Leaders in Customer Loyalty, Powered by Loyalty360

Tractor Supply Company: Building Strong Customer Loyalty with a Devoted Rural Demographic

August 09, 2023 Loyalty360
Tractor Supply Company: Building Strong Customer Loyalty with a Devoted Rural Demographic
Leaders in Customer Loyalty, Powered by Loyalty360
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Leaders in Customer Loyalty, Powered by Loyalty360
Tractor Supply Company: Building Strong Customer Loyalty with a Devoted Rural Demographic
Aug 09, 2023
Loyalty360

Founded first as a mail-order tractor parts business in 1938 by Charles E. Schmidt, Sr., Tractor Supply Company opened its first retail store in Minot, ND in the following year. Ever since, Tractor Supply has been passionate about making sure it serves the needs of recreational farmers, ranchers, homeowners, gardeners, pet enthusiasts, and everyone who enjoys a lifestyle the company calls “Life Out Here.”

Over 52,000 Team Members deliver ‘legendary customer service’ when assisting customers as they shop for everything they need for “Life Out Here,” in categories including pet food and supplies, livestock and equine, hardware and power tools, clothing, and lawn and garden.

A Fortune 500 company, Tractor Supply is the largest rural lifestyle retailer in the U.S., with over 2100 stores across 49 states. In 2002, the company’s annual sales hit $1 billion, followed by another milestone, $5 billion, in 2013. Most recently, in 2022, Tractor Supply’s annual sales reached a whopping $14 billion. The brand is clearly doing something right.

Mark Johnson, CEO of Loyalty360, spoke with Kimberley Gardiner, Chief Marketing Officer at Tractor Supply, about what it means to be a “Neighbor,” the essentiality of building customer loyalty, and how culture and real corporate social responsibility go hand in hand.   

Read the full interview on Loyalty360 here: https://loyalty360.org/content-gallery/in-depth-exclusives/tractor-supply-company-building-strong-customer-loyalty-with-a-devoted-rural-demographic/

Show Notes Transcript Chapter Markers

Founded first as a mail-order tractor parts business in 1938 by Charles E. Schmidt, Sr., Tractor Supply Company opened its first retail store in Minot, ND in the following year. Ever since, Tractor Supply has been passionate about making sure it serves the needs of recreational farmers, ranchers, homeowners, gardeners, pet enthusiasts, and everyone who enjoys a lifestyle the company calls “Life Out Here.”

Over 52,000 Team Members deliver ‘legendary customer service’ when assisting customers as they shop for everything they need for “Life Out Here,” in categories including pet food and supplies, livestock and equine, hardware and power tools, clothing, and lawn and garden.

A Fortune 500 company, Tractor Supply is the largest rural lifestyle retailer in the U.S., with over 2100 stores across 49 states. In 2002, the company’s annual sales hit $1 billion, followed by another milestone, $5 billion, in 2013. Most recently, in 2022, Tractor Supply’s annual sales reached a whopping $14 billion. The brand is clearly doing something right.

Mark Johnson, CEO of Loyalty360, spoke with Kimberley Gardiner, Chief Marketing Officer at Tractor Supply, about what it means to be a “Neighbor,” the essentiality of building customer loyalty, and how culture and real corporate social responsibility go hand in hand.   

Read the full interview on Loyalty360 here: https://loyalty360.org/content-gallery/in-depth-exclusives/tractor-supply-company-building-strong-customer-loyalty-with-a-devoted-rural-demographic/

Mark Johnson:

Good afternoon, good morning. This is Mark Johnson from Loyalty 360. Hope everyone's happy, safe and well. I want to welcome you to another edition of our Leaders in Customer Loyalty series. In this series, we have the privilege of speaking with leading brands about what they are seeing and hearing on the front lines of customer channel and brand loyalty. Today we have the pleasure of speaking with Kimberley Gardiner. She's the chief marketing officer of Tractor Supply. How are you today?

Kimberley Gardiner:

I'm doing really well. How are you, Mark?

Mark Johnson:

Doing well. Thank you very much. First off, for those who may not know Tractor Supply there may be one or two people out there Would love to know a little bit more about you, your background and, can you, current role at Tractor Supply.

