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A Loyalty Program That Rewards Jewelers

Features
By Anthony DeMarco, JCK Senior Editor
This story appears in the December 2006 issue of JCK magazine
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Airlines, credit card companies, hotels, and luxury retail chains have been using loyalty programs to gain and retain customers for years. Most of these programs award points to customers that can be redeemed for free products and services. Traditionally they’ve been offered by large companies with robust technological systems and the manpower to develop and maintain the programs.

Now, thanks to the increasing availability of easy-to-use technology, smaller retailers can provide the same type of loyalty programs. One enterprising jeweler has started a program and is offering it to jewelers around the country. So far, four have taken him up on the offer.

The program is called Platinum Rewards. Its creator is Michael Pollak, co-owner of Hyde Park Jewelers, based in Denver with stores in Phoenix and Las Vegas. He began the program about five years ago and put it into operation during the past two years.

Pollak and his partner, Steven Rosdal, who were both pursuing careers in medicine (Pollak as a doctor, Rosdal as a veterinarian), founded Hyde Park Jewelers in 1976 after partnering in a business that traded Indian jewelry four years earlier. The business began in Denver with just two employees. The most expensive item cost $30. The business gradually grew into a luxury jewelry operation with multiple locations in prestigious shopping districts. Today it carries a selection of merchandise costing from $50 to $500,000.

“My training in this industry is on the job and not as a result of growing up in the business,” Pollak says.

Pollak also has a fascination with technology that he says has helped his business grow and redefine itself over the years. “I love technology,” he says. “Technology is what helps us work more efficiently.”

Pollak says he saw a need for a customer relationship management (CRM) system that offered independent jewelers—particularly those in the luxury market—a way to reward customers for their loyalty. He also was looking for a way to compete with large local retailers, especially department stores, for affluent consumers.

“People do not need to purchase from jewelry stores,” Pollak says. “Today’s luxury consumer has more reasons to go to Saks and Neiman [Marcus] than to the jeweler, because they carry jewelry and everything else. There are many occasions outside of traditional jewelry occasions to attract people to their stores.”

To reduce costs, Pollak wanted a paperless system. He also wanted it to have point-of-service capability so his store could record purchasing information as well as important dates, such as customers’ birthdays and anniversaries. And he wanted to reward customers who made purchases beyond their normal spending pattern with additional points.

“I saw a need that was not being addressed in the jewelry industry,” he says. “I conceptualized it and had software engineers write the programs. … I put together the concept, and they helped connect all the dots from a technology standpoint.”

He chose an Internet-based system. Customers can sign up via the dedicated Web portal (www.platinumrewards.net) or at the store. Additionally, they can link to the Platinum Rewards site via a banner ad from either the Hyde Park Web site or another participating jeweler’s site. Once a customer signs up with a particular jeweler, he or she can deal with only that jeweler through Platinum Rewards. In addition to Hyde Park, the jewelers participating in the program are Tapper’s Diamonds and Fine Jewelry, West Bloomfield, Mich.; Carl Greve Jewelers, Portland, Ore.; Alpha Omega Jewelers, Boston; and Lacy & Co., El Paso, Texas. Pollak says each jeweler has program exclusivity within its market.

Customers earn a penny for every dollar spent at the store or on the company’s Web site. In addition, through the Platinum Rewards Web portal, customers can earn points for buying products from more than 1,000 Internet and multichannel retailers that have partnered with the program. Products include cars and trucks, computer equipment and fashion goods, wheelchairs, and career services. Participating companies range from Target and Lane Bryant to Enterprise Rent-A-Car and ESPN Shop. The only requirement for entering the program is a valid e-mail address.

“We created a network where customers can buy online from over a thousand different vendors,” Pollak says. “Some are traditional and others are purely online. If they shop with a member of Platinum Rewards, they can use those points for redemption in the jewelry store in which they sign up.”

Kirsten Darrow, sales and marketing manager of Boston-based ASC, which provides the point-of-sale interface for the loyalty program, says it was important for Hyde Park to enter into a relationship with the other online retailers because the average jewelry store customer won’t receive enough points to earn free merchandise.

“Consumers don’t buy enough jewelry to redeem Platinum Rewards, so they partnered with various online retailers,” she says. “When a member shops online, they earn points and they can use those points to get jewelry.”

A minimum of 10,000 points is needed to redeem points for jewelry. No matter how the points are earned, they can be redeemed only for jewelry at the store they signed with.

The relationship with the other retailers—which is invisible to the jeweler and the customer—is handled by another software company, Darrow says. Jewelry retailers receive a small cash award for orders placed with the other retailers.

“For example, a consumer buys a Dell computer for $2,000 and gets 20 in points,” she explains. “Hyde Park actually gets a check for $20 from Dell.”

Hyde Park and the other jewelers in the program will receive a lump sum on a regular basis from the company that manages the transactions, she says.

Howard Tapper of Tapper’s Diamonds and Fine Jewelry says he signed on to the program when it was first introduced. He has about 7,000 customers enrolled in Platinum Rewards. “I was really looking for something to have a competitive edge and an added value for my clients, and I thought it was a very good program,” he says. “We want to reward customers who are loyal to us and try to enhance their shopping experience. … We’ve received a very, very good response.” Tapper is especially pleased with the program’s ease of use. “The customer understands it when they get involved with it,” he says.

Customers must download a software program called the Maximizer—developed by Pollak—which keeps track of purchases. It also keeps track of their reward points and lets them know their totals as they use the Web site and through regular e-mails. It also tells customers how many points they’ll receive for each prospective purchase.

“Customers really like it,” Pollak says. “It’s simple to operate, and we have had no major issues. To accumulate 7,000 loyalty accounts is pretty good, and every time we do a major push, people use the points.”

The point-of-service software allows the retailer to automatically keep track of what customers are buying and also provide additional incentives to individual customers. It works like this: Before signing up, customers must provide basic personal information such as name, address, phone number, and important dates (birthdays and anniversaries). With this information, another software program allows retailers to create incentive programs for their customers (bonus points) based on their purchasing history and gift-giving occasions. The incentive parameters are set by the retailer. After that, the software manages the system automatically, alerting customers of any incentive awards.

“The jeweler has the ability to create different types of messaging depending on the reward people earn for those events,” Pollak says. “It’s behavior-based rewards. Our software has the ability to ‘incent’ people. And we have the most efficient delivery vehicle today: e-mail.”

Stores provide an incentive of 5,000 points and a chance to stay at a Ritz-Carlton hotel just for enrolling in the program. And it’s a permission-based program, so customers can opt in and out at any time.

Being a data-based, automated system, it’s easy to monitor the success of the program, Pollak says. “We measure business in customer frequency and metric sales,” he says. “You get enough new data before and after they join the program. Behavior doesn’t change overnight, but you can see an increase in frequency and average spend.”

He continues, “We think we have a unique and compelling application. We just need to educate [jewelers] to the opportunity to what I think is an excellent business practice—a way to accumulate data from customers and a way you leverage that data to increase efficiency and average spend.”

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