It was a heck of a 2020.
But, as 2020 was more a reactive year for retailers due to COVID-19, the first three months of 2021 have been more proactive.
Retail is starting to reopen.
Last year 35% of U.S. consumers tried a new brand since the COVID-19 pandemic began while 77% demonstrated new shopping behaviors, including new channels, stores, and brands.
As customer loyalty took a hit last year due to significant changes in consumer behavior, it’s no surprise that 90% of retailers say expanding their respective loyalty programs is a priority in 2021, according to our 2021 Loyalty Industry Data Study.
In keeping with that theme, many of the items in our Q1 Retail Recap revolve around brands testing premium loyalty or subscription programs.
From a loyalty perspective, in the first quarter we saw:
- Urban Outfitters launch a test premium loyalty program.
- Membership numbers revealed for the Walmart+ premium loyalty program, which launched in September.
- Ralph Lauren launch a subscription rental program.
- Target’s continued growth and our CEO’s thoughts on the company’s possible future launch of a premium loyalty program.
- How McDonald’s and Burger King plan to build more loyalty in 2021
Urban Outfitters Started Testing Its Own Premium Loyalty Program
Urban Outfitters started testing a new premium loyalty program called UP, to go along with its free UO rewards program.
UP is designed to drive increased frequency, capture a greater share of wallet, improve retention, and attract new customers.
Our CEO, Tom Caporaso, told Glossy that the UP premium loyalty program targets the brand’s most valuable customers.
“These top shoppers won’t accrue rewards over time, but instead will feel instant gratification for immediate access to free shipping, monthly coupons and other enticing rewards that they are looking for today,” Tom explained. “Enrollees’ reception to these perks will provide extremely valuable insights to the URBN umbrella, especially since they are the ones most likely to take advantage of new offerings and share their honest feedback.”
UP offers two tiers: a $48 annual price point and a $98 annual price point with various degrees of benefits.
Speaking of benefits, UP offers the right mix that includes:
- Free shipping and returns
- 15% discount on purchases
- A $10 coupon every month
- A discounted subscription to clothing rental service nuuly
- Access to promotions and events among its store brads
According to our 2020 Premium Loyalty Data Study, the top two perks that motivate consumers to join premium loyalty programs are free shipping (66%) and instant discounts that can be used whenever you shop (60%). The UP program has these two perks covered.
After a largely reactive 2020 for most brands due to the pandemic, Urban Outfitters is being proactive this year when it comes to customer loyalty.
Walmart+ Membership Numbers Were Quite Impressive
Five months after Walmart launched its premium loyalty program, Walmart+, company officials released data that says there are between 7.4 million and 8.2 million members.
Customers spend an average of $1,000 at Walmart.com per year, which is “remarkably similar to the long-term figure for Amazon,” said Josh Lowitz, partner and co-founder of CIRP.
Walmart+ members currently account for 13%-14% of total Walmart.com shoppers as of Jan. 30, 2021. Walmart+ charges an annual membership fee of $98.
The success of Walmart+ reinforces the popularity of premium loyalty programs.
- Our 2020 Premium Loyalty Data Study found that 70% of consumers would be willing to join a premium loyalty program if their favorite retailers offered them and the benefits were valuable to them.
- Ninety-four premium loyalty members shop at that program’s retailer at least once a month.
- Eighty-eight percent of consumers are likely to choose a retailer whose premium loyalty program they belong to over a competitor that is offering a lower price.
- Ninety percent of retailers say that Walmart’s launch of Walmart+ last year impacted their decision to pursue a premium loyalty program this year.
Ralph Lauren Launched a Subscription Rental Program
Ralph Lauren wanted to gain deeper consumer insights, so it launched a subscription rental program called The Lauren Look.
For $125 per month, consumers can curate items from the most recent Lauren collections, which is the company’s most widely distributed brand. Consumers receive a shipment once their curated closet is complete and favorite pieces are prioritized and can return them for new pieces or purchase them at member prices.
Our CEO, Tom, talked to Retail Info Systems about this recent launch. “Around 90% of loyalty professionals recently said enhancing or expanding their loyalty programs is a priority for 2021, and this could be Ralph Lauren’s first step toward a loyalty program,” he explained.
Tom said the program will allow the company to collect consumer data like their monthly preferences for apparel, how they best react to marketing emails or flash sales, and what they want the most from the brand.
“Ralph Lauren is also finding a loophole to the decline in physical storefront shopping, offering a ‘try before you buy’ model that really isn’t available across other luxury branded ecommerce stores,” Tom added.
