J.J. Haines Loyalty Club builds momentum Article Number : 1986

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Date	5/16/2007 8:03:09 AM
Written By	LGM & Associates Technical Flooring Services
View this article at:	//floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=1986
Abstract	By Steven Feldman ATLANTIC, N.J.—Less than two years since J.J. Haines, the second largest flooring distributor in the country with 2006 sales in the $350 million range, rolled the successful Flooring Plus program into...
Article	By Steven Feldman ATLANTIC, N.J.—Less than two years since J.J. Haines, the second largest flooring distributor in the country with 2006 sales in the $350 million range, rolled the successful Flooring Plus program into its Loyalty Club, membership is now 250 strong and comprises more than 15% of the wholesaler’s total business. The Loyalty Club targets smaller to mid-range flooring dealers— the average sales volume is under $1 million— and is designed to provide value-added products and services to those customers who are loyal to the 133-yearold distributor, according to Scott Roy, vice president, sales. “But it’s much more than that. It goes beyond products and pricing.” One example is marketing and advertising support, many facets of which are sponsored by Brand Source, a retail cooperative or buying group with which Haines has aligned. Brand Source, with a strong presence west of the Mississippi, is a group of about 3,000 independent, locally owned and operated appliance, home electronics and furniture retailers. The group was formed to compete against big box stores and collectively boast retail sales of $11 billion. Haines pays a fee to Brand Source to take advantage of its buying power and the tools it has created for their members. “We can obtain more powerful programs and business resources at reduced costs,” said Charlie Parsons, president of Flooring Plus. “We can utilize its entire tool box.” In illustration, Loyalty Club members are eligible to participate in an attractive financing program through Brand Source that is administered by GE. “Members can buy into an unbelievable rate as opposed to if they went out on their own to their local bank,” Roy said. Haines also offers Loyalty Club members targeted direct mail advertising through Brand Source. “Dealers can purchase a customized, attractive, four-color insert at unbelievable pricing,” Roy said. “It’s a powerful offering when combined with Brand Source’s marketing.” It doesn’t end there. In what may be the strongest benefit, Haines will create and host a customized Web site for any Loyalty Club member. “We offer multiple pages that allow the retailer to feature not only the products we sell, but his entire range of products.” He added there is an “about us” page, directions, etc. “We encourage them to allow us to create a Web site for them once they join.” Roy outlined four new Loyalty Club initiatives for this year: • A $300 merchandising fund to each member to offset all or part of the cost of any new display or samples. • A co-op fund worth $500 to offset the cost of the Brand Source insert program. • Three sale events with discounts on promotional material. • Training on everything from installation to product knowledge to financial training, which would include how to prepare a business plan, selling on credit, etc. The Loyalty Club is becoming a significant piece of Haines’ business. Bruce Zwicker, president and CEO, noted the distributor has about 6,000 active accounts in its 10-state territory that is serviced through six branches. While Loyalty Club members represent only 4%, they constitute 16% of Haines’ total sales, or more than $40 million. That alone explains why Haines’ primary goal is to seek new members while retaining existing ones. Membership doubled from 2005 to 2006, he said, with rebates surpassing $650,000. What does it take to join? Haines requires between 70% and 80% of member purchases be made through the distributor. Next, they must carry four Armstrong product categories and three non-Armstrong branded products by Haines. Then, there’s the $2,000 annual fee that is billed over 10 months. But members say the investment returns dividends in spades. Jane Detwiler, Gary’s Carpet Depot, Pottstown, Pa., credits the Loyalty Club for growing its business from $900,000 to $1.5 million over a five-year period. “We thought we were doing really well,” she said. “But where do we go from here? This is where the Loyalty Club helped us. It has given us our focus. They do the legwork for us. They check out product for us. They find out about advertising, health care plans, etc.” She isn’t the only one. Mac Glosock, president, Your Floors, Fredricksburg, Va., has been a member only since October but is already seeing the benefits. “I’m most excited about Haines coming down and teaching me how to better run my business from a financial aspect, how to better position ourselves with creditors, etc. Its willingness to share information to help you succeed is a huge asset.”