I’m a former Borders customer and past member of the now defunct company’s Rewards Perks program. While I freely admit to moving a lot of my business to Amazon over the years, I was sorry to see Borders go.

Maybe it’s nostalgia, but every once in a while I like to walk into a book store, stroll the aisles, and leisurely look for a title or two I may have missed. Just like reading a physical book has a tactile advantage over an e-reader, I also think a physical store has a sensory advantage over a virtual storefront—which for me, unfortunately, ultimately gets trumped by the superior selection and lower prices of an Amazon.

But back to Border’s. When the pieces of the company were sold off, Barnes & Nobel made an important purchase that went beyond the chain’s physical inventory—they bought Borders’ customer contact info and importantly, their purchase history, giving them the opportunity to send out personally relevant communications.

The wooing has begun, as B & N is now attempting to turn me from a qualified prospect to a customer. They’ve sent me a few e-mails to date and while I think my scant recent personal history prevents them from sending truly relevant messages, I do appreciate their efforts.

From a communications perspective, I think they’ve made a smart progression from showing sympathy over the loss of Borders, to being transparent when revealing the use of my Borders’ customer data, to being justifiably “retail-y” as they seek my business. See the messaging sequence below:

October 1: Sympathy Over the Break-Up

Dear Borders Customer,

My name is William Lynch, CEO of Barnes & Noble, and I’m writing to you today on behalf of the entire B&N team to make you aware of important information regarding your Borders account. First of all let me say Barnes & Noble uniquely appreciates the importance bookstores play within local communities, and we’re very sorry your Borders store closed.

October 15: Honesty and Transparency

Dear Borders Customer,

As a reminder, on September 30, 2011 Barnes & Noble acquired the Borders customer list. The transferred personally identifiable information in the customer list includes customer e-mail addresses and purchase history. No credit card data was transferred. If you would like to opt out of having your customer data transferred, please go to www.bn.com/borders by November 2, 2011.

November 7: Asking me out on a first date.
Subject line: Let’s get to know each other, starting right now.

You’ll always be welcome here. Nothing says welcome like an extra 30% off your first purchase at Barnes & Noble.

November 16: Attempt at a second date.

Subject line: A convenient 40% off at the always convenient BN.com

Your nearest Barnes & Nobel is open 24/7—at BN.com. Take an Extra 40%off one item.

I think Barnes & Noble is in a tough spot and agree with many that they’ll be the next domino to fall in the radically changing book industry. That said, I do think they’re doing a good job trying to convert prized prospects—former Borders customers like me—to the B & N fold. At least, they’re going down swinging.

By now, you’ve probably heard about the big financial mess that the Borders book store chain is in. They recently filed for Chapter 11 bankruptcy and it’s hard not to see the whole situation winding up in a very bad place.

The Borders predicament is emblematic of a continuing shift in the way we purchase goods and services in the digital age. The canary in the coal mine were the travel agents, who saw themselves squeezed out of existence once consumers figured out they could just as easily make travel plans on their own.

The next domino was the music business, and with the advent of Amazon and e- books, now the book industry. Even though Borders has a nifty Web site, they unfortunately entered the digital game very late—and as the demand for physical books shrinks, you sure as heck won’t be making a trip to the mall to buy an e-book.

It appears that Borders will go down fighting. As a member of the Borders Rewards program, I received an e-mail from Mike Edwards, the President and CEO of Borders, Inc. It was well-crafted and heartfelt, and included the following passages:

As Borders moves forward, our commitment to you is to be a best-in-class bookseller—whether it’s our stores or Borders.com—where you can purchase books and related products that stimulate and satisfy your reading interests. Over the next several months, we will build on our core strengths as a great bookseller with the goal of emerging as the destination of choice for the millions of customers who shop our stores each year.

Sorry, but I’m not buying it. And the fact I’m not buying it leaves me feeling a little sad, as I think Borders was a good chain with some cool stores that I at one time visited frequently. I’m also left wondering which vertical will be impacted next.

Tom Rapsas is a writer, creative director and strategist. He can be reached via Twitter @tomrapsas or at tomrapsas@gmail.com

Can a little magic help Borders?

I’m a card-carrying member of Borders Rewards, the program run by book, music and movie seller Borders, who recently announced their rewards program had grown 23 percent over the past year and now totaled 32 million members.

I first discovered Borders via their bricks-and-mortar stores in the early 90’s and still love their open store layout and laid-back vibe. I generally find their salespeople to be well-informed and helpful. I’ve been to their Web site many times and opted in to their e-mail list years ago.

Yet I may be one of Borders’ worst customers.

