What’s the deal?

Shoppers at the trio of Hudson’s Bay Company (HBC) retailers comprised of The Bay, Zellers and Home Outfitters are currently being exhorted to top up their carts with an unusual item. Less tangible than typical purchases, its wallet impact is just as real. It’s a long-distance service that’s competitively priced and packaged and offers substantial HBC Rewards points to boot.

Why did HBC enter the dog-eat-dog long-distance arena?

‘We’re always looking at ways to extend our customers’ relationship with HBC,’ says Toronto-based HBC rewards and loyalty VP, Steve Allman. ‘This is not a standard HBC product, but we figured everybody’s switching [long-distance] providers anyway so it makes sense to offer a good program with good rewards.’

How good a deal are we talking about?

HBC’s long-distance service, with Toronto-based Primus Canada as the provider, offers a flat rate of eight cents a minute, with no monthly fee or contract.

This rate is effective 24/7 throughout Canada and the U.S. and comes with 20,000 HBC Rewards points for signing up, plus 10,000 more points if a customer opts for payment by an HBC-loaded credit card. Plus 500 Rewards points for every $5 in monthly long-distance spending. Plus a $5 in-store coupon. Plus monthly bills that will be automatically compared with other long-distance programs and matched with any lower rate.

How’s this being promoted?

Perhaps surprisingly, Allman says HBC chose a ‘quiet launch’ for this new incarnation of a long-distance program that originated as a now-discontinued Club Z offer. Promotional plans do not include what he terms ‘outside advertising.’ Instead, existing HBC Rewards-specific vehicles are being leveraged. These include in-store sign-up booths in some stores, Zellers and Bay flyers, statement inserts, bag stuffers and in-mall campaigns partnering with CIBC Visa.

Possible future extensions of HBC’s long-distance program may include prepaid calling cards, paging, Internet provision, local phone service and even the option of applying bonus points to in-store purchases as well as catalogue shopping.

How does this fly with a retail analyst?

‘As marketing strategies go, it’s probably logical because it’s always easier to increase your current customers’ expenditures than to go out and get new customers,’ says Wendy Evans, president of Toronto’s Evans & Co. Consultants. She adds: ‘It’s another way to widen one’s brand in the marketplace and expand share of wallet, but I have no idea how profitable it might turn out to be.’

Is it a good loyalty builder?

‘As a value-added program, it’s fine, but I think it’s a flawed concept for building loyalty,’ says Robert Passikoff, president of New York City-based Brand Keys, which bills itself as the only research consultancy specializing in customer-loyalty metrics.

‘It’s like a retail version of Air Miles and it only works as long as no competitor lures your customers away by topping your offer,’ he adds. ‘But the airlines rue the day they set up the point system. They can’t walk away, so they’re being held hostage to it without adding any degree of loyalty.’