Kimberley Gardiner:

Yeah, happy to. So prior to coming to Tractor Supply, almost a year ago now, I spent about 20 years in automotive with brands like Toyota, lexus, mitsubishi, kia and, most recently, volkswagen. So a lot of different perspectives that I got from those brands. One thing I will say about myself is, you know, I always say to my team like I love, love, love marketing, not just automotive, but all marketing, because I find it something.

Kimberley Gardiner:

If you are very much okay with change, which I am, then marketing is something that is never the same, even we can say now, week in and week out, let alone month in and month out, and, you know, year over year.

Kimberley Gardiner:

So I'm somebody that continues to love the craft of marketing and really, really enjoy it and I love understanding what customers needs and wants are and making that shift from automotive to Tractor Supply. Really really fantastic organization, just such a fantastic culture, really lives its mission and values, and that was a huge driver for me. Personally, I find that I'm somebody that just I work better and I really get more out of not even a job at a career, I should say, over time with brands that I really believe in and that's been a throughput for me throughout my entire career and I can definitely say that's the case here at Tractor Supply. So I joined the company like I said, almost a year ago July of 2022, to lead all of our marketing functions, including data analytics, loyalty, crm, media partnerships, creative content strategy which we're recently adding, a group to help us with that national and local store marketing activities and then, as well as our store promotional support.

Mark Johnson:

Okay, quick question. When you came over from automotive I think deep roots there what was the? Maybe something that stood out as a change for you, or something when you moved more to retail? Was there one thing? There are two things that may have been kind of completely different. Obviously you were very flexible being able to address that, but you know what was the biggest difference, or was there one?

Kimberley Gardiner:

I think one of the biggest differences is just given automotive and the product itself. It's something that you keep for a minimum if you're leasing a car for two to three years, but a lot of folks keep them for five to 10, even more years. And so when we talk about how do you understand customer needs and wants, it's not only just that purchase and then that repeat coming back for things like service, but it's really over a potentially over someone's entire lifetime, with many people buying vehicles over and over again with the same brand. So, taking that customer lifetime value that was that was much more expansive and then coming to retail, which by definition, is a little bit more short term, right, week over week, month over month. What do we need to do to drive the business?

Kimberley Gardiner:

It's been a neat way for me to take that longer term thinking and use some of that into how do we nurture customer relationships over a longer period of time, which tractor supply, quite frankly, already does so well.

Mark Johnson:

Okay excellent Yeah, I think that's great. That's a very unique perspective from the automotive industry and I think also the automobile has the brand side too, but also has a dealer side, and big JD Power fan met him a couple of times in his seminal book really talks about just the dissonance between the two. Right, it's that old agency conflict you had in business school. The brand on the automobile side has their perspective, the dealers have their perspective and it kind of clashes where, at least with tractor supply, you're more aligned there and you can kind of drive that brand strategy, especially with all those roles rolling up to you. It sounds like that's kind of your focus for sure.

Kimberley Gardiner:

Yeah, and I think that, coming again from auto, where you are all about influencing that customer to make that decision at a more of a national like you said, a brand level, but you don't control that experience at the dealer level so being able to now influence that experience and working with our merchants and working with different teams here at tractor supply, it's so satisfying to be able to say that we can actually help make that experience. It's pretty great, but we can make it even better and that's really fulfilling as well. You'd asked earlier, though, about a fun fact about me I actually do not watch TV, which might be surprising for some folks in marketing.

Mark Johnson:

Oh, at all, or just not that often.

Kimberley Gardiner:

Not at all. I watch some streaming services here and there on my laptop at home, but I have not really had a screen of any large proportion and I don't watch TV at all.

Mark Johnson:

That's good. Yeah, I watch a lot of movies. I don't watch much TV, but that's that's. That's interesting. So that's the first one. For that Do you get the not watching TV award. So when you look at tractor supply Again, for someone who may not be familiar with tractor supply, can you give us a short history of the brand and what you guys do, how you do it, where you do it?

Kimberley Gardiner:

Absolutely so. The company was originally founded back in 1938 as a mail order catalog business and then about a year later opened up its first retail store in a little town called Minot, North Dakota, in 1939. Since then now, tractor supply has been very, very passionate about making sure we serve the needs of those recreational farmers, ranchers, homeowners, gardeners, pet enthusiasts and and really all those folks out there who enjoy what we call life out here Tractor supply. It's funny. You know people asking about the name tractor supply and although we've sold tractors over the years and all the things for tractors, that's obviously changed Now. You can, I believe, get a few from from us in terms of some mail order that you can do with one of our Partners that we've got for tractors.

