A Premium That Brings Customers Back for More (511 words)
The Home Depot is applauded by many retail specialists for its skillful approach to customer service and marketing. Among the most praised of its offerings is its in-store customer trainingessentially teaching customers how to use the very products it sells. The company's whole philosophy, which shows through in all of its marketing efforts, is summed up in its tagline: "You can do it. We can help."
The home-improvement giant's recent direct mail piece deserves no less praise. A 6" x 9" three-fold, four-color self-mailer is promoting its line of Andersen windows and doors, with no payments and no interest due for six months. The centerpiece of this otherwise not-necessarily spectacular offer is its premium: a Home Depot Gift Card.
After all, why not give someone a gift that brings him into the store to shop? "This is a good promotion for that very reason," says author, consultant and award-winning retail columnist, Frederick Newell of Seklemian/Newell International Marketing Consultants in San Diego. More and more retailers are touting gift-card premiums, says Newell, including stores like Bloomingdale's, which, he notes, used this tactic a good amount last fall.
"For a while, [retailers] were giving gift certificates, but they were more clumsyyou had to create it specifically with a person's name, etc.," he adds. "It wasn't electronic like this is."
The premium would work in most retail environments, says Newell, "except maybe a mortuary ... and maybe not a car dealer or something like that."
The Home Depot's mailer offers gift cards in amounts that correspond with varying purchase levels: a $20 gift card for purchases of $200-$499; a $50 card for purchases of $500-$999; and a $100 card for purchases of $1,000 or more.
It seems that such a premium would not even expose The Home Depot to the risk many gift-card issuers are facing with unredeemed gift cardssome retailers have learned the hard way that they can't count gift-card purchases as sales until the cards are redeemed. And, in some states, when cards are not redeemed, the retailer never gets to count the gift-card purchase as revenue; instead, the money gets handed over to the state treasurer. But, in this instance, no one purchased the card. Granted, The Home Depot must account for potential "discounts" given when customers use their gift-card premiums to pay for purchases, but if they don't use them, there was no purchase in advance to account for.
Retailers "used to give dollars off," says Newell, "but gift cards are being used more and more." Especially when they make sense. Chances are, if prospects are in need of new windows or doors, they may need to purchase a few more home-improvement items as well, and The Home Depot's premium can help them do it.