed, several winters ago, after noticing that a number of Green Hills' MVCs hadn't shopped at the store in awhile, Hawkins instituted a lapsed-customer communications effort to find out why these formerly loyal customers had seemingly defected. When the survey results came in, it turned out that these people hadn't started shopping elsewhere -- they just spent several weeks of the year in Florida to escape the cold Syracuse winters. To meet the particular needs of this segment, Green Hills began shipping products hard to find in the Sunshine State right to the customers' Florida doorsteps.

By relying on these methods, the "ROI grass" couldn't be greener for the savvy grocer. Green Hills' retention rate among its MVCs has exceeded more than 95 percent year year over year, with an amazing 80 percent retention rate among all customers. But the work is never done, says Hawkins. Even in successful programs -- such as a tiered, dynamic pricing plan that allowed MVCs to purchase ham for a paltry 79 cents per pound -- there's room for one-to-one improvement, he says. In the future, the grocer plans to link its loyalty program with its Web site. No doubt Green Hills Farms will be sowing the seeds of one to one opportunity for another 67 years.

© 2001 Peppers and Rogers Group. Do not duplicate. Copyright strictly enforced.

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