The College Store: Encouraging Customer Loyalty

Shelves of books

As college bookstores face increased competition from chains such as Barnes & Noble, peer-to-peer sites, and popular online retailers such as Amazon and eBay, many stores are seeing fewer students come through their doors, meaning not only declines in revenue from textbook sales but also from sales of other items — apparel, electronics, and campus memorabilia.

A feature in The Chronicle of Higher Education emphasized that bookstores at many colleges are responding to their changing industry with new services they hope will keep students coming: performance spaces for in-store concerts, multimedia stations for printing digital photos, and even dry cleaning. However, diversification of services can be an expensive investment, and many stores are neglecting their best opportunities for increasing customer loyalty around their core services.

This week, we turned to Mark Mulder, past auxiliary services director at Pacific Lutheran University and a key planner for the Garfield Book Company, and Dennis Mekelburg, associate director of Arizona State University Bookstores, to learn some practical tips for encouraging customer loyalty for the college store.

Positioning Your Campus Store in a Changing Industry

Before leaping into adding new programs to strengthen your customer base, Mulder suggests beginning with key strategic questions:

  • At the end of the day, what are you trying to achieve? (e.g., Identify and retain current customers against growing competition? Identify infrequent customers and encourage them to buy more often? Bring in new customers? Invite your current clientele to cross over to a new area of your products and services?)
  • How will you know that you have succeeded?
  • What are your competitors doing (or not doing)?

Be specific about your goals — and how you’ll measure success — in advance. Once you have answered these questions, let those answers drive your approach. For example: as you position your college store within its competitive landscape, will your approach to strengthening your customer base be focused on emulation or differentiation?

  • Emulation entails identifying programs popular among your customers and concluding that the absence of that kind of program at your store may position you negatively compared to your competitors; you then add such a program and work to do it “one better”
  • Differentiation entails identifying customer needs or opportunities that your competitors are not taking advantage of and then developing programs and services to meet those needs, positioning yourself as offering different services than your competitors

An example of emulation is a customer rewards program; such a program can help your store retain current customers and increase purchasing frequency. An example of differentiation is club membership associated with events or resources specific to your college’s culture, in response to an unmet need or demand in your community.

Emulation: Starting a Rewards Program

At Arizona State University Bookstores, Dennis Mekelburg has piloted a successful customer loyalty program that emulates rewards programs at Barnes & Noble and other popular retailers (in which club members earn points for purchases), but that also differentiates the ASU Bookstores experience from Barnes & Noble and online retailers by offering members privileged access to events unique to ASU’s campus culture. Mekelburg offers these nuggets of advice for peers at other college stores:

  • Let your club members be the first to know when there is a sale, and let them be the first students (or the only students) to participate in free drawings for concert tickets or athletic events
  • Don’t restrict what the points can be spent on
  • Loyalty membership needs to be free, quick, and easy to sign up for
  • Tie transactions of all types (a purchase, a return, a buyback) to their card so they see the benefits accumulate
  • Build the program around regular communication with your customers — newsletter, discounts, customer satisfaction surveys

Mark Mulder notes an additional practice seen often in retail but rarely in campus stores: offer a special sale advertised by email or Twitter, letting club members know that the first 20 to respond get a special discount or special deal on a particular product or event.

The key to an effective rewards program, Mekelburg notes, is developing a customer base that expects your store to communicate with them and then regularly asking them what they want and need. You will also want to think through:

  • Branding — will you brand your store card separately from the university’s One Card? (“If you do,” Mekelburg advises, “make sure your brand is closely tied to other campus brands”; for example, ASU’s mascot, Sparky, carries a pitchfork, and ASU Bookstores’ Pitchfork Perks program uses the mascot and the school colors)
  • Marketing — Mekelburg recommends communicating specific messages (ideally at freshman orientation) about what’s in it for the students and their parents (“for example, pitch to the parents that the bookstore will keep a record of all member purchases and supply an end-of-year report for tax purposes; pitch to students that if they plan to buy a $2K computer, why not get the points for that and have a gift card that they can use for discretionary expenses?”)

Differentiation: Leveraging Your Unique Strengths to Address Unmet Needs

One thing that has made Mekelburg’s program particularly effective is its leveraging of campus events and activities, offering members the first chance at tickets and other resources specific to Arizona State University. Moving beyond retail toward partnership with a variety of campus venues is a key method in differentiating the college store from other booksellers.

Mark Mulder notes that, depending on your specific goals for growth, there are many further ways to differentiate and position the campus store that most stores have not considered. Often, because of the resources of its institution, a campus store is uniquely positioned to serve its community in ways that other retailers can’t. The key is to do some critical research up front, to identify unmet needs in your community that your institution’s resources and knowledge base can help address. Then propose the campus store as a channel for that partnership.

Consider these examples:

  • A small liberal arts college with close ties to its college town has faculty who have published research on the culture of that region. The store decides to develop both stock and special events (such as faculty readings, guest lectures, or even crafts and storytelling events for local children) around regional content, inviting in both students and members of the local community. The store also reaches out to the community off-site, at community events, or in other venues.
  • A store at a flagship public institution realizes that it has access to materials that would be helpful for the local school districts, many of whose schools are struggling to provide their classrooms with sufficient study guides, teaching aids, and other supplies — many of the educators are providing what materials they can out of pocket. The store surveys the local K-12 educators and learns what they need most, begins carrying those items, and partners with the district to offer discounts for educators. One perk of the program could be that the store keeps a separate accounting system, recording purchases for educators who are paying out of pocket and giving them a report for tax purposes at the end of the year, with dates, ISBNs, and purchase amounts.

In both these cases, the college store reached out to new customers by:

  • Identifying an unmet need
  • Leveraging the strengths of its institution to address that need
  • Pursuing ongoing relationship management: regular communication, special events, and a customer loyalty program

“Build relationships with key customer bases. Partner with faculty, partner with local school districts or local entities. If you have a medical school, partner with a local hospital. Learn what needs these constituencies have and identify what strengths your campus can bring to bear on those needs. Relationships with customers and community will be the driver for college store business in the future.”
Mark Mulder