Virgin Rolls Out Mega V.I.P. Program

Brand Keys Retail Loyalty Report, June 2007
By Andrew Gaffney, Executive Editor

One of the most innovative store-based loyalty programs introduced this year has come out of a sector that has been nearly eliminated by e-commerce. Refusing to roll over to the digital download trend, Virgin Megastores rolled out its V.I.P. customer loyalty program in late February and is on pace to register more than 150,000 members by the end of the year.

Labeled as “a first of its kind in North America,” the V.I.P. program uses a patented rewritable card technology called GraphiCard. The interactive technology, created by Visible Results of Overland Park, KS, allows customers to receive their card immediately after completing their free registration. Then, as points are earned on every transaction they are instantly displayed on the face of the card, along with total balance and points required to reach the next reward level.

The flavor of the card and V.I.P. program is also consistent with Virgin’s unconventional personality, carrying the tagline “It’s not the size of your V.I.P.-ness, it’s how you use it.” The points-based program also goes beyond discounts on store merchandise, offering members special privileges such as backstage concert passes, trips and celebrity meet and greets.

Given the increased competition from the digital segment in music, one of Virgin’s objectives for the V.I.P. program was to support its expansion into videogames, DVDs, electronics and apparel. “The program has shown that on average Virgin customers return to purchase a new product at Virgin every 5-8 days,” said Dee Mc Laughlin, senior director of marketing, Virgin Entertainment Group, North America, adding that the chain has seen a “significant increase” in sales of other categories over the past four months.
According to Mc Laughlin, the chain’s suppliers have been enthusiastically supporting the V.I.P. program. “Most of the key vendors that we work with have become involved in supplying prizes, access to talent for in-store events and signed collectibles from artists. The VIP program has created a vehicle to target specific vendor promotions to a loyal entertainment consumer,” she said.

After originally debuting in its two highest profiles locations--Manhattan and Hollywood—Virgin plans to expand the V.I.P. program has been to 7 of its 13 stores. The early returns on the program have been extremely positive and are credited with helping to drive a 5% sales increase for the chain this year. “In many of our stores, V.I.P. members are making up 15% of the total sales,”

While the initial goal of the program was to drive customers into the stores, Mc Laughlin said it may be expanded to other channels in the future. “We hope to adopt a multi-channel program so our customers will have the full Virgin V.I.P. experience no matter where they choose to shop with Virgin.”

KEY TAKEAWAYS: While Virgin's store count is miniscule compared to a lot of other players in the industry, they are still influential based on the size and scope of their parent company and their high profile locations. Other retailers should take a cue from the fun attitude Virgin has injected into the V.I.P. program and also keep an eye on the unique GraphiCard technology to communicate personalized info at every interaction.