It’s no secret that shoppers love retail loyalty programs. Our data shows that nearly three-quarters of US online adults belong to at least one.
When executed well, loyalty programs deepen customer relationships, drive business results, and even create brand differentiation. For instance, Ulta’s loyalty members account for more than 95% of total revenue, Nordy Club members drove two-thirds of Nordstrom’s sales in 2019, and Sephora’s loyalty program led to its revered online Beauty Insider community.
In our latest report, “The State Of Retail Loyalty In 2020,” my colleague Emily Collins and I developed a framework to evaluate 13 retail loyalty programs to determine which programs serve their shoppers best across: ease of enrollment, participation benefits, account management, strength of communications, and privacy.
Here are some of the key findings:
- Overall, loyalty programs don’t communicate that well. Forrester data shows that the majority of consumers who belong to loyalty programs like to receive updates on their benefits. However, most programs that we evaluated send their loyalty members the same promotional emails that their nonmembers receive. To be more engaging in their outreach to members, retailers should send relevant messages that include information about membership, recent purchases, and progress toward rewards redemption.
- Benefits beyond points will bolster programs. Loyalty programs that gather shopper feedback and engage customers in unique ways will win in the future. Why? They are valuable and cost-effective ways to win with shoppers beyond the rebates and points that are commonplace in loyalty programs now. For example, Nordstrom’s loyalty members receive exclusive perks like early access to sales and free basic alterations. In its latest earnings call, Nordstrom CEO Erik Nordstrom revealed that customers who engage in their services (e.g., alterations and styling) spend three to five times more on average.
Find out more about how some of the top retailers — including 7-Eleven, Amazon, and Starbucks — fared in our evaluation in the full report. To learn more about where your program stands using our framework, please set up an inquiry with me or Emily Collins here.