You see, not long after Amazon.com launched in 1995, I became a regular there. As fans of Amazon know, they have the world’s best selection. Nine times out of 10, they have the lowest prices. And there’s plenty of customer commentary to peruse should I be on the fence about a specific book, CD or other product.

So it’s tough for either the Borders stores or Borders.com to measure up to market leader Amazon. Sure, I still visit my local Borders every now and then—but only after they send me promotional e-mails with a coupon good for 40% off any purchase. (As I said, I’m not a good customer.)

Still, even with Amazon’s superiority in so many areas, Borders now possesses a potential game changer – if they can figure out what to do with it.

It’s called the “Magic Shelf” and it was launched by Borders just about a year ago, with little fanfare. This nifty feature enables registered customers like me to turn the Borders’ home page into my own virtual bookshelf. Through an attractive wooden shelf interface, I can quickly scan music, book and movie recommendations in several categories.

Importantly, it shows me selections based on my preferences, per an online survey I filled out, so the titles on my virtual shelf are personalized just for me. It’s a different approach than Amazon whose less attractive home page shows me items based on my past purchases, not my preferences.

So will the Magic Shelf make me more likely to shop at Borders or Borders.com?

Well, not yet. Old habits die hard and Borders needs to find a way to compel me to become a regular customer by better leveraging the benefits of the Magic Shelf. For starters, it would help if Borders both told and reminded customers about this very cool feature.

It also means Borders will have to move away from their current e-mail marketing strategy, where it’s all about the discounts and latest money-saving offer. As Bill pointed out in a previous post, fully 75% of the e-mails Borders sends out are offer or price-based.

The solution seems simple: start sending personal, relevant e-mails, using information culled from each customer’s Magic Shelf selections. By filling e-mails with content that has real value—like info on new products I might be interested in—Borders stands a better chance of building a real (and profitable) relationship with me, because it will be based on my love of music, movies and books, and not my love of saving money.

With the proper use of the data gained from the Magic Shelf, it feels like there may be a small opening for Borders. Will they follow through on it? Or will they continue to beat their heads against the wall by trying to out-discount Amazon? Time will tell. But surely a personalized communications approach is a better way to go than continuing a price war against the mighty Amazon.

Tom Rapsas is an independent Creative Director, Writer and Strategist. He can be reached at tomrapsas@gmail.com.

Can a little magic help Borders?

I’m a card-carrying member of Borders Rewards, the program run by book, music and movie seller Borders, who recently announced their rewards program had grown 23 percent over the past year and now totaled 32 million members.

I first discovered Borders via their bricks-and-mortar stores in the early 90’s and still love their open store layout and laid-back vibe. I generally find their salespeople to be well-informed and helpful. I’ve been to their Web site many times and opted in to their e-mail list years ago.

Yet I may be one of Borders’ worst customers.

You see, not long after Amazon.com launched in 1995, I became a regular there. As fans of Amazon know, they have the world’s best selection. Nine times out of 10, they have the lowest prices. And there’s plenty of customer commentary to peruse should I be on the fence about a specific book, CD or other product.

So it’s tough for either the Borders stores or Borders.com to measure up to market leader Amazon. Sure, I still visit my local Borders every now and then—but only after they send me promotional e-mails with a coupon good for 40% off any purchase. (As I said, I’m not a good customer.)

Still, even with Amazon’s superiority in so many areas, Borders now possesses a potential game changer – if they can figure out what to do with it.

It’s called the “Magic Shelf” and it was launched by Borders just about a year ago, with little fanfare. This nifty feature enables registered customers like me to turn the Borders’ home page into my own virtual bookshelf. Through an attractive wooden shelf interface, I can quickly scan music, book and movie recommendations in several categories.

Importantly, it shows me selections based on my preferences, per an online survey I filled out, so the titles on my virtual shelf are personalized just for me. It’s a different approach than Amazon whose less attractive home page shows me items based on my past purchases, not my preferences.

So will the Magic Shelf make me more likely to shop at Borders or Borders.com?

Well, not yet. Old habits die hard and Borders needs to find a way to compel me to become a regular customer by better leveraging the benefits of the Magic Shelf. For starters, it would help if Borders both told and reminded customers about this very cool feature.

It also means Borders will have to move away from their current e-mail marketing strategy, where it’s all about the discounts and latest money-saving offer. As Bill pointed out in a previous post, fully 75% of the e-mails Borders sends out are offer or price-based.

The solution seems simple: start sending personal, relevant e-mails, using information culled from each customer’s Magic Shelf selections. By filling e-mails with content that has real value—like info on new products I might be interested in—Borders stands a better chance of building a real (and profitable) relationship with me, because it will be based on my love of music, movies and books, and not my love of saving money.

