Tractor Supply Company credits technology investments in customer service and its updated loyalty program as keys to its success.
The “Out Here” lifestyle retailer said e-commerce recorded its largest-ever quarter of sales in Q2 2021 and its new mobile app already has more than 1.6 million downloads and now represents over 10% of those e-commerce sales. Comparable store sales increased 10.5% on top of 30.5% growth last year with a two-year stack of 41%.
In April, Tractor Supply launched a new three-tier rewards structure to its free Neighbor’s Club loyalty program in response to customer feedback. The company exited 2020 with nearly 19 million Neighbor's Club membersrepresenting approximately 60% of total sales. It now reports the loyalty program has reached more than 21 million members and customer retention has hit an all-time high.
"We are seeing strong retention of customers that have shopped us over the last 12 months," said CEO Hal Lawton. "Our retention rates continue to run above historical trends.”
New customers are joining the Neighbor's Club program at a rate of nearly 30%, “significantly above” the rate from last year, said Lawton, and those new customers are continuing to skew younger compared to the retailer's core customers.
“The conversion of our Neighbor's Club loyalty program to a points-based rewards is resonating with our customers,” he noted. “Year-over-year, we have added nearly five million new members to the program. Neighbor's Club members are spending about three times the rate of non-members and they are comping at a rate well above the chain average. Neighbor's Club members accounted for about 65% of our sales and that's a step-up from where we've been running prior to the relaunch of the program.”
Tractor Supply is seeing significant growth in 18-45 year-old millennial shoppers and believes that the growth in this customer segment has staying power.
“Much like last quarter, the types of trends we're seeing can simply be described as once in a generation," he said. "We believe key aspects to our customer service, such as a convenient place to shop, product assortment, legendary customer service, and in-stock levels are important to keeping these existing and new customers engaged with our brand.”
Tractor Supply Company has made technology investments in customer service to help with this engagement. One example, every single one of the company’s team members wears a Theatro headset that creates an optimal customer service experience in the stores. The initiative began in 2020 at the same time Tractor Supply began dedicating staffing for outside. Within moments after a digital order is placed, that task is acknowledged by an associate, which helps with services like curbside pickup.
Now Lawton said the retailer is in the process of rolling out new handheld devices for every team member inside the stores as well.
“Those sorts of investments are enabled by our scale and they are really focused on helping us create, gain and capture market share and drive top line sales,” he noted, later pointing out that the company views team members as a strategic asset.
“We are a customer service driven retailer. We are not a retailer where you're going to walk in, pick the item you want, go to a self-checkout and never talk to someone, loading your car yourself and drive away. We are going to help you pick the item, we're going to review, we're going to check you out and we're going to help you loaded in your car. And that that's going to drive sustainable share gain for us.”