Kimberley Gardiner:

But overall really it's a we're a large, the largest. It's just a rural lifetime lifestyle retailer in the US with over 2100 stores across 49 states, very much a needs-based, essentials based business and we have now 52,000 team members and one of the things I think that makes us so special is they're really known for what we call legendary Customer treatment and really helping customers find what they're looking for. So lots of different things across the store and it's always fun for me to talk to somebody who is familiar with tractor supply and says that they love it, and then folks that have heard the name but not quite sure about it, and it's always a joy to be able to tell them a little bit more about the brand and invite them to come to the store. Absolutely.

Mark Johnson:

Yeah, I love hearing these stories and I think one thing that definitely resonates with you is the passion you have for the brand. I think you kind of mentioned that earlier, that that definitely is already coming through in the interview, so it's great to hear. When you look at your loyalty program the neighbors club at Tractor supply you know how does that program work, how do members engage with the program and what are the benefits for the customer.

Kimberley Gardiner:

Yeah, so our neighbors club program is what I would call a shop earn and rewards based program.

Kimberley Gardiner:

We now have, as of Q1, 30 million members that are part of that neighbors club and we've seen significant growth year over year over the past several years. With that program, rewards are essentially tiered based on spend. So we've got neighbors and we've got preferred, and then we've got preferred plus. So it's a tiered program and the higher the tier for example, with our preferred neighbors club members they earn more points for each dollar that they spend and they're eligible for additional rewards like same-day delivery, trailer rentals and several other things. So it really encourages folks to migrate up from that base program level, I should say up to preferred and then up to preferred plus. And then recently, also in the last couple years or so, we've looked at a few other rewards that people get as part of the program, including those that are tied to the use of our Tractor Supply store card and also those as part of our new Co-branded credit card. So customers can accelerate their rewards as well as then earn points not only a tractor supply but at other retailers.

Mark Johnson:

Okay, interesting. So it sounds like you made some adjustments to the program recently and you know how do you use insights from your customers to make those changes Right. That the private label credit card program, maybe the partnership programs that you're rolling out that give your you know Customers some engagement and, potentially, redemption options.

Kimberley Gardiner:

Absolutely so. We do a lot of feedback, we do a lot of listening, we capture a lot of customer comments, we do regular neighbors club surveys Across those 30 million members that I mentioned before. So we're continuously improving and understanding how we could make the program even better and make future enhancements, the most reason of which we did back in 2021 in terms of really a wholesale review of the program. A common theme that we were hearing from our customers were Lack of rewards and and sometimes lack of transparency in terms of how many points do I have and what could those points get me, and those kinds of things.

Kimberley Gardiner:

So what we did is, you know, I would say, take it from a traditional sort of affinity program in the past To much more of a of a pure loyalty program that has a lot more rewards to it and it's also something now that's tied to a better on the channel experience, which is also something we heard from our customers. So they were looking for that on the channel experience, wanted more visibility to their points across multiple shopping channels. So, for example, how do we make sure we integrate the program into our mobile app and into our website and then into the store system? So those are now ways that you can check your points, see how much you shop or see when your next reward is coming up, see what other benefits that you're eligible for and things like that. So it gives the customer a lot more visibility to when they they are in terms of those rewards and things that they can look forward to with that next tier up when they get there.

Mark Johnson:

That's great to hear One of the things that we do. We have a membership community at Loyalty 360 and we meet and talk about different topics and there's been a great deal of discussion around devaluing points, adding value but, most importantly, more clarity, as you mentioned, transparency with a program, because many customers don't feel that the program they understand, the program understand the benefits and many brands change the program quite frequently so it makes it hard it kind of is like a moving eight ball for them to understand kind of the value proposition to them. So the transparency piece being able to more easily understand it is a great addition to have for the program for sure.

Kimberley Gardiner:

Yeah, 100%.

Mark Johnson:

When you look at customer loyalty, what does customer loyalty mean to you? To Tractor Supply and the customers you serve.

