Retail Dive looks at changes in retailer loyalty programs, a topic that is always of interest, both to analysts and their personal shopping strategies. I am probably your worst enemy. If for some reason I chose not to use my Amazon Prime account, I will be looking at the retailer’s loyalty program for one-time use. Sure, that 15% off coupon might interest me today, but this may be the last time we meet. If you don’t offer me another opportunity next time, your competitor will.
Remember Plenti? That was a dog. I joined the multi-retailer reward program only because American Express was the force behind it. The free appetizer at Chili ’s was great, but after that we parted when they never seemed to simplify the transaction. A separate card was required, and with the required password, it was just not worth it. Amex was the appeal to me because they do so many things well, but this was not designed with the consumer in mind.
- In the past year, the space was reshaped when a slew of retailers reinvented, upgraded and dropped loyalty programs.
- The multi-retailer Plenti program shut down in July after Macy’s and several other important participants bailed. And several retailers have tweaked or added internal loyalty programs.
- Program changes have ranged from department stores, including Macy’s, Nordstrom and Kohl’s, to big-box and specialty retailers like Target, DSW and Lululemon.
Big data may be the driving force, but it has yet to figure me out as a consumer. I will use you more than you use me. And, even with my come-as-you-go strategy, the next retailer will be just as happy to have me sign up. I might even use my wife’s credentials to double dip.
- Sitting at the heart of every loyalty program, below all of the 10% off coupons, buried underneath the free tote bags and blankets for every $50 purchase, lies a trove of email addresses, phone numbers and purchase history records.
- And while shoppers are busy trying to get a promotion for their next purchase, retailers are focused on scooping up all that customer data, analyzing it and using it to hone a strategy to get customers to shop again — just one more time.
- “People wanted to have data about their customers, people purchased in physical locations, they didn’t have any other data points about the customer and by having them join a loyalty program, they were able to capture some of that data and then be able to target those customers,”
And, some retailers, seem just as fickle with their private label credit card partners. They are mimicking the PLCC offerings without the card integration. The card integration strategy is what paid for the loyalty program, so how well can this work?
- That’s led to many retailers lowering the barriers for entry to their loyalty programs, mainly by getting rid of requirements for store-branded credit cards, which are a tough sell already, and a tougher one for younger consumers with past (and future) recessions on their mind.
- This year alone, Macy’s expanded its loyalty program to members without its store card, Nordstrom upgraded its own to allow non-card holders to participate and J. Crew launched one in August without a card requirement.
Amazon, though is the best deal in town. The recent price increase was inconsequential. I’d pay 100% more (and hope they don’t tie this statement to my annual billing.) It is worth every penny.
- According to Bram Hechtkopf, CEO of KobieMarketing, Amazon Prime is partially so successful because it creates emotional loyalty with customers, which is based on status, habit and reciprocity. That emotional loyalty, over time, also makes the retailer’s customers less price sensitive because they’re already paying to receive the benefits of the membership.
So, call me cheesy or cheap. Every dime I save is better than one spent. Big data does not scare me. If I can’t find what I want at Amazon at a price I think is fair, you will find me trolling the internet looking for the next big offer. When I did it last December, I saved $60 on a bracelet for my wife. With that expectation, I will be back again looking for the same deal, perhaps somewhere eels if I need to.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