Is Premium Loyalty in Target’s Future?
While many retailers struggled since the pandemic started, Target has flourished.
Its earnings and revenue figures have far exceeded Wall Street estimates.
Target CEO Brian Cornell attributed the company’s success to careful planning and investment.
“Following years of investment to build a durable, scalable, and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic,” he said. “With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020, and grew our revenue by $15 billion, which is more than the 11 prior years combined.”
So, what’s next for Target? Perhaps a premium loyalty program like Amazon Prime or Walmart+?
Our CEO, Tom, shared his thoughts on this issue with Yahoo Finance.
“So many Americans are now acclimated to ordering groceries and weekly commodities online, and many Target shoppers will continue this routine moving forward, just like Amazon Prime users have chosen to do for years,” Tom said. “However, unlike Amazon Prime or Walmart+, Target still does not offer a premium loyalty program where customers can choose to pay an annual or monthly fee for enhanced, instant benefits.”
Target has always done a great job listening to its customers, evidenced by its popular Target Circle loyalty program.
Ninety-five percent of retailers with traditional loyalty programs have discussed launching a premium loyalty program in 2021.
Could Target be one of them?
McDonald’s and Burger King Will Prioritize Customer Loyalty in 2021
McDonald’s and Burger King might be household names, but that’s not stopping company officials from focusing on customer loyalty in 2021.
As two of the largest fast-food chains in the U.S., McDonald’s and Burger King are testing loyalty programs to increase repeat visits and take advantage of the massive growth in digital ordering since the pandemic started.
An interesting focal point for both test programs is speed.
Both brands are trying to reward faster and more often, get more personal, and take the steps to test and optimize the programs before rolling out nationwide.
Our new 2021 Loyalty Industry Data Study found that 86% of retailers that offer benefits within the first week say their loyalty program members shop at least once a week. That number goes down to 63% when retailers offer benefits within the first month.
Instant loyalty benefits like item upsizing and free coffee are featured in both the McDonald’s and Burger King programs.
About 900 locations out of McDonald’s 14,000 U.S. restaurants are now part of the test.
Not only will customers be able to earn points, but McDonald’s employees will be able to earn loyalty points by completing training tied to the loyalty program, and it will all encourage the use of the McDonald’s app.
Meanwhile, Burger King is testing a loyalty program in five U.S. markets – Los Angeles, Long Island, Miami, New Jersey, and New York City.
The test program is called “Royalty Perks.”
Program users receive 10 “crowns” for each dollar spent, which can then be used to get free menu items. Members can also earn points on orders from Burger King’s website or app.
Also, Burger King’s program will hand out free daily perks, such as upsizing members’ drinks or fries and award double points throughout a member’s birthday month.
Only time will tell if McDonald’s and Burger King achieve their respective loyalty goals.
But keeping your customers at the center of everything you do is the right way to build loyalty.
Clarus Webinar Focused On Loyalty Marketers’ Priorities for 2021
Clarus published its 2021 Loyalty Industry Data Study that was the focus of a webinar titled, “New Data Reveals Loyalty Marketers’ 2021 Priorities.”
Paul Wolfer, B2B Marketing Manager, Clarus Commerce; and Carlos Dunlap-Beard, VP of Loyalty Solutions at Clarus Commerce, served as co-hosts of the webinar.
The webinar tackled the following themes:
- COVID-19’s impact on loyalty
- What your customers want from a loyalty program
- How other loyalty vendors are stacking up
- How other retailers are stacking up
- Working with loyalty partners
- The rise of premium loyalty
- Loyalty challenges in 2021
“Consumers want better from their brands,” Carlos said. “What can we do that adds real value for our customers? Even if it’s something they didn’t ask for. It’s OK to be bold. This is the time to be bold if you’re a brand. It’s OK to come up with a new benefit for your customers. Put it out there and see if customers like it.”
While 2020 was largely a year of being reactive, 2021 is the year for retailers to be proactive with their customer loyalty efforts.
If you’d like to listen to the webinar, please click here.
Loyalty Is On the Minds of Many Retailers
As our 2021 Loyalty Industry Data Study reveals, 90% of retailers say expanding or enhancing their loyalty programs is a priority for 2021.
Also, 95% of retailers said they are considering launching a premium loyalty program this year.
Those themes are echoed in our recap through Urban Outfitters, Walmart+, Ralph Lauren, Target, McDonald’s, and Burger King.
Loyalty is certainly on the minds of many retailers this year.
If enhancing your loyalty program is a priority for you in 2021 and you’re looking for advice, we’d love to chat with you anytime.