Smokers Choice, a chain of tobacco stores in New York and Pennsylvania, faced formidable challenges: Stagnant customer retention rates and diminishing market share. Despite their rapid growth and broad reach (more than 50 stores), the company needed a solution to stand out from competitors and drive per-customer revenue.
Enter tobacco scan data.
The company joined the Altria Digital Trade Program, a tobacco scan data program, and using FTx POS and Loyal-n-Save, Smokers Choice rapidly grew customer retention, loyalty program engagement, and tobacco incentive revenue.
By a wide range of measures, Smokers Choice saw massive success.
The company grew revenue by 448% compared to competitors. Plus, their loyalty engagement rates flew through the roof (76% loyalty retention). Ultimately, offering its customers promotional pricing and improving loyalty engagement helped Smokers Choice rapidly expand its market share (up 184%).
What Wasn’t Working
Smokers Choice faced stiff competition in the tobacco retail industry and had two problems:
- Customer Retention – Low and stagnant customer return rates was limiting revenue growth.
- Market Share – Amidst growing competition, Smokers Choice also faced shrinking market share.
Ultimately, by leveraging technology to reach Tier 3 of the Altria program, the company reversed both of these metrics, while dramatically increasing revenue.
Smokers Choice wanted to introduce, grow and operationalize a loyalty incentive program, augmented with POS scan data reporting and a POS-based loyalty app. By launching a loyalty program, Smokers Choice aimed to both increase customer retention and market tobacco incentive offerings from manufacturers.
Do you need a loyalty program to qualify for tobacco incentives?
Tobacco manufacturers pay retailers incentives for transactional data. Manufacturers provide greater incentives for higher quality data, e.g., submitting transactional data with an associated loyalty ID. Retailers can also earn incentives for automating their scan data reporting and using advanced age verification systems.
Smokers Choice used all of these tactics to accomplish its goals:
- Using custom POS analytics solutions, Smokers Choice was able to automate scan data reporting across its entire operation.
- These reports were optimized to qualify for higher rebates.
- A loyalty system (including app connectivity) was launched – Loyal-n-Save
- Staff were trained in onboarding loyalty customers.
- Pilot tests were launched in select stores to evaluate the system’s efficacy.
Launching the Loyalty Program
Using Loyal-n-Save, Smokers Choice began to offer customers manufacturer incentives for select products. The loyalty app allowed the company to market these promotions directly to its customers (through email marketing and push notifications).
Ultimately, Smokers Choice used FTx POS and Loyal-n-Save to:
- Automate reporting with both loyalty and transactional data
- Offer exclusive promotions and discounts to loyalty members (which were seen whenever customers opened the app)
- Market these offers using email and app notifications
Prior to launching, the company’s loyalty engagement was low. However, during a 13-week period after launch, roughly 43% of customers returned to a Smokers Choice location within 30 days (with 75% of customers returning within 90 days).
In other words, manufacturer incentives empowered Smokers Choice to drive customer loyalty engagement and drive retention and customer return rates. By offering exclusive product discounts and pricing, the company built a loyal audience that 1) returned more frequently and 2) continued to promoted brands.
Smokers Choice experienced rapid revenue growth, higher customer retention rates, and huge market share growth:
Astounding Market Growth
Smokers Choice saw a 184% growth in market share in the first six months. Offering these promotions to build a loyal audience helped the company stand out from competitors.
Compared to competitors, Smokers Choice saw revenue increase by 448%. Higher customer retention and larger order values (driven by manufacturer incentives) played a significant role in helping drive this revenue increase.
Increasing Brand Loyalty
Using promotional offers, Smokers Choice built a loyal customer base for its products and drove new business. Customers came to them for the best prices on their favorite products.
However, even after a product promotion had ended, sales of that product remained elevated over pre-campaign levels.
High-Frequency Customer Return
Smokers Choice passed incentives to customers. As a result, this strategy drove loyalty program engagement and lead to a significant lift in returning customer rates.
About 43% of loyalty subscribers visited a Smokers Choice two or more times within 30 days. Further, 75% had shopped at least twice within 90 days.
Impressive Loyalty Conversion
Over the span of the first six months, the company’s loyalty conversion rate was 76%. In other words, a significant percentage of its loyalty members had become regular customers.
Smokers Choice also saw positive momentum in these areas:
- Customer Feedback – The program received high praise for its ease of use and enticing rewards offers.
- Employee Satisfaction – The loyalty and POS tools were user-friendly, and employees quickly became proficient in marketing the program, onboarding customers, and updating systems.
- Operational Efficiency – The automated scan data reporting, as well as one-to-many loyalty tools, improved operational efficiency at individual locations and the corporate office.
Conclusion – Stop Leaving Money on the Table
Using tobacco scan data rewards to build customer loyalty works.
Our Smokers Choice case study proves that. Using POS and loyalty tools, Smokers Choice began earning Tier 3 Altria Digital Trade Program rewards. The company passed those incentives along to customers and used them to drive customer loyalty and retention. This lift in customer return rates ultimately helped drive huge gains in market share and revenue.
In other words, any business that sells tobacco should look into joining a tobacco scan data program. You don’t need multiple stores to generate these kinds of returns. In fact, any retail business that sells tobacco – whether a corner store, independent tobacco outlet, cigar shop, etc. – can qualify for tobacco scan data incentives and use them to drive gains in customer loyalty, repeat business, and market share.
You just need the right technology provider. To earn top-tier rewards, you need to be using these systems:
- A POS system for tobacco retail
- A POS-integrated loyalty app
- Automated scan data reporting in your POS
- Integrated age checker technology
Need some help getting started? Contact FTx POS today to learn more about our retail software tools that can help grow your business.