THE CLARUS Blog

The Loyalty Programs You Should Watch in 2019

In 2018 we saw a wave of changes in retail from AI, to store redesign, to an increase in ecommerce, and many brands rethinking their loyalty strategies that are all part of the way companies are now engaging consumers.

One of the key focus areas for brands was in their loyalty program efforts. Retailers doubled down by enriching existing free programs, launching completely new ones, and stepping into the largest growth area of paid loyalty.

There is a concerted effort to win new customers with a keen focus on retention.

So which loyalty programs are the ones to watch in 2019?

We have a company filled with passionate loyalty experts and here’s what some of my colleagues had to say.

 

DSW Has a Loyalty Program That Fits

Kelley Gargano, Senior Director of Product Management

DSW is investing a lot of money in promoting its loyalty program. I consistently receive direct mail and DSW has given its program premium placement in-store and online.

This is a good example of how a retailer can get ROI from a loyalty program if it places it front and center. The program itself is compelling with a good blend of transactional perks (points that equal rewards and free shipping) and interesting extras (shoe donations and birthday gifts for you AND your friends).

I also love DSW’s messaging, which is clear, concise, exciting, and on brand. This program demonstrates that DSW knows and understands its audience well.

Transactional benefits let your customers feel smart, where experiential benefits let them feel special. Both have an emotional impact.

The balance between transactional and emotional benefits helps a brand attract and retain more customers.

In today’s loyalty landscape, if you don’t show your customers that you value them, they will look elsewhere. It’s that simple. Combining transactional benefits and experiential benefits is the best way to engage the most consumers with your brand.

 

Uber is Driving Loyalty

Alyssa Callahan, Product Manager

Uber Rewards uses a four-tiered, points-based system that is simple to understand. Earn a point for every eligible dollar you spend on rides and Uber Eats, while earning extra points for booking some of their pricier ride options (UberXL, Select, Black SUV trips, etc.).

For every 500 points earned, members receive $5 in Uber cash. All your points are conveniently banked within the app and members can stack up their savings to use more than one reward at a time.

Uber’s rewards program was built so it appeals to everyone and, for those of us who don’t live in big cities, Uber Rewards is currently on a waitlist, but its email communications have already begun to build the hype and anticipation.

 

Premium Loyalty is Pushing the Boundaries

Tom Caporaso, CEO

I always have my eye on Prime because Amazon has shown it is a leader in premium loyalty. I am also interested in the Lululemon program to see if a lower price program has success with an apparel retailer.

With its 100 million Prime members, Amazon blends its laser customer focus with a plethora of attractive benefits to acquire and retain customers. For Amazon, the strategy has always been simple: Figure out the pain points and take them away. It began with its ability to truly listen to its customers.

In early December Canadian athletic apparel retail Lululemon Athletica announced that it’s been testing a premium loyalty program that charges members $128 annually.

Because the results have been so successful, officials for the athleisure brand plan to expand the test into additional markets, possibly at a higher membership price point. One reason that Lululemon’s premium loyalty program test has been so successful is because there is a clear value proposition.

For $128 annually, members receive a pair of pants or shorts. If someone plans to buy one pair of those leggings a year, that membership just paid for itself.

 

Stitch Fix’s Loyalty Program is Always in Style

Jillian Dimoff, VP, Business Development

I’ll be watching Stitch Fix to see what it’s doing in co-creation and personalization to attract and retain customers.

Co-creation is a management initiative that leverages ideas from direct customers that creates new strategic ideas for a company.

The first step in this process happens as soon as the customer creates his or her Stitch Fix account. Customers who set up an account, either through their email or by connecting to Facebook, are led through an extensive questionnaire called the Style Quiz.

Every step of the customer journey is mapped, analyzed, and optimized by algorithms.  Stitch Fix employs more than 80 data scientists who work on everything from clothing design to package fulfillment and logistics.

Stitch Fix officials believe that data-driven decisions help their customers and their entire internal team. This data helps Stitch Fix officials create keenly personalized offerings.

 

Macy’s and Kohl’s are Leading Apparel – Who Will Follow?

Tom Baker, VP, Strategic Partnerships

Sephora started 2019 with expanded benefits that are more customer-friendly.

After the very successful program updates from Macy’s and Kohl’s this past year, I’m interested to see where the likes of Belk, Lord & Taylor, Dillards, and J.C. Penney are headed to try to compete.

Macy’s customers will no longer need to have the company’s credit card in order to be eligible to join the Star Rewards program. Company officials have opened the loyalty program to all customers, regardless of how they pay for purchases.

Meanwhile, in May 2018 Kohl’s announced its latest iteration of loyalty called Kohl’s Rewards.

Kohl’s Chief Marketing Officer Greg Revelle talked about the Kohl’s Rewards loyalty program on the company’s website.

“As part of our foundation in value, we’ve also offered best-in-class loyalty programs that keep our customers coming back for more,” Revelle wrote. “First, we gave customers more value with Kohl’s Charge, our enormously successful private label charge card program. Today, Kohl’s Charge accounts for nearly 60 percent of our sales. Next, we gave customers more value with Kohl’s Cash, the iconic customer-favorite that is often copied, but never duplicated. Millions of customers redeem Kohl’s Cash each year, and usage continues to grow. Most recently, we offered customers even more value with Yes2You Rewards, our payment-agnostic, points-based loyalty program that now has 30 million active members. As we’ve built these programs, our customers have responded by increasing their loyalty to Kohl’s.”

Revelle added: “Kohl’s Rewards unifies our three best-in-class loyalty programs–Kohl’s Charge, Kohl’s Cash, and Yes2You Rewards–into one platform based on the power of Kohl’s Cash. We believe Kohl’s Rewards will become the new standard in loyalty– simple, compelling, and rooted in value customers will find only at Kohl’s. It’s designed to give every customer an opportunity to win.”

 

Retailers are Rethinking Loyalty

It’s exciting to see many brands rethinking loyalty.

DSW shows that a loyalty program delivers when it is front and center and blends transactional and experiential benefits.

Uber Rewards uses a four-tiered, points-based system in its loyalty program that is simple to understand.

With a nod to Amazon’s gold standard premium loyalty program Prime, Lululemon tested a similar type of program with its customers and the results are quite promising.

Stitch Fix heavily involves its customer base through co-creation and personalization efforts.

We can only hope that 2019 brings as much change with consumer engagement strategies and technology that 2018 delivered.

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