GNC, seeing major pressure from its competitors, turned towards loyalty as a way to revamp its business model to be more customer-centric. Clarus CEO Tom Caporaso discusses why this will set them up for major success down the line.
As originally published on www.nasdaq.com.
Sticking to the status-quo can be comfortable for a lot of businesses. For some, the need to evolve and shift is unnecessary, especially if you are in a line of business that is recession-proof or immune to the shift in expectations from consumers. But, for a large majority of businesses, which don’t have that luxury, there comes a tipping point where something has to change.
GNC, which was feeling the pressure from competitors like Vitamin Shoppe and Amazon, knew it needed to do something, and in 2016, it scrapped its unsuccessful loyalty program, Gold Card Rewards and closed down all of its stores for a day to simplify and lower prices on a large portion of its inventory. These moves were a result of careful planning and execution and were borne out of the launch of their “One New GNC” initiative, which focused squarely on the customer.
But, more importantly, through the theme of focusing on the customer, GNC created myGNC PRO Access, their premium loyalty program in early 2017. For $39.99 per year, GNC gave myGNC PRO Access members benefits like free shipping, quarterly member-only sales days, monthly customized PRO boxes (which contain samples, coupons and new products that are tailored to their lifestyles and goals), plus much more.
The results, which were never truly realized in their old points program, have been eye-opening. In Q2 2017, CEO Robert Moran reported that:
- PRO members had purchased twice as often and spent significantly more than a regular non-PRO customer; and
- Total enrollment had reached 325,000 members since its launch four months prior; and
- PRO member had visited the physical store locations two times more than non-members
With the almost instantaneous success and the increased engagement, GNC has not only started to evolve but is giving modern consumers what they want, while providing them with a positive, mutually beneficial relationship. In fact, the move towards launching a premium loyalty program wasn’t an experiment, but a calculated tactic based on ongoing trends. According to a recent data:
- 43% of consumers said that standard rewards programs require too much spending to reach the next level of status, 36% said the points or rewards expire before they can use them, and 33% said that it’s hard to use the rewards because of all the restrictions; and
- Nearly half (47%) of respondents in a survey said rewards in fee-based programs are better than rewards in free programs
So, clearly consumers are pining for it, and the retailers that are offering it are reaping the rewards. With increased engagement, spending, frequency of purchase and many other benefits associated with a premium loyalty program, GNC is clearly starting to separate itself from the pack. And GNC is not alone in its quest either, as Gamestop, Best Buy, AMC, and Restoration Hardware have all joined the premium loyalty movement in the last few years.
With a clear path towards their customers and an ecosystem which will nurture them towards increased loyalty, GNC has stumbled upon a building block, which will sustain them for long-term exponential growth. As more subscribers join myGNC PRO Access, the company will not only see their business evolve but more importantly, they will start to fulfill the customer-centric mission that they embarked on in 2016.