I'm sad and I'm happy. Not morosely depressed or wildly elated. Just...a little sad AND....a little happy.
Boo hoo. Yay
Why? Because Borders, the bookstore one that is, is being smart, but what has been smart for them so far isn't realizing the revenue they hoped so far. That's what makes me sad.
But what makes me happy is that they are taking the risk of moving ahead with their scheme, rather than just retreating and cutting bait and running as most traditional companies - on the retail side - the so-called "brick and mortar" stores - would ordinarily do.
Borders Loyalty Program
I'm a member of Borders Rewards program. I'm a member of theirs RATHER than Barnes & Noble because Border's program offers more in a much more attractive way. From what I can tell as a member, there are two pieces to their fundamental value proposition. First, regular earnings of bonus award $$$$. Second, benefits in particular to members of the program. But presented in a way that delights you by the uexpected in combination with the base rewards, rather than providing you with the base benefits - pretty much as expected.
So for example, I will get a regular email that indicates that I have either a certain amount of money earned by my Borders spending ("You've got $17.50 in your Borders Rewards account" so to speak) or that due to my spending I have a day in the month (any day I choose within the specific month) that all items I buy will be 10% off no matter how many I buy and how many visits to the store I make. So I can purchase 100 items over the course of the day through 5 visits to 4 stores and the 10% will uniformly hold for the entire set of transactions during that single day of my choosing.
The other piece to the Border's loyalty program is that I get one to two emails per week with a 20% to 30% off a single item in a variety of categories with the ability to print out the coupon presented to me online that I bring to the store. That means I can buy ANY single item in any store and apply the discount with the coupon. Or sometimes, there are categories for the rewards. I'm not sure that they've targeted me personally on those categories, judging from the mix.
What makes this particularly attractive to me - aside from loving books so much I could cry - is that when you get to the register, the checkout folks at the register, gasp, remind you that "you have x and y available and would you like to use it, sir?"
On the latter, for example, The Best Buy Rewards Zone doesn't remind you of anything when it comes to the coupons you provide and the only discounts come based on your spending. There is no other benefit beyond getting a certain amount for a certain amount of points. The points are about a zillion per dollar earned but it sounds really good when you've earned a gazillion points until the real world benefit is realized - which is about none. By not having the dollars you've earned at the register, its very easy to not be diligent (believe me, I know this) and not use the coupons you printed out the once or twice you're allowed to. Since they have expiration dates, the Best Buy program is a use it or lose it program. That's pretty sad actually. Big ticket items are sold at Best Buy.
Best Buy is even worse than that though. One day, I spent about $300.00 at Best Buy but forgot to use my Rewards card. After I was rung up but before I even left the counter, I remembered and asked the checkout person if I could enter my number. Their program had no way of doing that so I just simply lost the points. Even though I hadn't even walked away yet. It was a technology problem, because of the human problem of bad thinking.
Makes me want to shop at Tweeters.
Border's also beats its competitor, Barnes & Noble, when it comes to loyalty programs, too. Barnes & Noble charges $25 a year for the privilege of a discount. Border's charges zero dollars for the benefits of being a loyal customer. BN thinks loyalty has a price - it does but the other way around - the customer exacts the price of loyalty and provides the revenues in return. Paying $25 for a loyalty program might be a prudent financial move to handle administrative costs but ain't real smart when it comes to trying to create advocates. Books are already too expensive. How do I know. Simple, I have major publishers for my books that sell to Barnes & Noble. I know that Barnes and Noble buys a $30.00 book for about $14.00 and charges $30.00. A 40% discount still makes them $4.00 per book over their cost which is about 35% margin. Not too shabby. And that's AFTER a 40% discount which they don't always offer. So $25.00 becomes an insult, given that Borders is free.
But Borders Is Even Smarter Than That...
Border's doesn't stop with just a good loyalty program that keeps it interesting. They are "customer ecosystem-friendly" a.k.a. customer eco-friendly. That means two things. One minor. One major.
The Minor Key
They are the only chain that sells the Sony Reader at their stores. The Sony Reader, much as I dislike Sony, is the first digital reading device that reasonably successfully mimics the printed page, using e-ink technology. I have one and think its well worth the cost. I take this eight ounce device with me on travel via plane because it eliminates the weight of books. I have 10 books and it is still no more than the eight 8 ozs. Borders is willing to carry this first "threat" (though I honestly think NOTHING will ever take the place of a real book) to the printed page out there.
The Major Key of G with a Sour Note In Between
"The holiday season was very competitive and highly promotional. We are disappointed that store traffic and sales trends were not better, especially considering the significant investment made in the Borders Rewards loyalty program," said Borders Group Chief Executive Officer George Jones.
they haven't retreated but, instead, moved ahead and announced a major alliance with Gather.com - a community-based social networking site, where they will form literary communities - e.g. virtual book clubs. The communities will discuss multiple topics of literary and personal interest. A coffeehouse on the net to talk it all over - that warm, toasty conversation over a good book with a virtual hot chocolate, cup of coffee and a scone or two.
Why? Because they are figuring out that the newer generations of customers in their competitive world, need these communities ONLINE and they are providing them. They have become aggregators of products, services and tools, the very model of the 21st century business with a brain.
First thing they've announced in their newly minted partnership with Gather.com is a contest to find a publishable author. That means if you win, you get $5000 from Gather.com, distribution at Border's guaranteed and a publisher (though I don't think they've named the publisher in particular).
All in all, this company attempting to turn around is making a valiant effort by embracing the new customer ecosystem, not running from it.
Good for them.
Okay, time for me to curl up with the E-Reader. Just kidding. A book. Really.