Loyalty Programs - Good for Business?

I've now been a seller on Etsy for just over two months and I've felt like I'm getting rather consistent sales, but I'm definitely not ready to give up a day job yet! But I've been selling long enough to start having repeat customers - which is awesome! Now I'm working on a plan for what I can do to keep those customers, but not face the seller's dilemma of only getting them when you have a sale.

I've been doing a lot of research on pricing points, good selling interactions and how to market yourself/your brand. Everything I'm reading says you don't want to set yourself up to only get purchases when you're having a sale, so offering too many discounts or discounts too often can actually hurt your bottom line. I equate it to not becoming a Kohl's even though I love Kohl's. I admit, I fall into this category - when I'm looking for clothing and shoes I shop most of the time at Kohl's, but I go only when I have coupons, bonus bucks, there's a huge sale or all three. I've never purchased a full-price item at Kohl's. Not in years.

While it's less of a concern for Kohl's because my volume of purchases over the year makes up for my only buying with coupons/sales, the same can't be said for small businesses. I'm never going to have the volume of sales as a chain department store with a huge, very broad spectrum inventory. I sell unique, often rare or one of a kind, vintage items. So how does someone like myself go about building customer trust and repeat business without hurting profitability - especially when I have relatively thin margins?

After research - here's the tact I'm planning on taking and would love to hear feedback on from both buyers and other sellers!

Part One - First Time Buyers

If you purchase from my shop for the first time you'll fall into one of two categories - Buyer under $10 and Buyer over $10.

If you spend under $10 in my shop I send you a thank you note and I write a coupon code for 10% off your next purchase on it as a token of my thanks. I figure this way if you're on a budget, or if you're likely to make repeat small purchases I can still offer you a sale/coupon, but not lose $1.25 on on $5 item, which is likely to be more than half of my profit on the piece.

If you spend over $10 in my shop you get the thank you note and a coupon code for 25% off. Same thought process - if you were willing to invest in your first piece without a coupon then you'll be likely to spend over $10 again and even more likely to purchase at a higher amount if you get 25% off your entire purchase.

The only exception to this rule of thumb is if your first purchase from my shop was made with a coupon. I run promotional sales for fans of my Facebook page and Twitter followers and I'll put sales up in my shop banner on Etsy, if during your first purchase from me you used a coupon code, even if you spent over $10 I give the 10% discount code in your thank you note. This way you still get a reward, but hopefully you don't come to expect to receive a discount for every purchase.

So far this system has worked well, but just this week I had a return buyer who'd already used a coupon on her second purchase and I wanted to be able to still reward her, but not issue another coupon - which sparked all this research!

Based on what I found I had a couple of options - give an additional "free" item in the shipment of this mailing, give a sample of another product, offer a service, or start a loyalty program. Since I don't have a bunch of vintage items lying around to just toss in when someone makes a purchase and I don't actually have samples of other projects/products, I automatically ruled those out. This has left me with both the idea of developing a loyalty program and offering a service - both of which I will put into implementation.


Part Two - Loyalty Program

Here's the program I'm thinking of putting into effect - I'd love to know if you think it's appropriate, if the rewards are something you'd be interested in or even if you think it's too generous!

Return Buyer - After your second purchase in the shop I will send in your package a loyalty card/voucher. I'll add up all your previous purchases and stamp your card with your current balance. Reward points will be earned at $10 increments. For every $10 spent on merchandise (not including shipping) you'll earn 1pt. At the 5pt mark ($50 spent) you'll earn free shipping on your next order. At the 10pt mark ($100 spent) you'll earn a free item, up to $10, or $10 off your next order, whichever you prefer. If you select the free item you'll just pay the $.20 listing fee and shipping!

Once you've reached the 10 point mark I'll send you a new card with your next order and the process starts over again - at 15pts you'll earn free shipping, at 20pts a free item and so forth.

Part Three - Service

I realized when doing this research that there is a service I can provide and why people buy vintage from me - because I make it easier for them. The best service I can offer is to do custom "picking" or tracking down of a specific item or style of item they would like. It's like when Mike and Frank from American Pickers take on a client and go find items specifically for them. So once you've purchased from me a few times and you're an established customer that I can depend on to actually buy an item if I track it down for you, I will make this offer available to you.

