CompUSA’s Anderson On Its New Loyalty Progam for Small Businesses

Last week, CompUSA unveiled its new loyalty program for small-business and home offices. The program, CompUSA Network for Business, charges a one-time fee of $30, then lets members earn ConnectPoints (to redeem on high-tech goodies) and gives a slate of specialized services, including a free annual computer cleaning (worth $50) and members-only sales (Xtra, Sept. 20). Alliance Data Systems Corp., Dallas, handles.

CompUSA is testing a consumer version of the loyalty program in five cities, but it’s the $70 billion-a-year small-office/home-office industry that the Dallas-based retailer has its eye on now.

Network for Business competes with small-business loyalty programs at Best Buy, OfficeMax and Staples. But CompUSA thinks it has a better proposition. Director of Loyalty Marketing Mark Anderson, who joined CompUSA in March, told PROMO why.

PROMO: Why now?
ANDERSON: SOHO (small office/home office) is a $70 billion a year business; there are 40 million small- and home-office businesses. They typically spend $5,000 on technology to set up, then $3,000 a year on maintenance. My wife is a photographer with her own home office, so we spent a bit more than that.

SOHO has always been important to CompUSA, but this gives us an even better opportunity to forge a much closer relationship. We can track all of a member’s purchases and marry that to surveys mailed periodically, probably two to four times a year, with basic questions— you have a Mac or PC, what type of business do you run— we can make product recommendations. Members also can update their profile in between surveys.

PROMO: What research did you do to know what consumers want?
ANDERSON: It was an 18-month process; Alliance Data Corp. and The Richards Group, CompUSA’s ad agency, did internal research with employees and external studies with customers to find the right set of services that SOHOs want— like free online shipping, since 20% of SOHOs prefer to shop online. And SOHO businesses really want to consolidate their business spending, so our Memberconnect service lets us track up to three years of purchase history, so customers don’t have to remember what printer they own or what paper they prefer; that’ll be tracked for them.

PROMO: How do you strike a balance between rewards and service?
ANDERSON: We’re hitting both sides of the equation strongly. On the earn side, we have a very strong value proposition: Members only have to spend $177 to get a $10 reward, versus $300 to $500 in competitors’ programs, like Best Buy. And our members earn credit on all purchases, where Staples and OfficeMax limit what you can earn points on. Plus, our members can bank points; it’s entirely up to them how to earn and burn their points.

For service, our cornerstone is the annual computer cleaning. The computer is SOHOs’ bread and butter. Even if the only thing a SOHO business did was take advantage of that benefit, the membership would pay for itself. We’ll also have members-only sales, and reserve access to hot products like Xbox 360 and iPod Nano to give our best customers a two- to three-day head start to get the technology first.

PROMO: How do you decide whether, and what, to charge as a membership fee?
ANDERSON: We looked at the marketplace; Best Buy charges a fee. And we want SOHOs to see our program as a value, so we wanted to find an appropriate price point. The $30 is a one-time fee; the introductory price is $20. That will hopefully run for a very short time and demand will be high and we can raise the price; we’ll decide as we see how many people join the program and how it influences their spending behavior.

PROMO: What are your plans for the consumer program now in test?
ANDERSON: It’s a scaled-down version of the SOHO program with a value proposition that’s not as aggressive on points (10 points per dollar spent, versus 13 points per dollar spent for SOHOs) but still more aggressive than what’s in the marketplace. Service is scaled back, but they’ll still have access to three years of purchase history and the Web site with special offers. We’ll evaluate it in six months.

PROMO: Why did you choose Alliance to run it?
ANDERSON: They’ve done strong program for other marketers. They know retail and come to the table with a suite of offerings, including a database platform, analytics consulting and creative— we need to implement and manage a very successful program.

PROMO: Your background is in hospitality programs— Hotels, Red Roof Inn, La Quinta, US Airways, Marriott. How is retail different from hospitality?
ANDERSON: It’s not that different. Consumer motivations are pretty much the same— room is a room is a room and a store is a store is a store. It’s all the other variables that matter—, location, customer service. That’s what drives the sale.