Kimberley Gardiner:

Customer loyalty. I would say for us and I've heard some of your other interviews as well when they answered this question and it feels like I would say the same thing in terms of it's absolutely essential. It's fundamental to how we do our business and how we think about our business. I would say it's been a huge driver of the success that we've seen over the last few decades several decades, I should say as customers rely on tractor supply for those essential needs. People are coming in for what we call our cue based items, things that are consumables and usable, essentials and edibles for their pets, for their animals, for really their way of life, and that means that weekend and week out, month in and month out, they're coming in. They trust Tractor Supply, they trust our team members. They're looking for that consistency, for that value, the quality of the assortment that we have, reliability that we're known for. And a couple of just quick notes on loyalty and how we think about that and how that comes to life.

Kimberley Gardiner:

I often, when I go into stores and our team goes into stores and talk to our team members, talk to our customers, they refer to their Tractor Supply, as when I come to my Tractor Supply, or let me tell you about my Tractor Supply. I think that's a real testament to how loyalty really isn't just a label. It's something that I think our customers really feel, something that we need to continuously earn. We also talk about how many of our team members were former customers it's nice to hear our team members talk about. I used to shop here at tractor supply and I loved it so much that I wanted to join the team and be part of the brand itself. So I think it's also another way that we think about loyalty is how do we even continue bringing back folks that have big customers and now they wanna be part of our team and part of the brand's just ongoing?

Mark Johnson:

Okay, when you look at your customers, diverse as they may be, is there a standard, maybe customer characteristic, a key trait that is consistent across them? It sounds like passion may be kind of a consistent trait they have for the different areas that you serve. Is there a standard trait?

Kimberley Gardiner:

Yeah, you're a hundred percent right, mark, in terms of that passion for that rural, outdoor life out here lifestyle. We describe our customers as friendly, as neighborly someone that you'd like to have as your next door neighbor. They're hardworking, very genuine and very resourceful. Many of our core customers have recreational farms and ranches. They've got animals and pets and they're really about self-sufficiency and that do-it-yourself lifestyle. And now our emerging customers, which we've seen grow over the last few years, especially during COVID and following COVID, they really tend to shop for us for a whole basket of different things across the store, so not only things that I mentioned, but also clothing, pet and food supplies, lawn and garden decor and things like that. So it's a really I can say this, I'm no imbiased, but it's a really fantastic group of customers that we have and they all seem to be very proud, I think, of the things that they do, the things that they get from our stores and just the lifestyle that they lead. It's just really neat.

Mark Johnson:

Okay, and when you look at your customers, one of the talking points we have with our members is how customers are changing, how they're evolving their attention, their interests, what it may, whatever it may be. How did your customers change, maybe going into COVID, coming out of COVID, and how did you adapt and continue to adapt that customer change?

Kimberley Gardiner:

No, great question, and I think you know we saw across the board right in this country.

Kimberley Gardiner:

You know, covid really brought a migration of folks, many folks outside of urban centers to ex-urban areas, outside of those major city centers, to more rural areas, and we've seen that growth across multiple customer segments, especially millennials, which is fantastic to see. Also more women customers and more diverse customers. So that migration of location also came with a migration of mindset, I would say, and more people feeling like they just want to spend their time pursuing things that are important to them and their family. That means, you know, caring for their home and then land differently and really appreciating that time outdoors. So I would also add that our customers across all cohorts are looking for more flexibility in how they shop and they buy. Covid obviously was a huge factor in that. They want, you know, more services 24-7, things that are out there ready. So we made some really nice enhancements in terms of our E-com business, our buy online pickup, on store and delivery services, to help meet those changing needs that were, I would say, really precipitated by COVID.

Mark Johnson:

Okay, you touched on a little bit about partnerships. It's a big area of interest for a number of brands, as you know. It sounds like it's a huge area of interest or focus for Tractor Supply. You know how does Tractor Supply typically approach partnerships and are there key partnerships you have in place today and how did those come about?

Kimberley Gardiner:

Sure, so many of our partnerships, I would say, stem from interest that people pursue in our stores, right. So we talked about, you know, that rural kind of base lifestyle, outdoor living, do-it-yourself, self-sufficiency, things like that. So those themes are really a nice filter, I would say, for how we think about partnerships across the board. You know, from a marketing perspective we have a number of partnerships right now In addition to vendors that we work with in the store brands like Purina and Carhart and Cargill, etc. Also things like Yellowstone and that franchise with Paramount, which has been really really a strong success for us and we've been with them the last couple of years and it's been great to see that franchise grow and, I think, folks that watch that program. It's a really nice overlay with the customer set that I mentioned earlier. Same thing with professional bull riding we have a partnership with them.

