Business Discounts for Co-op Members

What's so special about co-op membership? Why should I pay money to shop at a store, and what benefits do I get that I wouldn't get anywhere else? These questions are becoming more and more crucial, as competition intensifies in the grocery world in which we do business. And if the answers we give through the services we offer can demonstrate a special creativity that grabs the imagination of our shoppers and members, the marketing of our businesses can be all the more successful.

One special service helping to market Puget Consumers Co-op (PCC) to its more than 25,000 active members in the Seattle area is the Co-op $aver, a business and services discount offered exclusively to co-op members. Another Seattle store, Central Co-op, also participates in the program with PCC. Co-op members simply show their membership card when using a business service to receive the discount.

The program has been in existence since 1983 and has grown to include over 120 Seattle area businessess and professional services. Its design is simple and straightforward. Participating businesses choose a discount they would like to offer solely to co-op members, and write up a short business description. They are then included in a pocket sized brochure published once a year. The brochure is distributed in PCC stores, given to all new co-op members when they join, and periodically featured in the Sound Consumer; PCC's monthly newspaper, which is mailed to all active members.

The businesses and services that participate in the program run the gamut from the traditional to the esoteric, from dentists, restaurants, bicycle shops and bookstores to an iridologist and a flower remedy business. What they have in common is a potential clientele among co-op members for the goods and services that they offer. The discounts they offer also range from a simple percentage off the cost of goods and services, to targeted areas in which a business wants to increase sales and customer interest. As might be expected, participating businesses are predominantly health related (naturopathic physicians, chiropractors, massage therapists, counselors) and food related (restaurants, caterers).

What's in it for the businesses? The cost of participation in the Co-op $aver program is kept minimal ($15/year), so that it is an attractive advertising vehicle at a low cost. Small businesses that depend on word of mouth advertising find it beneficial and see that it targets a narrow audience from which they draw their customers. Many business owners who are themselves co-op members participate year after year because they enjoy spending some of their advertising money on a business they want to support.

What does it take to set up and run such a program? Initially, there is a large investment of time and energy to break ground by contacting businesses and selling them on the idea. (For smaller co-ops with more potential volunteer person power than available paid staff time, it can be an interesting and rewarding program for a volunteer to coordinate.) A core of small businesses that already operate nearby, existing business advertisers in your newspaper, co-op members who own small businesses, and the health and alternative business community are places to begin. Small businesses whose clientele overlaps with yours will likely be interested, if the cost is low. The key to success will be your ability to show participants that you let shoppers know the program exists. Once it develops a track record that proves co-op members will use it and generate sales for the participating businesses, the program picks up the momentum that can sustain it year after year.

Puget Consumers Co-op has found that the program generates as much goodwill and visibility for the co-op in the business community as among shoppers. With the ability these businesses have to "spread the word" about the coop, this in itself is a worthwhile result.

Services like the Co-op $aver can be a tool to make your business a special place that commands loyalty and continued member patronage. It may be worth a try at your cooperative.

A Growing Idea

Lest readers of the accompanying article from Puget Consumers Co-op think that a business discount program requires a membership of thousands, comments were solicited from some other co-op stores which have a similar service.

West Bank Co-op Grocery
Minneapolis, Minnesota

The co-op is doing $1.35 million in annual sales, has about 330 members. The business discount program is a year and a half old and has 14 participating neighborhood businesses.

Katie Fournier, membership director: "It's a great way for co-ops to offer a service to other businesses in the area. Good places to start in setting it up are businesses advertising in the co-op newsletter, as well as the co-op's membership."

Cape Ann Food Co-op
Gloucester, Massachusetts

The co-op is doing $1.2 million in sales annually and has over 700 member households comprising over 1100 individuals. Their business discount program is two years old and currently has 36 participating businesses.

Paul Cultrera, general manager: "It's a great idea, and every co-op should have such a program. Initially, we talked about it for years and tried to get volunteers to organize the program, but it never happened. It actually happened when we hired someone, gave her a contract, and it took about a month to set it up. The businesses get free advertising (two 1/8 page ads annually) in the co-op newsletter, plus their name in the brochure, on a sign in the store, and in the newsletter. We've had an 80 percent renewal rate by the businesses; it's easier after the first year. Members like it a lot -- that extra benefit helps many to decide to make the investment as a member, a benefit that will easily return that investment in discounts at the businesses."

See other articles from this issue: #021 February - March - 1989