This is the final installment in my Big 5 series, profiling the five metrics my team uses to track the health of our hardware chain and it’s all about our Scan Rate.
In this context, Scan Rate measures the percentage of our total customer rewards transactions to the total transactions rung up at point of sale.
A Bold Goal
Our target scan rate is 70% of all transactions.
When you own a neighbourhood hardware store, you learn pretty quickly that you’re not just selling screws, paint, or a new rake for the yard. You’re selling confidence. You’re selling advice. You’re selling the reassuring feeling that a business in your community wants to help you.
So, after more than two decades in this business, if I believe one thing it’s this: the most powerful tool in a hardware store isn’t a hammer or a power drill. It’s relationships.
And a practical way to strengthen those relationships is by implementing an effective customer loyalty program. One that your team believes in, and your customers genuinely want to be part of. It needs to have stickiness and importance to keep it relevant.
But years ago, when the leaders at Ace Hardware suggested we implement the Ace Rewards Loyalty program, I convinced myself it would annoy my customers, not endear them to us. So, I balked.
I’m sure you remember the original loyalty programs that required customers to carry around a little plastic card, typically attached to their keychain. There wasn’t a great deal of back-end technology associated with them at the time and our keychains started to feel more like a ball and chain. They got bulkier and heavier and more cumbersome. As a consumer myself, I just gave up.
Ace was ready with a strong argument though – their data could demonstrate what our average ticket was for customers, who used the cards and those who didn’t.
Mind the Gap
That answer was a whopping $12.50! With more than 71 million customers enrolled worldwide, and top tier customers shopping an average of 27 times a year, who was I to argue with them?
So, we hopped on the bandwagon, implemented the program, and have been growing it ever since. Our current scan rate is 68% for all 13 stores with 73% of total sales coming from reward members.
Loyalty Is Built at the Counter
In a neighbourhood hardware store, the checkout counter is where a lot of magic happens.
It’s where a first-time customer becomes a regular. It’s where someone who came in for a single lightbulb leaves with a new understanding of how to fix their garbage disposal. It’s where conversations happen about weekend projects, leaky roofs, stubborn door hinges, and the best tomatoes to plant this year. You know exactly what I mean!
A loyalty program should feel like a natural extension of that interaction.
When a customer signs up, it shouldn’t feel like paperwork. It should feel like being welcomed into the club.
Your Team Has to Love It First
Before a loyalty program can win over customers, it has to win over the people working behind the counter.
That means involving the team early. Ask them questions like:
– What rewards would our customers actually care about?
– What would make sign-ups easier during busy weekends?
– What benefits would make regulars excited?
Instead of saying, “Do you want to sign up for our loyalty program?” they say something like, “If you’re doing projects around the house, you’ll probably want to be in our rewards program. You can rack up reward dollars pretty quickly. All I need is your phone number to enroll you.”
That shift – from script to conversation – is where loyalty programs start working.
Customers Need a Reason to Care
A strong program might include things like:
– Reward points for purchases
– Exclusive sales for members
– Early access to seasonal items
– Invitations to DIY workshops
– Project tracking or purchase history
The “Coveted” Factor
Another bit of research Ace was able to supply was the number of times a rewards customer of ours is ALSO shopping at our competition. They are able to do this by cross-referencing credit card purchases made by customers who are in our program. For us in the U.S. it was “how many times are my loyal customers going to Home Depot or Lowes or places like Walmart and Target –
all big competitors of ours.
And as you can imagine, that loyalty was tenuous. Customer were shopping 30% more at those places than ours, all the more reason for us to promote the program.
How do you know it’s working?
One of my favorite signs that a loyalty program is working is when customers start asking about it before you even mention it.
You’ll hear things like:
“Can you make sure this goes on my rewards account?”
“My neighbour said you guys send great coupons.”
“Can you look up my past purchases?”
That’s when you know the program has crossed an important line: it has become something customers value, not something they tolerate.
Before stepping down as CEO, I would often sneak down from my third-floor office to be a cashier on particularly stressful office days.
The team loved teasing me about my cashiering skills (I swear I’m GREAT at it!) and I would often forget to ask the customer in front of me if she or he was a rewards member. I was always pleasantly surprised when that person reminded ME to add their account number to their purchase. Apparently, the customers are as good at training us as we are them.
Training Afterall, Is Everything
Here’s a lesson we learned the hard way: if you want a loyalty program to succeed, you have to train your team on it, the same way you train them on tools.
Employees should understand:
– How the program works
– What benefits customers receive
– How to sign people up quickly
– How to answer common questions
More importantly, they should know why it matters.
When employees see the program as a way to help customers save money and stay connected to the store, they’ll naturally talk about it more often.
And consistency is key. If one employee mentions the program but another never brings it up, customers get mixed signals. Clearly, I needed to be better trained!
Do the programs work in Ireland?
Estimates vary slightly by study, but most research shows that roughly three-quarters of Irish consumers belong to at least one loyalty program with shoppers actively participating in about four loyalty programs per month on average. (https://chillipepper.ie)
This data indicates that Ireland is one of the more loyalty-engaged markets in Europe.
Market % of adults in at least one loyalty program
Ireland ~75.4%
United Kingdom (Great Britain) ~77.2%
European average (24 markets) ~61.3%
The European loyalty programs market is expected to reach roughly $31.8 billion (€33b) by 2029 implying that loyalty programs are here to stay and becoming an even larger tool for retail outlets like hardware stores to take advantage of.
What to be aware of
Even though enrollment numbers are large, roughly half of loyalty memberships may be inactive, showing the gap between sign-ups and meaningful participation.
The industry calls this “loyalty fatigue” which occurs because consumers are enrolled in many programs but only regularly interact with a few of them.
Our challenge then is to differentiate. To stand above the noise by creating convenient programs, recognition, or experiences – not just discounts.
The Bottom Line
Our online and big box competitors are stronger, bigger, richer and have more resources to help build loyalty away from us. And at the end of the day, customers can buy a hammer almost anywhere.
But they will come back to a place where they feel known. They come back to businesses that know their shopping habits their names and their past projects.
Strong loyalty program just might help with this challenge – it certainly made a difference for my company.
Footnote:
I’m curious if any of my readers implemented a program based on one of Big 5 metrics I’ve written about in my last 5 articles? Please share your efforts, challenges and results with me at gina@ginaschaefer.com.
