Loyalty trends and best practices

Loyalty Makeover: Ace Hardware

by Arif Damji
February 28, 2014
Loyalty Makeover: Ace Hardware


In this installment, we look at the loyalty program at Ace Hardware, the $3 billion hardware store co-operative with 4,700 locations.  Loyalty Makeover offers suggestions to retail brands for  making the most of their loyalty initiatives.

What Ace Hardware's loyalty program looks like today

Known as Ace Rewards, the Ace Hardware loyalty program rewards members with in-store discounts ("Instant Savings ") and a points currency for all purchases. Members collect 10 points for each dollar spent and get 1,000 points for enrolling. Once they reach 2,500 points, they receive a coupon for $5 back on their next purchase, equating to a 2% funding rate. The private label Ace Rewards Visa Card allows members to augment their Ace Rewards point balances with up to 10 points per dollar spent.

First impressions

Ace Rewards is unusual among retail loyalty programs in that its benefits include both a preferential member price as well as the accrual of a points currency. The generosity of the program is likely a significant driver of its strong enrollment, which has reached nearly 25 million members. In-store purchasers are attracted to the preferential member prices, while online shoppers benefit from the point currency. However, strategic changes to its loyalty program could benefit Ace Hardware's member stores in their ongoing battle with the likes of Home Depot, Lowes, and Amazon.

Makeover ideas:

  1. Personalize rewards: A premium program tier would allow Ace Hardware to hold on to its top customers while giving mid-tier shoppers an incentive to spend more. Inactive shoppers could get a free gift just for stopping by the store.

  2. Expand potential earning opportunities: As it stands, there the only way to earn points is through purchases (in-store or online). In order to drive engagement between purchases, Ace could award points for writing reviews, creating wish-lists or uploading project plans. This ensures that members are more invested in the currency and are more likely to repurchase sooner.

  3. Introduce a points expiration policy: There doesn’t appear to be an expiration date on points earned by members. Ace should consider expiring points after some period of inactivity, as this will create urgency around repurchasing sooner. (The right period depends on an analysis of purchase frequency among mid-tier shoppers.) Sending “reminders” to members regarding upcoming point expiration will be an invaluable tool to drive higher retention.

  4. Improve rewards fulfillment:  Today, reward certificates (coupons) are mailed to a home address. Shoppers who purchase in-store must wait for these deliveries, and can use rewards only in-store. Instead, Ace Hardware should make rewards claimable and redeemable both online and at in-store (mobile coupons or POS).

Questions? Or is there a loyalty program you'd like to see featured in Loyalty Makeover? Send me a note at

Arif Damji is Director of Strategy & Development at 500friends, which offers THE complete SaaS loyalty solution for today's CMO. 


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