Ikea: relevant to the retailer

In this special report, we examine the use of premiums and incentives in direct marketing.The three case histories Ñ a direct mail campaign for the Ontario Lottery Corporation, a loyalty marketing program for Ikea Canada, and a direct response campaign for...

In this special report, we examine the use of premiums and incentives in direct marketing.

The three case histories Ñ a direct mail campaign for the Ontario Lottery Corporation, a loyalty marketing program for Ikea Canada, and a direct response campaign for PolyGram Canada Ñ are quite different but have in common the use of premiums and incentives that are relevant to the advertiser’s business.

Also in this report is a preview of Tele-Solutions/Direct-Solutions, a conference and trade show to be held March 7-9 that promises to help marketers integrate their telemarketing, direct marketing and database activities.

A related story looks at the evolution of the modern call centre.

Family program

Ikea: relevant to the retailer

A package of items used to encourage customers of Ikea Canada to become members of its family program provides them added value while reinforcing the image of the home furnishings retailer, says a spokeswoman for the agency that marketed the program in Canada.

‘Instead of just getting a toaster or a barbecue or a cd player – which have been done to death – you are getting something that is relevant to the brand,’ says Judy Elder, managing director of Toronto-based Ogilvy & Mather Direct.

The Ikea family welcome kit includes a tape measure, an Ikea ‘how-to’ magazine full of decorating tips, the Ikea catalogue, a large-format calendar, a punch-and-munch discount card for the store’s in-house bistro, as well as a coloring book for children.

In short, all of the things that reinforce the idea of Burlington, Ont.-based Ikea as a home and family environment.

‘It is an incentive to join for those Ikea shoppers who are interested in receiving other value-added benefits from the store,’ Elder says.

‘But it is also the first of a number of rewards for becoming a member of the family,’ she says.

Although the family program has been around since 1990 in Canada, it was previously free to join. Now, membership costs $15.

Elder says the purpose of charging the membership fee is to qualify those who are committed Ikea shoppers, adding, when membership was free, people joined indiscriminately.

Communicate

‘The original idea was to communicate with our most frequent shoppers, inviting them to take advantage of benefits that are exclusive to the membership,’ says Stephen Plunkett, family program manager for Ikea Canada.

And although the numbers are not in yet, the program appears to be successful. Plunkett says stores are reporting good response and membership renewals are up.

Premiums and incentives have traditionally been used in retail to generate traffic as opposed to brand-building, Elder says, adding, now, marketers just do not have enough money to do both.

‘So, what we’re doing with incentives like the welcome kit is creating a win/win situation by creating a customized premium and building brand equity while generating brand dividends,’ she says. ‘You can do both at the same time.’

Loyalty marketing

Elder says premiums and incentives have, by necessity, evolved into loyalty marketing, adding, it is not just an individual premium that counts anymore.

‘The welcome kit is sort of like getting flowers on the first date,’ she says. ‘However, we know we’ve got to continue pleasing them if we’re going to keep the marriage alive and earn their loyalty.’

Family shop

Each Ikea store is set up with a special family shop where customers can get information about the program as well as pay their membership fees.

The family program continues throughout the year and members receive discounts on their membership fees for the next year, based on the value of their purchases.

For example, members who have spent $150 within the year pay a membership renewal fee of $10. Those who have spent $300, pay $5, and, $500 or more receive a free membership.

Members continue to receive monthly issues of Ikea family home magazine with special features on decorating everything from the bathroom to the patio.

Regular bulletins

They also receive regular bulletins which tell them about upcoming sales and store events exclusive to family program members.

The Ikea family program, which began in Germany, Scandinavia and France in the 1970s, may have taken 20 years to get to Canada, but has proved to be equally as successful, according to Plunkett.

For example, when the Burlington store recently hosted a family evening – the store was closed but members were invited to roam and shop at their leisure – 1,250 people showed up.

Says Plunkett: ‘When you get that many people out on a Monday night to shop and have a discounted dinner in the Bistro, that’s a pretty good indication of how loyal Ikea customers are, and how much they enjoy browsing and shopping through our store.

‘I like to refer to them as Ikea fans,’ he says. ‘It’s really the best description of how our members feel about us.’