A key to understanding the power of exclusivity can be found in a statement by database marketing consultant Fred Newell in Discount Merchandiser (September 1998), “Marketers must learn to understand customers and customers’ perceptions of value.”
Collectors are willing to pay anywhere from $10 to $50 annually to “join a club” (i.e. put their names in a database), because they get something with a very high perceived value. This usually includes an exclusive “gift” – a doll, bear, or other collectible item that nonmembers can’t get – as well as newsletters, membership cards, buttons, posters, catalogs, the opportunity to purchase special “club edition” pieces, hats, T-shirts, or jewelry, and to attend special club events. These are all items and benefits that don’t cost the marketer a lot, but have a high value to the collector.
Many of the clubs benefit retailers by requiring members to redeem certificates for the club edition pieces at a retail store. This not only gives the retailer a cut of the selling price, but also brings highly qualified buyers into the store, where they will undoubtedly buy other items of similar interest. Club newsletters also provide news about store events and new merchandise. Some include reports on secondary market prices for items no longer available at retail that have held their value or appreciated, thus increasing the perceived value of current merchandise.
Making A Connection With Collectors
Collector clubs are offered by a huge variety of collectibles marketers from Beanie Babies[R] to Waterford[R] crystal. A good example is Steiff, a German company known for its high-quality, hand-sewn mohair bears and animals since the 1880s. The Steiff club has a worldwide membership of over 40,000. The $50 annual dues include a tiny 3-inch bear in a different color each year, a quarterly newsletter, a product catalog, a membership card, and certificates to redeem at their favorite Steiff retailer for special club pieces in the $300 to $500 range.
Retailers can hold Steiff events for local club members who are also encouraged to bring prospective new members. The Steiff Club president and a sales representative usually attend these events, announcing upcoming products, giving away door prizes, and offering exclusive event pieces. Collectors share pictures and information on their collections and sometimes bring older pieces for appraisal. The amount of new merchandise moved by the retailer during one of these events is staggering, especially when you consider that most Steiff animals sell for between $100 and $500.
Collectors of Bill Younger’s Harbour Lights[TM] lighthouse sculptures can join the Harbour Lights[TM] Collectors Society for $30 a year. Some 25,000 worldwide members receive a special lighthouse sculpture as a gift, a binder to hold a quarterly newsletter, a membership card and certificate, and certificates to redeem for exclusive club pieces at a retailer. Harbour Lights[TM] also conducts store events where people line up to have special event pieces and other purchases signed by Younger or his associates.
The Madame Alexander Doll Company, the only major doll maker that still manufactures most of its dolls in the U.S., has a 12,000 member collectors’ club. Though it is an independently operated club, authorized by contract with the company, it could be a lot more beneficial to the company than they seem to realize. When sales began to flag after Madame Alexander herself died in 1990, it took several years and a bankruptcy to convince the company to listen to collectors who were trying to tell them what their problems were. The company could have mailed detailed questionnaires to the 12,000 club members for the cost of bulk rate postage and conducted a highly responsive market research study.
Unfortunately, most collectibles marketers don’t fully realize the value of these clubs as marketing databases. Members often complain they don’t get their orders filled promptly, their problems handled in a cheerful and timely manner, or product announcements and other news when it’s current. Renewing memberships and receiving club gifts and newsletters is often a difficult process as most companies don’t have sufficient personnel to handle the clubs. This is strange considering that members are actually paying the costs of the program. At $50 per person, the Steiff worldwide membership of 40,000 provides a $2 million annual budget that should adequately cover the cost of the small bear, communications, and program administration.
The Harbour Lights[TM] worldwide membership of 25,000 provides a healthy annual budget of $750,000 with its $30 dues. But despite often poor service, the exclusivity factor is extremely powerful. Collectors continue to join every year, paying their dues faithfully, simply because they can’t get these benefits anywhere else.
What are the benefits collectors’ clubs offer collectibles marketers? First, they have a database of people who not only want to buy their products, but eagerly await the tiniest tidbit of information about them. All they have to do is announce a new product and many will say, “I want it.” They are guaranteed that a large, or at least a consistent, percentage of this database will buy.
Second, they have a ready-made market research database. They can simply ask club members what they think about current products or what new products they would like to see and members will be happy to tell them. They don’t have to recruit people or pay them to attend focus groups or return surveys. Club members are waiting to tell marketers what they like and don’t like, what they want and what they will buy.
Third, they have a group of “advocates.” People who join these clubs are always talking to their friends, family, and co-workers – even strangers who are willing to listen – about their collections. They will wear t-shirts and pins bearing the marketer’s name. And they will bring in more new customers and club members than all the advertising marketers could ever do. All for free!
Finally, the Lifetime Value of these club members is astounding. They are intensely loyal over time. Many have collections built over a lifetime and even as a continuation of a parent’s or other family member’s collection. They often spend hundreds, or even thousands, of dollars a year on their collections and even more on gifts for other collectors.
In Newell’s Discount Merchandiser article, he also pointed out that marketers don’t have to “buy” valuable customer information with discounts. In fact, none of the collectors’ clubs offers a discount on merchandise to their members! Rather, they offer something exclusive that appeals to their core customers. It’s something customers pay for, but its exclusivity gives it a greater perceived value than the monetary price they actually pay. It also makes them feel they have a special priority to the company – not just anybody can get this “exclusive” deal.
This approach can be adapted in some form for almost any business. It’s a lot like the loyalty programs that are currently popular, but emphasizing exclusivity can take it a step further. Try offering a special edition of your most popular product, a special product or service not offered to the general public, a newsletter with valuable information, password access to a special Web site, or an event that showcases exciting new products and announcements. Set up selling and servicing processes that are exclusive to and convenient for your best customers. Listen to their complaints and requests – and give them what they ask for. They will be much more likely to sign up for these exclusive benefits than to simply provide information for your database. (A cashier in a national retail chain store once asked for my phone number and when I told her I don’t give it out, she said “Don’t you want to be in our database?” With no benefit being offered, I said no.)
Exclusive benefits with a high perceived value have even been shown to outperform cash incentives or price discounts and they cost the marketer less. They might even get your customers to pay you to put their names in your database!