I bought some vitamins at the Vitamin Shoppe across the street from my office this morning. I opted for the generic Vitamin Shoppe Brand, which had a discounted price marked on it:
$11.97
$7.17
Seven bucks instead of twelve sounded good to me, so I brought it to the cashier.
“Are you a vitamin club member?” the cashier asked me. I replied in the negative, not having shopped at the shoppe with enough frequency to bother joining. I figured I’d be missing out on a discount, but fine, for a buck or two, I’ll skip it.
The cashier scanned the vitamins. “$5.97, please.”
Let’s pause for a moment and dissect what is happening here, as I did, standing there with eight dollars in hand. This was the second time Vitamin Shoppe Brand products have cost me less than stickered price. Consider:
The Vitamin Shoppe believes its vitamins are comparable to name-brand products. It prices them at comfortable profit margins, then displays suggested name-brand retail prices to showcase the advantages of shopping there. Then, the shoppe encourages shoppers to join its club, apparently to save money on purchases — but it gives unadvertised cost benefits to unidentified customers anyway.
Where is the incentive?
Consumers won’t hand over personal data without good reason. The onus is on companies to give them that reason.
Zagat.com, for example, has free registration that allows users to send in ratings and shop online. But unless their users want to share their thoughts, there’s no reason for them to join. How much more effective would Zagat’s system be if the company offered a bonus to its members — say, a discount on their first online store purchase (Zagat.com gives a 15% discount to paid subscribers but nothing to free registrants)? A user might sign up, order a 2002 guidebook, and then feel compelled to vote and contribute. Zagat is aiming to do it the other way around.
To build loyalty and a community of consumers, companies must give a tangible reason for individuals to participate. Without visible incentives, they may remain customers, but they won’t buy into the system.