What do you think of my three-prong business retention approach? Thoughts on how to make the program better? Other loyalty program/service items you like from vendors you deal with? I'd love to hear from you!

Where to Find Me Next - Wallach House Holiday Open House

This weekend is hot for holiday open houses! You'll find me in person at the Wallach House in Eureka, MO on Saturday for a few hours and again on Sunday from 10-5pm. This Friday and Saturday the Wallach House is hosting their annual Holiday Open House - there will be snacks, wine (every day but Sunday!) and sales as well as new merchandise!! Be sure to come out and visit!

Friday and Saturday are special in Ohio too! Just this past week I've started consigning with cousin's shop in Marysville, Ohio. You'll find Just Around the Corner to be a great shop filled with vintage items, homemade treats, children's clothes and lots of fun winter holiday gifts! They'll also be hosting an open house Friday and Saturday, featuring some of the costume jewelry that I just shipped last week!

Finally, in  honor of all the holiday open houses I'm hosting a sale in my Etsy shop too! Everything in the shop will be 25% off with coupon code STL25. Please wait until Friday and Saturday to use the code! I've posted tons of new items since my last blog, so be sure to check it out!

Happy Holidays all!

If you aren't a fan on FB yet please consider liking my page to get updates and notifications about sales early! As well as links to handy resources, good blogs and other vintage FB pages - www.facebook.com/vintagebaublesnbits

I'm also on Twitter! Follow along with VntgBaublesnBit

Etsy - The Good, The Better and the I Wishes

So I've been an Etsy seller for nearly three weeks now, but I've yet to make a sale on the site. I'm not sure if there isn't enough awareness of Etsy or if there is just too much competition or if it's just a cruddy economy and slow to move items. But I find myself being completely addicted to monitoring the site and daily check it to see if I'm having any luck.

For those of you not familiar with the site or selling on it, there are actually some pretty good incentives - it only costs 20 cents to post an item, with five photos and the option to feature it on your own store. There's also no charge for your own store front. The other cool benefit - items stay live on the site for up to 4 months - that's right, 4 months of exposure for 20 cents! So huge bonuses over Ebay which charges you insertion fees, fees for extra photos, fees to make your item stand out and massive final value fees if you actually sell something. Did I mention most Ebay auctions are for only 5 days, the longest auction is 30 days and costs you about 5-6x the Etsy listing prices. And don't get me started on final value fees! It used to be that Ebay would charge you 12% on the final selling cost of your item, which is a bit steep, but they made it worse! They now charge you the full 12% on not just the selling cost of your item, but also the cost of postage! They claim it's in order to keep postage costs low, but for those of us that don't mark up postage we're just losing money... On the other hand Etsy only charges a 3.5% final value fee on the item, not item and postage. Making it much, much more reasonable.

The other really super cool thing I like about Etsy is the site tracker. I can monitor the traffic to my site, how many people looked at an item, how many visited the store, the words they searched to get them there, where they came from and if they "favorited" an item or my store. I love this! I find myself constantly trying to push site traffic. I post on Facebook and Twitter. Link to the store via this blog and create treasuries all the time. What are treasuries? They're 16 individual items (not your own) that fit any theme you want that you post for others to view. The folks you feature usually repost the treasury, or favorite it or start to follow you or your shop - all of which improves site traffic. If you visit my Etsy page I believe you can see my treasuries or look for mheth as the curator to pull them up.

The final two pieces I've decided to do to push traffic and try to gain sales are promotions and buying key words. Etsy offers coupons that you can customize for your site. So I created a coupon code that I've put on postcards to hand out at my flea market events and a code for my electronic communications, like this blog, Twitter and Facebook. For those of you reading this - your code is Post15. Click on the Etsy viewer on the right and if you purchase something use the code to get 15% off!

Buying key words is brand new to the site - just launched last week. It basically works the same as Google Adwords - the site helps you come up with the key words you use most in tagging your items and creates ads to push your products if someone searches your key words. My ad buy starts tomorrow - so I'll be very curious to see if it drives traffic the way it indicates it should!

Even if you're not interested in buying - you should hop on the site and look around, so many things are available and you never know what you may find!