Saturday, February 04, 2006

A really dumb promotion

Marketing, promotion, loyalty rewards, GNC,

I've been involved with marketing and promotional efforts for many years but I've yet to see a stranger, non-sensical kind of promotion than that being used by the vitamin brand of GNC .

There are two types of loyalty programs in broad use, one which rewards loyal and frequent customers with prizes or benefits (like frequent-flyer programs) and the second which aims at increasing a customer's use of a product or service regardless of their prior history.

It's really difficult to understand what GNC is attempting to achieve with their Gold Card program which, in short has the following characteristics:
  1. You must pay $15.00 a year for the card.
  2. It can be used ONLY during certain days of the month.
    The US version allows the first 7 days. A Chilean version is more restrictive and convoluted: it permits just the first Monday, Tuesday or Wednesay of each month.
  3. The benefits are subject to change at any time.

While GNC products are generally perceived as being high quality, they are not bargain priced. In fact, they may be among the higher priced in their category. The card offers holder (initially) a 20% discount.

Simple math shows that a person must spend at least $75 to simply break-even BUT what happens if they need a product which GNC sells a day before or after the limited time span which the card provides the discount?

Chances are, that a client, who might have every intention of purchasing their brand, would be annoyed at not being able to get the expected discount unless they were willing to wait till the following month. Would they buy the GNC product anyway, or would they wait til the next month?

My guess is not. I'd expect that a significant number of consumers would be inclined to see if they could find an alternative product at a lower price and might even vow to NEVER use the GNC brand again.

A good incentive program needs to be simple for the customer to use unless there is some kind of exclusive, highly desirable benefit that a client is prepared to suffer some inconvenience to obtain.

GNC's card program seems to fall short and, in my view, runs the danger of actually costing them more in lost sales than they might gain from those who don't mind the limtations imposed by it.

Of course, my perceptions might be wholly off base and I'd be delighted to have someone explain to me the benefits which a program such as this can bring both the customer and the company which uses it.


fooDcrazEE said...

that is real in the hell r they gonna their client to buy stuff at % price....

jf said...

Your though foodcrazee was exactly why I can't understand what GNC hopes to accomplish with this promotion.

In the US version they restrict a customer's purchases to 23% of the time, in the chilean version under 10% of the potential buying days in a year.

If I were designing a promo I'd want to have maximum opportunities for a customer to purchase unless I had some specific need to stimulate sales only on certain dates. If that were the case I'd not be charging a customer for the right to help me increase sales, but rather would make it easier, not harder for them to buy.