Kimberley Gardiner:

We've got a new partnership now that we just launched recently with what we're calling our tractor supply emerging artist program. That we're working with Lainey Wilson on. She's a huge up-and-coming I'm not even up and coming now. She's very much her star is on the rise and going great places. So she's part of that program. We've got some mentors that are part of it, that are really excited to help other artists in country really get discovered and help them with their craft. So those are all interests that overlay nicely with our customer base and emerging customers as well. And I'd be remiss if I didn't mention our tractor supply foundation as well.

Kimberley Gardiner:

In terms of other ways that we bring in partnerships to Neighbors Club and get that Neighbors Club engagement up with that loyal base, things like our support of the Future Farmers Association, which we've been working with for many, many years now, giving grants, doing scholarships with that group. It's been fantastic for us and a great engagement for our customer base. Same thing with 4-H, where we've raised money with them with their paper clover fundraising campaign. So those are meaningful ways that we can engage with our Neighbors Club members, building up that loyalty, giving them some touch points to come back in the store. We also do a lot of work with our veterans programs. So that's another customer base that's really important to us and we want to not only show them that we've got the right assortment, we want to meet their lifestyle needs, but we also care about the things that they care about and the communities that we all care about as well.

Mark Johnson:

So you mentioned your foundation working with the veterans and you know corporate social responsibility is another one of those topics, that Very important brands. But brands either do it well or exceptionally well. Like your organization, I haven't truly integrated Within what the brand is or but a lot of brands like, oh, we need to have a CSR, I think, well, we're a shoe store, maybe we'll just bring in the shoes, right, and then we're gonna talk about it, right. So it's not truly genuine. And you have people like you guys.

Mark Johnson:

What you're doing with the Veterans Association, the foundation, it kind of sits Behind the scenes but when you kind of peel back that layers of the onion, it's very important and ingrained within the culture of the organization. Even something like PetSmart right, petsmart, they've had almost seven million pets They've had adopted, so going back 20 plus years. But at other people like, oh, we need to do other ones doing it. It's very important in millennials, we'll just craft something and market it out how, as it's such a part of your fabric, you know how did it, how did it start? How do you sustain that? How do you build that? Because that's very unique.

Kimberley Gardiner:

I think that, with such a strong focus on our mission and values, practice supplies an organization that we're very committed to making sure that, not only that, we live those mission and values internally right we work hard, we have fun, we make money, we're all about communication and Making sure that we are high on teamwork. Take the initiative, accountability, all the things that make the company what it is. That's a, that's a nice natural segue into how do we support the communities in the way that would live up to those missions and that mission, sorry, and that and those values. And so when we talk about supporting veterans, we talk about supporting future farmers and young people that want to get into agriculture, and how do we continuously build up and sustain that, that way of life that we call life out here? Those are all fundamental things to make sure that we continue to deliver the mission and values just going forward.

Kimberley Gardiner:

So those things are all interconnected and intertwined with our team members, with their customers, with who we are as an organization, and it's not just for us about putting those things up on a wall. We honestly, honestly live them Every day, both here at our source support center but also in the stores. So I think when you feel that that mission and value come to life, I think I would say to other organizations as well that's a great place to start To your point. This shouldn't be a marketing initiative. This should be something that how do you support the things that are important to you as an organization? What mission are you on and what values do you want to show to your customers, and what are those things that are important to your customers that you want to help support in the community?

Mark Johnson:

Okay, excellent. Now what is the Biggest challenge you face in your role? Kind of keeps you up at night being the chief marketing officer at Tractor Supply.

Kimberley Gardiner:

I think that much, like we just talked about. You know, as we think about our culture, as we think about our mission and values. That is something that, as a marketer is is so important in terms of how I answer the question to a new customer, potential customer why tractor supply right? Why should I Look at Tractor Supply? Why should I shop there? What makes people want to be part of that Tractor Supply brand, if you will?

