Borders’ Borrows from Banks’ Christmas Clubs

Discussion
Feb 22, 2006
George Anderson

By George Anderson


Whoever came up with the idea for Borders’ new customer loyalty program must have belonged to a bank Christmas club.


For those who may not know, bank Christmas clubs let consumers set aside a regular amount on an ongoing basis throughout the year so they will have the funds to go out and buy presents when the holidays come.


With its new free loyalty program, Borders Rewards, customers get five percent of all qualifying purchases put aside in a personal Holiday Savings account, which can be used for purchases made between November 15 and January 15.


Other more immediate perks of the program include exclusive savings for card holders during specified weeks and the reward of a 10 percent-off ‘Personal Shopping Day’ each time a consumer spends $50 or more at any Borders’ property during a particular month.


“The Borders Rewards program provides us with an exceptional opportunity to reward our best customers in attractive ways,” said Vin Altruda, president Borders Group U.S. operations in a released statement. “We listened to what our customers told us they wanted from a loyalty program, and we designed something that responds to their needs,” he continued. “Borders Rewards is easy to join, easy to use, and membership is free — all the things our customers told us they wanted.”


Moderator’s Comment: Will its new loyalty program provide Borders with a competitive advantage over Barnes and Noble and other competitors? What do you
see as the benefits/drawbacks of the program?

George Anderson – Moderator

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6 Comments on "Borders’ Borrows from Banks’ Christmas Clubs"


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Mark Lilien
Guest
15 years 9 days ago

Unfortunately for Borders, it’s likely that their loyalty program will be matched (although it might not be copied) by Barnes & Noble almost immediately. Barnes & Noble, Amazon, and Borders are exquisitely sensitive to any initiatives taken by any the Big Three and tend to react almost immediately. I’m sure Vin Altruda knows this and has anticipated the other 2 companies’ responses.

Al McClain
Guest
Al McClain
15 years 9 days ago
This sounds like a reasonably innovative program, so they should get a gold star for that. But, their stores get low ratings from this frequent book shopper. Although they have the nearest book store to me, it’s just a heck of a lot easier to shop via Amazon or bamm.com. In my store at least, the kiosks to look up whether they have a book are either broken, or too slow to use. On a recent visit, one of the keys was inoperable, so any search with that letter in it wouldn’t work. And, they use a DIAL UP connection. So, you end up standing in line to wait for a salesperson to use their terminals, which aren’t much faster. The bottom line for me is they don’t have enough staff in the stores, and they aren’t keeping the stores well maintained. And, via their e-mail club, I get a coupon several times a month for 30% off any regularly priced item, reinforcing the idea that their prices are too high. My takeaway is that… Read more »
James Tenser
Guest
15 years 9 days ago

Best positive about the Borders Rewards program is that the greatest rewards accrue to the most frequent customers. In this structural respect at least, it tries to reverse the loyalty arrow. Next best positive about this program is the absence of an enrollment fee, which compares favorably with B&N last time I checked.

Well-aligned shopper incentives are great, but the description of the program does not address how or if the firm will apply accrued data toward segmenting its customer base and tailoring offers and messages. Rewards without personalization may tend to create impersonal, economic-centered behavior without the affective (emotional) loyalty that leads to long-term profitable relationships.

With its low enrollment barrier, this program will be worth watching.

Laurence Aronson
Guest
Laurence Aronson
15 years 9 days ago

This is a terrific alternative to the Barnes & Noble offering. It is easy to join, provides a unique benefit concept with the holiday savings program, and offers shopper frequency incentives. Very well done by Borders!!!

Matt Werhner
Guest
Matt Werhner
15 years 9 days ago

The upside to this program compared with the Barnes & Noble membership program is that it is free to enroll and offers a Holiday Savings account. B&N members pay $25 but get 10 percent off for the entire year. The program is not unique or clever by any means but it is an interesting concept to drive sales and increase loyalty.

I’m not so sure B&N and Amazon will respond with a similar program. B&N has an extremely loyal customer base to begin with. B&N’s niche is the comfortable store atmosphere. Amazon’s niche is convenience. I think a quick response to implement a similar program would be made in haste. It would be wise give this time to play out.

I like the idea of the program but I also agree with Al. Take care of the basics first. Retailers across all channels will be very interested in this program if it starts to take off.

Don Snyder
Guest
15 years 7 days ago

The Borders stores in Columbus are excellent, but their lack of rewards program would frequently stop me from making large purchases, when I knew I could drive another block or two and use my Barnes & Noble card to save 20%.

This is still not my ideal of a discount program I would create for myself — but it’s certainly better than nothing!

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