J&R Loyalty Club Aims to Break Price-Conscious Habits

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J&R Electronics Inc. soft-launched an online loyalty program in late May to motivate customers to come directly to its Web site rather than arrive via a link on another site.

J&R, founded in New York in 1971, sells consumer electronics, entertainment and housewares from its original Park Row location, which has expanded and now spans a massive city block. The company draws customers worldwide through catalogs and www.JR.com, which launched in 1998. Roughly one-third of its business comes from online purchases.

The nationwide loyalty program is designed as an antidote to the current nature of the consumer electronics industry, said Jason Friedman, J&R vice president of e-commerce.

"Unfortunately, in the age of the pricing engines and all of the comparison-shopping engines, consumers have been trained to be disloyal and (to) be price conscious," he said. "[We] and our competitors end up fighting over pennies. It has just become silly. ... You are obviously not going to win on every item every day or every year next to every competitor -- which, unfortunately, the shopping engines expose."

To replicate the loyalty J&R's physical presence generates, Mr. Friedman said, the company chose to reward online shoppers who come back to J&R instead of going through shopping engines every time.

In general, "an important piece of the loyalty program is to try to incentivize customers to not only come back to JR.com but to come to the site directly," he said. "We are trying to untrain the customer from being so price conscious over pennies here and there. We are trying to train them that we are an established brand that will always do them right, customer service-wise and shipping-wise, et cetera."

Consumers sign up for the program at www.JR.com, and the first year is free (The annual membership fee has not been announced.). Members who go directly to JR.com without arriving from a link on another site earn points equal to 2 percent of the value of the products they order.

These points are redeemable as a J&R gift card that consumers can use toward anything J&R sells at JR.com, through its toll-free number or in its store. The gift card is mailed to members.

Mr. Friedman said that J&R can track how consumers arrive at the site and let consumers know that orders placed during the visit are eligible for loyalty club points because they came directly to JR.com.

The soft launch was promoted in an e-mail sent to a list of nearly 1 million people who previously signed up to jr.com. The e-mail explained that the beta test was offered to a "small hand-selected group of our best customers ... and we are waiving the first year's annual membership fee."

A high response rate resulted, Mr. Friedman said. The program launches later this year, the company said, and a link to the program has been placed on the Web site. Information about the program will appear in customer communications such as direct mail pieces and catalogs.

J&R launched the initiative with Loyalty Lab, San Francisco, an on-demand retail loyalty and customer management provider. Loyalty Lab's (www.loyaltylab.com) on-demand CRM Suite hosts all components needed for a multichannel loyalty program, including customer signups, accounts and redemptions.

Though the program is solely online now, Mr. Friedman said it would be integrated with catalog and store information by year-end.

"This is obviously important, especially for our New York customers in the Wall Street area that shop online and also purchase from the store," he said. "We want to make sure that all of their purchases are accounted for, and currently they are not accounted for."

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