With the proper use of the data gained from the Magic Shelf, it feels like there may be a small opening for Borders. Will they follow through on it? Or will they continue to beat their heads against the wall by trying to out-discount Amazon? Time will tell. But surely a personalized communications approach is a better way to go than continuing a price war against the mighty Amazon.

Tom Rapsas is an independent Creative Director, Writer and Strategist. He can be reached at tomrapsas@gmail.com.

On April 1, Borders Group CEO Ron Marshall and CFO Mark Bierley held their 4th quarter earnings call for the investment community. I give them credit as they displayed courage, confidence, or both in having the call on April Fools day! Transcript of the call can be found by visiting the Seeking Alpha web site.

Acknowledging a weak fourth quarter where Borders Superstores saw same-store sales decline by 11.7%, the executives mapped out details of their 4 key priorities for the business. The second item on the list was “Reengaging with our customers ….. reclaiming our status as the book seller for serious readers ….. and further leveraging our Borders Rewards Loyalty program”.

On giving customer centric marketing a priority, Mr. Marshall explained “For the last couple of years our outreach has primarily been directed at our best customers. The nearly 32 million members of our Borders Rewards loyalty program increasingly we have relied on discount offers to entice them to shop and over time these offers have lost effectiveness. We are focused now on improving gross margins through being smarter and controlling promotional offers and in-store discounts.”

Realizing that the value of short term promotions and discounting was eroding, Borders experimented last year.  Mr Marshall continued “we did a test late last year removing many of the ongoing in-store discounts in a control group of stores. Customers didn’t miss these discounts and we saw an appreciable up-tick in margin. Now we’ve rolled this out to all stores and are pleased with the results.”

The Borders Rewards program is interesting in structure and starkly different than Barnes & Noble Membership, a retention strategy put forth by the competing chain.

Borders Rewards members join at no charge and earn 5 Borders Bucks for every $150 spent in store. That averages to a 3.3% return for members. During 2008, the company has been inviting members who register online to take advantage of Borders Rewards Perks, an online mall program extension.

Barnes & Noble Membership requires a $25 annual membership fee and in return offers savings of 40% on hardcover bestsellers, 20% on adult hardcovers, and 10% on “everything else”. Depending on the mix of items purchased, B&N Membership would appear to return at a higher rate, though the annual fee is an enrollment hurdle for many customers.

In the Q&A segment of the call, Mark Bierley explained that the Rewards program would continue to play an important role in the marketing mix “It really is all about the next significant investment that we’ve made in terms of promotional discounting which is our Rewards program.” He continued “We have 18 segments and we want to get to being able to communicate more on the content side, talk about authors that they may like as well as other value or content messages versus just a discount. I would say that that is probably the single largest next opportunity that we’re focused on.”

This commentary serves to illustrate two lessons of Loyalty Truth:

1. Untargeted product based discounting is an ineffective marketing strategy that yields poor results. Borders has evolved to this understanding as Ron Marshall said “promotional spending and discounting is important but you need to do it with a plan.”
2. Companies that understand the importance of their loyalty program data and actually leverage it to match customer preferences with product offers are on a path to success.

In the very near future, Hanifin Loyalty LLC will publish the results of a year long study of how industry leaders use email to communicate with their Loyalty Program members. I’ll preview some results with you as they pertain to Borders. As the principal, if not the only, communication channel for Borders Rewards members, the company is a prolific emailer, averaging approximately 14 per member per month.

Of the total, roughly 75% were blasting discounts (40% off coupons) and promotional offers (special one day sales, author highlights) while 22% were promoting Borders Rewards Perks.

Over 67% of all mail was sent in mid-week (Tues, Wed, Thurs) and over 73% were sent while we slept (between hours of 11pm – 8am).  Across the board, Borders initiated about 1 survey per quarter.

The weighting of emails towards discounts has to be seen as lost opportunity for Borders as these untargeted mails are essentially a digitized version of newspaper coupons that have lost favor over the years. One can only imagine that if Borders changed the make-up of its surveys and constructed offers with tangible links to survey responses, that the membership would be energized.

The company might also want to sharpen the language in its Borders Reward Perks promos, adding context to their message that members have enjoyed benefits from “592 merchants and savings of $212.32 per active member per quarter”. The problem with mythical savings numbers is that consumers don’t understand their origin. Are they based on MSRP which noone pays and the difference is counted as “savings”? Or is the number similar to the “savings” figure on grocery receipts?

