Not surprisingly, Wegmans too has a turkey promotion tied to spending. But the bigger store has yet to award Christmas trees. Presumably, it has the data it needs to do so. But it's what you do with the data that's the measure of any loyalty-marketing program. Does Wegmans know its customers the way the folks at Green Hills know theirs? Says Hawkins, "There are some advantages to being small."
Susan Greco is a senior writer at Inc.
The company
Green Hills Farms Store, in Syracuse, N.Y.
Business: Selling groceries
Size: 22,000 square feet
Financial summary: In 2000, sales were $18 million and average weekly sales per square foot were $16. (The industry average is about $8 to $10 per square foot)
Annual customer retention rate: 80%
Management: CEO Gary Hawkins; president Keith Hawkins; director of operations John Mahar; director of information services Lisa Piron
Origins: Founded as a farm stand by Gary Hawkins's great-grandmother in 1934
Capitalization: 100% owned by the Hawkins family
Strategy: Forgetting industry convention, organize marketing promotions around customers rather than products. Use frequent-shopper program to reward best customers to ensure their continued patronage and reap higher gross margins for the store
Competitors: National superstores like Wal-Mart, and supermarket chains Wegmans, Aldi, Price Chopper, and P&C, as well as several independents
The CEO
Gary Hawkins seems like the picture of a small-town grocer. Waving to customers and employees at the entrance of his store one recent day, he is approached by a middle-aged woman. "Do you know who I am?" she asks. Hawkins stares at her hard. Is this a test of his customer knowledge? After all, Hawkins's store prides itself on its collective ability to identify more than 10,000 shoppers by household name. But if this is a pop quiz, Hawkins is failing. The woman asks again, "Do you know who I am?" There's a sudden flutter of recognition. "Yes," he says. "How are you?" Later he explains: "Her daughter and I had our tonsils out at the same time. I haven't seen her in about 30 years."
It's been just as many years since Hawkins, who is 42, started stacking produce as a boy in the store run by his father. Green Hills Farms had been run by Gary Hawkins's grandfather before that. It was actually his great-grandmother Carrie Hawkins who had started the business as a farm stand in rural Syracuse to make ends meet during the depression. The family ran a dairy farm and also grew such crops as sweet corn and tomatoes. A fire in the 1940s destroyed the main dairy farm, but in the late 1950s Green Hills grew into a small supermarket. As luck would have it, a labor-union strike in the 1960s shut down all but the independent stores for a while, and Green Hills' business skyrocketed. In the 1970s Hawkins's father shut down the produce farm and opened two new locations, but the new stores closed amid growing competition.
Hawkins took over running the original store in 1985; sales then stood at about $17 million. He seemed like the dutiful son come home to roost. In his first few years he ruffled few feathers. Hawkins admits the only reason he launched the Green Hills loyalty program was that he saw bigger supermarkets experimenting with their own frequent-shopper plans. But that one decision to institute a loyalty program at Green Hills changed his life. "Before, it was like operating blind," he says.
Now Hawkins travels the world helping other retailers see the light. (A few years ago he even self-published a book on loyalty marketing.) Never dreaming his life would be so different from his father's, Hawkins has logged more than 150,000 miles a year in his second job, as a consultant, flying across the United States and to South America, Europe, and Asia. Which means he is an expert on another form of loyalty marketing: airline frequent-flier plans.
Best practices
Trying out promotions on employees
Hawkins never forgets that his 75 full-time and 125 part-time employees are also customers. For example, before the store rolled out its first 5%-off promotion for shoppers who hit a spending target, Hawkins ran a similar program for employee households. And then he watched what happened. The approach has several benefits: employees spread the word of new promotions, and Hawkins gets real data. "Test, reward, and learn," he says.
Mining the database
Lisa Piron, who manages the customer database, plays a pivotal role. Each day, she tracks such measures as the customer-identification rate, percentage of households shopping that week, how many new customers the store is retaining, and markdowns as a percentage of sales. "If the numbers are off, I start poking around," she says. She even drills down to the customer-defection rate per department.
A marketing peer group
Hawkins and five other noncompeting grocery-store owners meet once a year (and keep in contact more often by phone and E-mail) to exchange marketing ideas. "We all have loyalty programs, and we're all trying to push the envelope," he says. The group's members include both U.S. and overseas chains such as Virginia-based Ukrop's, Dorothy Lane Markets in Ohio, and Superquinn of Ireland.
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