US-based supermarket Dorothy Lane Market (DLM) has revamped and expanded its loyalty programme to offer significantly more value than traditional 'points for discounts' rewards, having introduced a new 'Priceless Points' mechanism that rewards customers differently, depending on their purchasing behaviour. This article is copyright 2012 The Best Customer Guide.

Rather than follow the traditional retail 1% rebate point programme of earning 1 point per US$1 of spend and receive a coupon for US$5 for each US$500 spent (or 500 points earned), DLM has announced that the so-called Priceless Points are now at the heart of its expanded customer loyalty programme.

DLM was one of the food industry's early adopters of a loyalty programme as they sought to understand and serve its customers better. In 1993, CEO Norman Mayne worked with Brian Woolf, a leading loyalty marketing consultant and member of the Coca-Cola Retail Research Council, which in 1993 published the industry-changing loyalty report, 'Measured Marketing: A Tool to Shape Food Store Strategy' (click here).

Ever since then, DLM has studied its customer data to understand its customers better to help shape its strategy. For example, one of its many findings was that there was no need to continue with its weekly newspaper advertisements: DLM hasn't placed one for 15 years. Instead, the company communicates directly with customers and makes individualised offers that recognise the value of each customer.

Brian Woolf, author of the book, 'Loyalty Marketing: The Second Act' (click here, helped guide DLM toward its next phase in loyalty marketing: Club DLM Rewards. This newly announced enrichment to the existing Club DLM programme breaks again from the practices of traditional retailers. DLM is offering its regular customers the lowest prices on basic items in the market area. For example, the new price of bananas is US$0.09 per lb., while eggs are only US$0.19 a dozen, and milk is only US$0.49 per gallon - when purchased with the right number of loyalty points. The bananas price requires 100 points; eggs require 200 points, and milk requires 300 points.

Points are earned by customers in three ways:

  1. Based on how much they spend;
  2. When they buy any of the many Bonus Point items around the store;
  3. On the 10th, 20th, and 30th of each month, customers earn 10 times the points earned on their total spending on the other days of the month.

Interestingly, because of their inherent flexibility, these new points have no assigned value. Each customer allocates the points they have earned toward the Club DLM Rewards priced items they wish to buy. In so doing, customers decide the value of their own points.

The philosophy behind this points-based extension of the DLM Loyalty programme is to offer its regular customers greater value for shopping with DLM. The only people who miss out - entirely by their own choice - are those customers who are obsessed with the lowest price and not with quality, service, or a long-term relationship with the company.