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Unique Bedfellows

Convenience stores and outdoor recreation retailers may not have that much in common. The same goes for c-stores and ski lodges. But that isn't stopping several convenience store chains from partnering with diverse retailers such as these, and reaping benefits of increased sales and traffic.

In October 2009, CHS Inc.'s Cenex convenience store chain launched a program with outdoor goods retailer Cabela's for a co-branded Visa credit card. Cardholders can receive points good toward merchandise in Cabela's rewards program when using the card at Cenex stations.

"Our contract with another vendor was coming to an end, and we were looking for something more compelling than a typical petroleum loyalty program, with a different angle and new direction," explained Steve Menard, senior product consultant for CHS Payment Solutions. "With Cabela's, it made sense. They have an excellent reputation with a very loyal customer base; our footprints for the majority of Cabela's locations and Cenex overlap; and they have an established card base."

Doug Dorfman, brand, product and marketing manager of refined fuels for Cenex, described the program as "mutually beneficial" for both the energy company and Cabela's, and added it is a great fit for the two companies' customer demographics -- primarily outdoors enthusiasts who enjoy hunting, fishing and other activities.

The goal on Cenex's side is to grow its credit card business and overall transactions by increasing the frequency of existing customer visits and gaining new customers, Dorfman said, noting on the dealer side, this type of loyalty program also helps the company differentiate itself from other petroleum marketing programs in the region.

To promote the program, Cenex and Cabela's have taken a multiple touch-point approach, marketing it in stores, on both companies' Web pages and social networking profiles, Menard said. Cenex also launched a direct marketing campaign and advertised the program on billboards, Dorfman said.

Although the program had only been operating for 10 weeks as of press time, customer response so far was "outstanding," said Menard. From October to November, like-for-like Cenex-branded credit card transactions were up 30 percent, Dorfman said.

Similarly, North Salt Lake City, Utah-based convenience store retailer Maverik is using its loyalty program for a partnership with the Brighton Resort, a ski lodge in Brighton, Utah. Through its Adventure Partners program, Maverik's Adventure Club cardholders can receive a $30 discount on lift passes for Thursday night skiing when they show their card at the resort, a relationship piloted in the winter of 2008 and brought back for 2009.

"We increased Brighton's business on Thursdays. They saw 100 to 200 people a night showing their card to get the discount. At almost half off, it's a great value and a no brainer," said Scott Shakespeare, executive vice president of marketing for Maverik. "We want the club card to have a lot of added value."

Set up by Maverik's media buyer, the program also features advertisements for the lodge on signage in Maverik convenience stores, as well as 30-second spots on Maverik's in-store radio and TV networks. The radio spot offers the resort 450,000 monthly impressions throughout all stores, while Maverik's in-store TV network shows the ad 800,000 times a month throughout the 40-50 stores with the equipment installed.

Shakespeare acknowledged, though, the Adventure Partners program has some challenges. "Communicating the value to customers is difficult when you have more than 200 stores in seven states," especially when it comes to selecting partners for the program, he explained. "If we have a relationship with a local franchise, we don't want to confuse the customer, thinking they can get the same deal at any other location."

Increasing membership and use of the Adventure Club Card is one goal of the Adventure Partners program, "not just because we want customers to have it, we want to be top of mind," said Shakespeare, noting recent analysis of the chain's data found loyalty customers who buy in-store merchandise spend $1.25 more on average than non loyalty customers. And on the gas side, loyalty customers on average pump two more gallons per transaction.

In the future, Maverik's Adventure Club Card may also boast other valuable offerings to customers as the company upgrades its Radiant loyalty engine. Adding the ability to use the loyalty card as an Automated Clearing House (ACH) payment card is being discussed, as well as combining the card with other Maverik loyalty programs such as the punch cards for hoagies, coffee and more, which would result in a single, powerful loyalty card, Shakespeare said.

In addition, Maverik is looking to add more valuable offers to its Adventure Partners program through its reality TV show "Kick Start," which is entering its third season this summer. On the show, contestants "kick start" their lives by engaging in extreme sports and other activities. The retailer wants to create relationships with the outfitters featured on the show, so loyalty cardholders can show their Adventure Club Card at the establishments to receive a discount on the various activities, such as white water rafting, Shakespeare explained.

Unique partnerships aren't only being formed on the retail side. Earlier this year, on-the-go health and beauty care supplier Lil' Drug Store Products teamed up with office supply retailer Office Depot to offer several exclusive products to the convenience channel.

"We have the distribution in the c-store channel and a structure in place that provides an efficient way to get product into it," said Paul Rossberger, vice president of sales and marketing for Lil' Drug Store. "We're set up to really leverage ourselves and gain distribution where others can't."

Lil' Drug Store looked at the c-store channel and identified the office supply section as an area of focus, since c-stores have offered those products for some time, yet manufacturers hadn't provided a program for the section, he said.

"We wanted a partner that knew office supplies. Office Depot is one of the leading [office supply] retailers in the U.S., with great brand awareness," said Rossberger. "We brought in their knowledge of the office supply category to benefit the c-store retailers."

Through the program, 27 of the top-selling office supply SKUs are available exclusively to the convenience store channel that can't be found in any other class of trade, such as a three-pack of high-quality pens, priced at $1.79.

"We asked how we could maximize profit for the retailer, while offering good quality and good value to consumers," Rossberger said.

In addition, Lil' Drug Store offers rebate programs to both wholesalers and retailers who utilize the program. Retailers also have access to inline displays complete with Office Depot branding for merchandising the products in their stores.
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