Kimberley Gardiner:

And so much of those things are tied back to the culture that we have, and so how do we keep that culture, how do we nurture those mission and values and continue to do that over time, like we've always done, but still we were under a lot of, you know, aspirations in terms of growing the size and the scale of the organization and the footprint that we have. So how do you keep that things that are special about the brand? At the same time, you know, manage the growth that you have, and how do you scale that to make sure that we really protect for that culture? Because I think it is something that makes us so unique and special and it's part of a huge story that I want to continue to tell in terms of our marketing messaging.

Mark Johnson:

Okay, excellent, and when you look at other programs that you may be loyal to, programs you admire, are there a couple programs that you think do a good job from a customer loyalty perspective and in what May you like about that they're offering?

Kimberley Gardiner:

I always like to the tried and true airline frequent flyer programs because they've been around for so long and it's been interesting to see them evolve and pivot over time. I like to talk about United because I've been part of their mileage press program now for over 25 years. So talk about longevity with loyalty. That's quite a long time and I also look at you know what makes me loyal to the company. You know what makes me loyal to them.

Kimberley Gardiner:

It's not necessarily their, their flights, it's not necessarily the planes that they fly, it's not necessarily the time time scales and timing and things like that, because sometimes I say well, you know, I may have to have an extra layover, it may not be in a convenient time for me, the fare might be a little bit more expensive than someone else, but I will still go out of my way to fly United because I'm at that top tier level and I have been for a long time. So I appreciate those benefits and it's something that is important enough to me in terms of time saving, which is the number one thing why I keep keep with them that preboarding that I can get through United is worth gold. So it's something that, if you can keep that loyalty even in that case, despite sometimes it's not as convenient or it costs you a little bit more. I think that's also a testament to a really strong loyalty program over time.

Mark Johnson:

Okay, excellent. And if you could ask someone on the CMO and maybe in a different industry, you know a question about their customer loyalty approach or customer experience approach, you know what would that question be?

Kimberley Gardiner:

As we're trying to look at. How do we migrate more of those Based to your customers of neighbors club into the preferred neighbors club and then preferred plus? I just be curious more about what's their migration strategy. What have they found over time that's worked really well in terms of graduating folks from one level to the next Because, much like the United example that I gave our preferred plus members, they have some really great benefits to that program and we see that they're some of our most engaged customers by far. So I think we'd all like, as marketers, to be able to graduate folks too if we have a tier program, as we do. How do you? How do you migrate them? How do you get them from one level to the next to then obviously spend a little bit more with you and spend more time in your stores and online with you?

Mark Johnson:

Okay, and the last question I have Kind of self-serve, but you know what can Loyalty 360 to help you and your team in your customer loyalty journey.

Kimberley Gardiner:

So I think Loyalty 360 could help us in terms of benchmarking other companies. I'm somebody that I believe in. No matter what industry I'm in, I always want to learn from other industries and see what they're doing. That might help us balance the needs of our diverse customer base across different customer cohorts. So how, how are you seeing other industries, other companies, manage their loyalty programs successfully, not only from, maybe their core customers, but they're emerging customers, those customers that they're growing with over time, like for us, those millennial and Gen Z customers? So how do you create a program that's balanced in terms of what each of those cohorts are looking for, which might be a little bit different Depending on where you're coming from?

Mark Johnson:

Absolutely Well. Thank you very much, Kimberley, for taking the time to talk to us today. It was great to get to know a little bit about you, interesting that you're not a TV watcher, which is great. I'm a kind of envious of that which is good and looking forward to hearing more about Tractor Supply and you're, you know, very compelling a customer loyalty program going forward.

Kimberley Gardiner:

Well, thank you, mark, it's been a real pleasure.

Mark Johnson:

Absolutely. Thank you very much, everyone for taking the time to listen today. Make sure you join us back for another addition of our leaders in customer loyalty series soon. Have a wonderful day.

Intro
Tell us about you
Difference between automotive industry and retail industry
History of Tractor Supply
Benefits of the Tractor Supply Loyalty Program
How do you use customer insights to evolve your program
What does customer loyalty mean to you
Key trait with your customer
How have customers changed since COVID
How does Tractor Supply approach partnerships
Corporate Social Responsibility
Biggest challenge you face in your role
What loyalty programs are you loyal to
If you could ask another CMO about their loyalty approach what would you ask
What can Loyalty360 do for you
Outro