In this installment of Loyalty Makeover, we look at the rewards program at AutoZone, the $9.1 billion automotive parts retailer with more than 5,000 stores. Loyalty Makeover suggests ways for retail brands to make the most of their loyalty initiatives.
What AutoZone Rewards look like today
Members sign up for AutoZone Rewards at a physical store, where they receive a Rewards Card linked to their account. For each purchase of $20 or more, online or in-store, members earn one “credit.” When members accumulate five credits, they receive a $20 voucher for in-store redemption. The expiration period for credits varies by state, however in most states members must earn their 5 credits within a 6-month period and redeem vouchers within 3 months.
AutoZone’s financial performance has been fantastic over the last 12 months, with its stock jumping more than 42%. That said, the company could be doing even better by making some strategic improvements to AutoZone Rewards. Most notably, AutoZone Rewards accrue based on purchase frequency, rather than on purchase amount (once the $20 minimum is met), which deprives AutoZone of tools for stimulating higher purchases. Also, it’s difficult for consumers to find out how AutoZone Rewards work: AutoZone’s website FAQ advises visiting a store or calling customer service. (When I called, however, a pleasant and efficient AutoZone phone representative did a good job explaining the ins and outs.). In short, a number of changes to AutoZone Rewards would help AutoZone realize material gains in sales and profitability.
1. Switch to rewards based on purchase amount. While the one-credit-per-purchase approach limits AutoZone’s reward liability, it does little to spur customers to spend more. By switching to a structure in which rewards accrue based on purchase totals, AutoZone can unlock the vast potential of its loyalty program. Ideally, a salesperson should be able to say, “You’re just $10 away from your next reward. Would you like to buy something else?” Similar messages should also be sent by email and automatically triggered based on member activity (or inactivity).
2. Enable online signup and redemption. AutoZone Rewards members can see their credit totals online, but that’s about it. If you want to sign up for the program or redeem rewards, you have to visit a store. This creates a point of friction for consumers who might otherwise participate, and decreases the loyalty program’s bottom-line impact. AutoZone should follow the lead of retailers like 1800 Flowers, who enable all loyalty interactions both online and in stores. AutoZone might also integrate AutoAnything.com (acquired in 2013) into its loyalty program.
3. Streamline the rules, and better explain them up front. Customers shouldn’t have to call a customers service line to understand the basic rules of a loyalty program. When I spoke with the AutoZone rep on the phone, she told me that some vouchers are valid for 18 months, while others expire in just 3 months. A more streamlined program, communicated clearly through the company’s website, would go a long way towards boosting enrollment in AutoZone Rewards.
Is there a loyalty program you’d like to see featured in a 500friends Loyalty Makeover? Send me a note at zach (at) 500friends.com. Zach Woith is Head of Loyalty Strategy at 500friends.