This bird’s eye view into plans for “reengaging customers” spotlights how smart marketers work. Messrs. Marshall and Bierley didn’t blame lack of results on Borders Rewards and kill the program. Instead, they are planning key improvements to the program that should yield tangible and measurable results. Combined with a renewed emphasis to have booksellers improve customer service standards, I can’t wait to read the next chapter they are writing in the story of Borders Rewards!

On April 1, Borders Group CEO Ron Marshall and CFO Mark Bierley held their 4th quarter earnings call for the investment community. I give them credit as they displayed courage, confidence, or both in having the call on April Fools day! Transcript of the call can be found by visiting the Seeking Alpha web site.

Acknowledging a weak fourth quarter where Borders Superstores saw same-store sales decline by 11.7%, the executives mapped out details of their 4 key priorities for the business. The second item on the list was “Reengaging with our customers ….. reclaiming our status as the book seller for serious readers ….. and further leveraging our Borders Rewards Loyalty program”.

On giving customer centric marketing a priority, Mr. Marshall explained “For the last couple of years our outreach has primarily been directed at our best customers. The nearly 32 million members of our Borders Rewards loyalty program increasingly we have relied on discount offers to entice them to shop and over time these offers have lost effectiveness. We are focused now on improving gross margins through being smarter and controlling promotional offers and in-store discounts.”

Realizing that the value of short term promotions and discounting was eroding, Borders experimented last year.  Mr Marshall continued “we did a test late last year removing many of the ongoing in-store discounts in a control group of stores. Customers didn’t miss these discounts and we saw an appreciable up-tick in margin. Now we’ve rolled this out to all stores and are pleased with the results.”

The Borders Rewards program is interesting in structure and starkly different than Barnes & Noble Membership, a retention strategy put forth by the competing chain.

Borders Rewards members join at no charge and earn 5 Borders Bucks for every $150 spent in store. That averages to a 3.3% return for members. During 2008, the company has been inviting members who register online to take advantage of Borders Rewards Perks, an online mall program extension.

Barnes & Noble Membership requires a $25 annual membership fee and in return offers savings of 40% on hardcover bestsellers, 20% on adult hardcovers, and 10% on “everything else”. Depending on the mix of items purchased, B&N Membership would appear to return at a higher rate, though the annual fee is an enrollment hurdle for many customers.

In the Q&A segment of the call, Mark Bierley explained that the Rewards program would continue to play an important role in the marketing mix “It really is all about the next significant investment that we’ve made in terms of promotional discounting which is our Rewards program.” He continued “We have 18 segments and we want to get to being able to communicate more on the content side, talk about authors that they may like as well as other value or content messages versus just a discount. I would say that that is probably the single largest next opportunity that we’re focused on.”

This commentary serves to illustrate two lessons of Loyalty Truth:

1. Untargeted product based discounting is an ineffective marketing strategy that yields poor results. Borders has evolved to this understanding as Ron Marshall said “promotional spending and discounting is important but you need to do it with a plan.”
2. Companies that understand the importance of their loyalty program data and actually leverage it to match customer preferences with product offers are on a path to success.

In the very near future, Hanifin Loyalty LLC will publish the results of a year long study of how industry leaders use email to communicate with their Loyalty Program members. I’ll preview some results with you as they pertain to Borders. As the principal, if not the only, communication channel for Borders Rewards members, the company is a prolific emailer, averaging approximately 14 per member per month.

Of the total, roughly 75% were blasting discounts (40% off coupons) and promotional offers (special one day sales, author highlights) while 22% were promoting Borders Rewards Perks.

Over 67% of all mail was sent in mid-week (Tues, Wed, Thurs) and over 73% were sent while we slept (between hours of 11pm – 8am).  Across the board, Borders initiated about 1 survey per quarter.

The weighting of emails towards discounts has to be seen as lost opportunity for Borders as these untargeted mails are essentially a digitized version of newspaper coupons that have lost favor over the years. One can only imagine that if Borders changed the make-up of its surveys and constructed offers with tangible links to survey responses, that the membership would be energized.

The company might also want to sharpen the language in its Borders Reward Perks promos, adding context to their message that members have enjoyed benefits from “592 merchants and savings of $212.32 per active member per quarter”. The problem with mythical savings numbers is that consumers don’t understand their origin. Are they based on MSRP which noone pays and the difference is counted as “savings”? Or is the number similar to the “savings” figure on grocery receipts?

This bird’s eye view into plans for “reengaging customers” spotlights how smart marketers work. Messrs. Marshall and Bierley didn’t blame lack of results on Borders Rewards and kill the program. Instead, they are planning key improvements to the program that should yield tangible and measurable results. Combined with a renewed emphasis to have booksellers improve customer service standards, I can’t wait to read the next chapter they are writing in the story of Borders Rewards!