THE CLARUS Blog

Retail Recap Q4 2019: Breaking Holiday Records and Winning with Loyalty Programs – Amazon, 7-Eleven, & More

What do Echo Dots, Slurpees, and yoga classes have in common?

Well, these products and experiences were offered by some of the big winners in Q4 2019.

In our fourth edition of Retail Recap for 2019, we saw several amazing things happen in the customer loyalty industry.

Let’s take a closer look:

 

Amazon Was All Smiles After the 2019 Holiday Season

The day after Christmas Amazon officials announced that the holiday season was “record-breaking” thanks to its customers all around the world.

According to Amazon officials, billions of items were ordered globally and tens of millions of Amazon Devices were purchased worldwide.

“This holiday season has been better than ever thanks to our customers and employees all around the world,” Amazon founder and CEO Jeff Bezos said.

Amazon’s successful premium loyalty program, Prime, surged to the forefront during the holiday season.

More people tried Prime this holiday season than any previous year – in fact, in one week alone, more than 5 million new customers started Prime free trials or began paid memberships worldwide.

In 2019, Amazon’s dedicated last-mile delivery network delivered over 3.5 billion customer packages globally.

It’s not too early to start planning for your 2020 holiday season and clarifying your customer loyalty strategy.

 

7-Eleven Nearly Tripled Its Loyalty Program Membership

The evolution of 7-Eleven’s 7Rewards loyalty program is truly remarkable.

Since the program expanded two years ago, its membership has nearly tripled, rising from 9 million members to 25 million.

This substantial membership surge equated to increased store visits and more loyal customers, company officials noted.

7Rewards is a mobile customer loyalty app that earns users a free beverage for every six cups purchased.

Due to its huge success with the 7Rewards loyalty program, this year 7-Eleven received several awards for its loyalty program, including: Convenience Store News’ Technology Leader of the Year Award, Loyalty360 Technology and Trends Platinum Award, and The International Business ‘Gold Stevie’ Award for Integrated Mobile Experience.

“While winning awards is certainly an honor, the real measure of success is how 7Rewards benefits our customers and franchisees every day,” said Joe DePinto, 7-Eleven President and CEO.

Brands are successful when they focus on their customers and offering memorable experiences.

 

Lululemon Continued to Create a Community Through Experiential Loyalty

Canadian athletic apparel retailer Lululemon Athletica is committed to experiential loyalty.

Lululemon uses an innovative product that creates a loyal community of customers and drives high engagement.

“We’re proud of the continued momentum in our business as we live into our vision to be an experiential brand,” Lululemon CEO Calvin McDonald said.

He noted that Lululemon’s experiential stores “really are the pinnacle expression of our vision of the guests living the sweat life. Second is, they create a positive impact across the market. There really is a halo impact.”

Lululemon’s fourth-quarter net revenue rose 23%, to $916.1 million.

Also, direct-to-consumer net revenue increased nearly 30% and there was a 38% revenue increase in men’s during the fourth quarter.

Lululemon’s unique approach to loyalty begins with its stores.

“Then you factor in our ambassador community, then you layer in our membership, then you layer in our events, it really is creating a layered halo that’s impacting not just loyalty engagement, but our strength within these marketplaces,” McDonald added.

Lululemon’s premium loyalty program offers an engaging value proposition and awards members curated events and workout classes.

The concept of brand authenticity is clearly top of mind at Lululemon.

“I believe that one of our greatest assets is the direct and authentic connection we have with our guests,” McDonald added.

 

British Grocer Tesco Took a Premium Loyalty Approach

British grocery giant Tesco blazed a new trail in premium loyalty.

Tesco became the first major British supermarket group to offer a premium loyalty program.

The new loyalty program allows about 19 million Clubcard members to upgrade to Clubcard Plus for £7.99 ($10.27) a month.

Clubcard Plus members also receive 10% off selected Tesco brands in-store, such as F&F, Go Cook, Tesco Pet, and Fox & Ivy.

Could this impact grocers in the U.S.?

Grocers operate on very thin margins, limiting the value of the rewards and benefits they can give back to their customers within a loyalty program.

Grocery loyalty program owners are challenged by both the economics of the industry and the limited opportunities to differentiate the customer experience for their best customers.

Given all the available shopping options, today’s new generation of consumers is looking for immediate rewards and personalized benefits.

With new challenges from leading brands like Walmart and Amazon, grocers need to rethink their respective approaches on creating sustainable customer loyalty.

For all these reasons, premium loyalty is a viable option for grocers.

The opportunities for loyalty marketers are clear in the grocery industry: 83 percent of consumers say they visit between four and nine different chain stores each year to buy groceries.

 

Silver Star Brands Launches VIP Rewards Program 

On Oct. 1 Silver Star Brands, one of the largest direct marketers of consumer gifts and household products in the U.S., launched its VIP Rewards premium loyalty program in partnership with Clarus Commerce.

Jolie Landrum, Director of Customer Relations at Silver Star Brands, said that the VIP Rewards program “will bring added value to our customers and enhance our relationships with them. The program offers our customers a chance to engage and save with us more often, and it will be wonderful to help them realize real benefits when they have to shop elsewhere.”

The VIP Rewards program launched on four of the Silver Star Brands: Miles Kimball, Walter Drake, Easy Comforts, and Native Remedies (which includes PetAlive online orders). Members of the program can shop at any of these four “sister brands” and save 10%.

Miles Kimball VIP Rewards offers exclusive savings on purchases from its sister brands and more than 1,000 retailers in the Marketplace.

Premium loyalty focuses on increased engagement with a brand’s top customers and offers value that free programs can’t touch.

 

ShopHQ Rewards Customers with New Premium Loyalty Program

Just two weeks later, Clarus launched ShopHQ® VIP, an exciting new loyalty program for the iMedia Brands, Inc. (NASDAQ: IMBI) nationally distributed flagship television network, ShopHQ.

ShopHQ VIP members receive unlimited free shipping for purchases and returns on ShopHQ as well as 5% cash back on all ShopHQ purchases.

Also, ShopHQ VIP members are eligible for cash back and shipping benefits at more than 1,000 other retailers who are part of ShopHQ’s special VIP network.

 

Takeaways from Q4

The fourth quarter also highlighted the importance of emotional connections in building customer loyalty and how Lululemon is kicking it up a notch with its experiential premium loyalty program.

Premium loyalty was such a major theme in the fourth quarter and our CEO, Tom Caporaso, wrote an article titled, “Free and Premium Loyalty Programs Can and Should Coexist,” that was published in Street Fight magazine.

“With shoppers’ desire for richer experiences and more valuable rewards and retailers’ need to gather data to support these desires, a blend of both premium and free loyalty is an advantageous route,” Tom writes.

Retailers should consider offering both free and premium loyalty programs, Tom adds.

“With a tiered strategy, retailers can ensure that a greater percentage of their customers are not only consistent but also loyal,” he writes.

Selling existing members on a premium program comes down to communicating the value, Tom notes.

“When both the transactional and experiential benefits are desirable, more and more customers will take the leap and become premium members, further engaging with and staying loyal to your brand,” he adds.

As more major retailers rethink their respective loyalty strategies, what are your 2020 plans to build stronger relationships with your customers?

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