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A Case Study in Loyalty: The Cabela’s CLUB

Jim Tincher Jim Tincher 03/21/2013

How do you create a world-class customer loyalty program? Focus less on providing best-in-class benefits and more on creating a great customer experience. That’s the advice of Sean Baker, the incoming CEO of Cabela’s World’s Foremost Bank and leader of the Cabela’s CLUB program.

I interviewed Sean to learn more about Cabela’s CLUB and its critical role in driving their customer experience. The lessons certainly apply to retailers as a class, but also have something to teach anybody wanting to create better relationships with customers.

CLUB Components

First, a quick background on the program. The Cabela’s CLUB is a loyalty program paired with a Visa card. It began as a partnership with a small regional bank as a way to give their best customers free gear, but in 2001 Cabela’s brought the program in-house. They are now one of only two retailers who entirely own their own bank to run their loyalty program (Nordstrom’s is the other).

Similar to most retail loyalty programs, members receive points for Visa purchases, whether at Cabela’s or other retailers, that can be used for future Cabela’s purchases. There is also a lesser-used Rewards card version for those who do not qualify for the Visa credit card. What differentiates this program is how it transcends typical points-based loyalty programs to include:

  • Private in-store CLUB events
  • Family Outdoors Days where trained staff teach youth and their entire families about outdoor sports
  • Exclusive trips to high-end experiences

Sean discussed how Cabela’s differentiates their program through removing friction, leveraging the in-store experience, and creating a great customer experience. He also shared the results of the program, which show the true value of creating a customer-inspired experience.

Removing Friction

With most retail loyalty programs, a customer makes a large purchase and applies to the program while in the store. A week later the card shows up in a pile of mail, which may sit around for a few days. By the time they put it in their wallet, two to four weeks may have gone by since the initial purchase. Now, it’s just another card. They probably use it when visiting that retailer, but are unlikely to use it for other purchases. Across the sector, approximately two-thirds of all purchases made with a retail credit card are with that retailer. The industry as a whole has had a difficult time getting consumers to use loyalty cards elsewhere.

Cabela’s has built a great customer experience by tearing down traditional barriers to make it effortless to become a Cabela’s CLUB member. Like most retailers, Cabela’s can respond to a credit application within ten minutes. But while most retailers give customers a temporary paper card, Cabela’s prints the permanent card in the store, allowing customers to use the card immediately.

The first month is critical to determine a customer’s ongoing engagement. Cabela’s clearly understands that changing behaviors requires immediate reinforcement. They encourage usage by giving extra points for purchases within the first 30 days of CLUB membership. By pairing immediate cards with bonuses for the first month of usage, Cabela’s gets the customer accustomed to using the card, resulting in ongoing engagement.

Gas and grocery purchases are the holy grail of retail loyalty credit cards. When customers use the card at other businesses it brings additional revenue to the card issuer. The industry average is for 30-40% of all card purchases are made outside of the retailer. Cabela’s strong program results in 95% of card purchases being made outside of their store. This is a win for both the consumer and the company – the customer gets more free gear, and Cabela’s receives additional revenue.

Leveraging the In-Store Experience

The CLUB booth is typically found close to the store entrance. To avoid bombarding customers with offers, their process is for the greeter to ask customers if they are CLUB members. The messaging is that you can save money today through the program. If interested, customers are directed to the CLUB booth to apply.  But the booth provides more than just credit card applications. Dedicated CLUB employees service the booth, helping customers on all card services without calling the CLUB’s home office.

Contrast this to the services provided at Target. I enjoy the programs’ 5% discount, so suggested to my wife that she sign up. She applied, but was told that she couldn’t have a card because mine was already linked to our checking account. We visited customer service only to be told they couldn’t help us, and we needed to call the bank. So we gave up. By staffing dedicated CLUB employees in their stores, Cabela’s provides a seamless, high-touch customer experience to avoid this type of frustration.

The linchpin to store engagement is the store employees, called Outfitters. Cabela’s encourages Outfitters to talk about the card benefits but not oversell it. As Sean explained, “It’s an art. The people who are successful are those who can connect with customers. They really understand it inside-and-out, and can explain it in a positive way without being pushy. The reason they’re able to be successful is because it’s genuine. They really understand how the program benefits customers.”

Creating a Great Customer Experience

A Visa program, even with points, is not a great customer experience by itself. Cabela’s goes beyond traditional loyalty programs by focusing on the CLUB member experience first and the points second.

CLUB membership features three added programs targeted at the Cabela’s value proposition – increased access to the outdoors. While many retailers offer exclusive sales to loyalty CLUB members, Cabela’s CLUB events add a personal touch. In addition to bonus points and discounts, events may offer something special – giveaways for members, free bottles of water, personal shoppers, or CLUB lounges where you can kick back, relax, and learn more about a specific topic of interest.

