By  on November 16, 2005

Gary Hawkins, chief executive officer of independent grocer Green Hills of Syracuse, N.Y., and ceo of retail consulting firm Hawkins Strategic LLC, has built his business on rewarding loyal customers.

Now the grocer has replaced its loyalty cards with shoppers" fingers. Working with Pay By Touch, Green Hills has developed and implemented a pilot called SmartShop that uses biometric data — in this case, a swiped finger — rather than a loyalty card for customer identification and rewards.

The pilot, which went live this month, prevents customers from borrowing each others" cards and improves the accuracy of the retailer"s customer data. It"s also convenient for the customer, who doesn"t have to carry the loyalty card around.

"At many large retailers, 30 to 50 percent of customer data is worthless because it"s inaccurate," said Hawkins.

The Green Hills loyalty program offers only relevant discounts to customers, and Hawkins said he hopes eventually the store will be able to charge different customers different prices, based on their shopping patterns.

Hawkins has long been a proponent of rewarding only his best customers with discounts and other incentives, such as parties. He has written two books on the subject of loyalty marketing, the most recent of which is "Customer Intelligence."

Green Hills, which has been in business since 1934, is operating in a difficult competitive environment, said Gary"s son, Sterling, vice president of Hawkins Strategic. The population of the area has declined more than 10 percent in the last decade and the economy is relatively stagnant. Competitors include Wal-Mart and other big-box and discount stores, many of which have recently added more selling space.

But after the grocery store began to reward its best customers with targeted discounts and promotions — rather than offering them across the board — business improved.

Typically, the least loyal customers receive more than their fair share of deals, said Gary Hawkins.

Now 53 percent of the grocer"s sales come from loyal shoppers, up from 38 percent before its loyalty marketing program. The retailer has increased its gross profit margin by 5 points.

Gary Hawkins defined customer value as the average spend per visit, the frequency of the shopping, the amount of gross profit margin and retention over time."Many retailers have loyalty programs," he said. "Fewer of them understand it and use it in how they go to market."

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