Digital incentives help a tractor supply company battle e-commerce giants
Tennessee-based Tractor Supply Co. originally sold farming tools by mail, but digital technology has put the expanding 81-year-old company at the forefront of loyalty marketing.
While e-commerce and the ongoing growth of Amazon and Walmart are contributing to older retailers closing brick-and-mortar stores, Tractor Supply is opening about 80 new U.S. stores a year, recently hitting a total of 1,800.
Tractor Supply, which sells a broad range of farm and garden supplies—along with apparel and shoes—told investors earlier this year its healthy sales are due in large part to its surging loyalty program.
Neighbor’s Club, a loyalty program introduced two years ago, which now has 12 million members, also is closely linked to Tractor Supply’s private-label credit card, according to a spokesperson for Citi. Since 2000 Citi has issued the retailer's proprietary credit card since 2000.
Tractor Supply is one of Citi's longest-running retail card programs, and Citi recently worked with the company to streamline the connection between the physical stores and the company's booming e-commerce operations, according to the spokesperson.
One advancement was simplifying the online application process, so that about a third of all store charge card accounts are now opened online. Using customer data gathered through the loyalty program to shape marketing programs is key to Tractor Supply's recent growth, the company's CEO Greg Sandfort told investors in July, and a key part of Citi's mission is making sure charge card customers also enroll in the company's loyalty program.
When the loyalty program made its debut in 2017, Tractor Supply gave customers a $5 store credit for every $150 spent on the store card. Last month the company bumped up the benefit so customers now receive 5% rewards all purchases, increasing the loyalty value by 50%, according to the Citi spokesperson.
A more seamless integration of in-store and online ordering with the loyalty program and payment options is also driving strong overall efficiency. More than 70% of Tractor Supply’s e-commerce purchases are picked up by customers at the store, the company has reported.
Tractor Supply aggressively promotes the private-label credit card in stores, online and to loyalty club members via email. For each new charge card account opened, Citi delivers a $20 certificate good for Tractor Supply merchandise via email.