CLUB members also receive exclusive access to Family Outdoor Days. Originally offered twice a year, they plan to host eight in 2013. Members bring in their family to learn more about the outdoors. Trained staff teach them about sports in a safe, supervised environment, whether their sports is archery, skeet shooting or fly fishing. The Family Outdoor Days are inexpensive, resulting in very positive feedback. Participants include not only parents but grandparents who want to teach their children and grandchildren to appreciate the outdoors.

The CLUB is an enabler, but it’s not really about the points or the Visa card – it’s about the engagement with the customer. As Sean says, “It’s all about trust. Family members trust that if they bring their children to the event and the Cabela’s staff is teaching them how to use a bow and arrow or firearm, Cabela’s will make it a safe environment for them to learn.”

The third exclusive offering is Cabela’s Signature Outdoor Adventure trips. The origination for this program came from a famous quote from Dick Cabela: “We’re in the business of selling fun.” As Sean says, “We don’t sell things you need – we’re selling fun. We’ll sell you the product, the clothing and the gear. We’ve also extended that to a network of outfitters, hunting and fishing lodges, and so on. Places where you can access the experience. As simple as pheasant hunting in South Dakota to as exotic as African safaris or fishing in Costa Rica.” These exclusive programs are kept small, so if customers have never experienced the sport there will be someone there to help them with it. For many members, this becomes a bucket list item. As Sean says, “It’s amazing the positive feedback we get – it’s not just about the trip, but also about the connection with the brand, the people, and the experience.”

The CLUB also keeps corporate staff connected and engaged with customers. Corporate Outfitters attend CLUB Days and trips to interact directly with the customers.

The Secret to Success

I asked Sean what separates stores that successfully connect customers with the CLUB from the rest. He replied, “It isn’t magic. We’ve proven that the answer isn’t any of the easy excuses – competition, market saturation, etc. The secret is finding the right store leadership who can connect with all of our Outfitters to embrace the CLUB as part of The Big Green Roof and as a benefit to consumers. We’re not just peddling a credit card – that’s not what it’s about. If you get them to believe in the power of the CLUB and how it opens up doors to our customers, the locations will do better, and our customers will benefit.”

Sean explained how it has definitely helped to own their own bank. “When we initially offered the program through a partner, it started as a very banking-focused transaction. But when we brought it in-house it moved away from being a credit card to being a way to build relationships with our customers. The one thing we can never forget is that we’re not here to run a bank. We’re here to find any way possible to give our best customers the opportunity to earn rewards to access the outdoors with free gear and come back to us more often.” That change in attitude has made it much easier to work with other parts of the company. “We’re not focused on doing what’s best for the bank. Instead, we’re working directly with our partners in retail, internet, and merchandising to do what’s best for the customer.”

Sean then discussed the future to the CLUB program. “Our challenge is scaling the experience. If we reach a thousand customers a year with our family events and our outdoor adventures, that’s only a small percent of the CLUB membership. And while those thousand members love the experience, how do we find different ways to touch all of our members and give them a great experience, whether through education, helping them, or outfitting them? Our job is not just to get Cabela’s gear in your hands, but to get you outdoors doing what you love, and helping you to share that with your children and growing your outdoor lifestyle. If we can do that, we’ll be fine, because we’ll grow with you.”

Great Customer Experience = Great Results

Focusing on a great CLUB member customer experience has also provided strong returns to the company. Spending per CLUB Visa card holder is well above average for issuers, as many of Cabela’s customers use it as their primary card. In addition, Cabela’s is in the Top 10 for Visa issuers by charge volume and the Top 20 in outstanding credit. They benchmark their program regularly. At a time where the competition for cardholders is the highest it’s ever been, and credit lines are shrinking, they continue to see more engagement around their card. Even though some cards can beat them on credit lines or interest rates, they continue to grow at a very healthy rate of more than 10 percent.

More important than the Visa data is the loyalty the CLUB brings. As Sean explains, “Our cardholders are our best customers. Their average spend is higher, their return visits are higher, their number of transactions are higher. I don’t know for certain if our best customers sign up for the card, or our cardholders become our best customers. But my gut is that our most loyal customers are signing up for our program because they love Cabela’s, and the CLUB enables them to go to a whole new level of engagement. The program enables them to share their passions and get outdoors even more.”

What could be better than that? I concluded our interview by asking Sean what advice he has to companies trying to build great loyalty programs:

“You need to focus around the customer experience. Anybody can offer points or rewards. That’s easy. Everybody does it. What is going to differentiate you and give your customer a reason to increase their brand affinity with you? The only way to do that is to build common experiences and values.

“Don’t get me wrong – you need to have benefits. You need to have the hook. But at the same time, you don’t need best-in-class rewards. If you resonate and give something that improves the customer experience by having an impact that makes them feel like they want to be a part of something that will draw in customers and create that loyalty.

“What’s really fun is when you go to a conference and mention you work for Cabela’s, at least one person in the group will have their eyes light up and say, ‘I love your store.’ They pull out their wallet and say, ‘Look, here’s my Cabela’s card.’ Which is pretty amazing for a company that started out around a kitchen table in Chappell, Nebraska.”

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