Newegg Toys With Hatching Loyalty Program

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Newegg.com already has a dedicated audience and customer base, so why is creating a loyalty program next on its list of things to do? That's a question company executives are answering two months after signing on to use Loyalty Lab's On-Demand retail e-mail and loyalty suite.


"We are wondering what types of loyalty retention programs can create more of a desire for customers that aren't shopping with us as regularly to come back and offer us a larger share of wallet," said Stewart Wallock, director of marketing at Newegg, City of Industry, CA.


Newegg is exploring how to merge the functionalities of its private-label credit card with a loyalty program or event-triggered e-mail marketing campaigns. Loyalty Lab's tools collect customer and transaction data and use it to implement and track targeted e-mail campaigns and loyalty programs. Loyalty Lab is based in San Francisco.


"You start to marry these types of functionalities together, and all of a sudden you have the bones of your program that you need to offer incentives," Wallock said.


For example, the private-label credit card, also referred to as the preferred account program, "is basically a department charge card that allows Newegg to offer promotional financing and other savings," he said. "We [also] can use it to track customers' purchasing behaviors and offer them special incentives if they use the preferred account."


Newegg, founded in 2001, has 5 million registered customers. It is an online computer, consumer electronics and communications products store where consumers can find product information, how-tos, customer reviews and community interaction. Its 2005 sales were about $1.3 billion.


A private-label card "gives you more of an opportunity to stay in touch with your customers than you would if they were using a standard Visa or MasterCard," Newegg vice president Howard Tong said. "We can offer them credit card promotions via e-mail, and [if we offer a loyalty program] let them know about the program and that they have reached a certain number of points and can redeem them."


Newegg already reports positive results from its private-label credit card program, launched in October with i4 Commerce, Timonium, MD. Average order value has climbed 300 percent when using the card. When offered with a no-interest special offer, the average order value soared 400 percent.


Newegg said it offered different payment options to build longer-term customer loyalty and improve customer service.


"We are giving customers more choices and better payment options," Tong said.


Newegg also accepts major credit cards, i4 Commerce's Bill Me Later and PayPal in addition to checks.


Newegg feeds customer information from its data warehouse into the Loyalty Lab system, which can send targeted e-mails. This month, the company plans to segment customers by purchase history and start sending e-mails with promotional offers based on previous purchases. For example, if a consumer buys a digital camera but not extra memory cards, "we can go back and send them an e-mail message that asks them if they would like to buy memory and offer a promotion around that," Wallock said. "Or if someone buys a printer, we can tell them to come back and buy printer paper."


Newegg sends two weekly e-newsletters to visitors who opted in for them: one with information about new products and one with promotional specials. Each newsletter has a 600,000 circulation, though there is overlap.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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