Daily Insights

The New Silhouette of Loyalty

By: Alizah Asif Farooqi | Jun 20, 2019

Loyalty programs from major department stores are expanding and changing form to meet customer demands.

Though overall adoption increased from 74% to 85%, many long-running programs saw major changes according to Gartner L2’s Digital IQ Index: Department Stores. Programs from traditional department stores—like Macy’s Star Rewards and Barneys’ Influencer program—switched to a tender neutral model, allowing customers to earn rewards from any purchase while continuing to offer additional rewards for credit card members. Department stores, however, should be wary of costs as the arms race for loyalty heats up. ASOS, for example, notably deprecated its A-List program, citing its program’s costliness, instead refocusing on a highly personalized app experience for its loyal customer base and adding an annual subscription program for free expedited shipping.

The most notable shift, however, is in experiential rewards. While any online retailer can offer points for purchases, department stores stand out from them and specialty retailers alike by offering all-inclusive luxury services. Barneys’ updated loyalty program is a prime example—in addition to earning traditional rewards points in a tiered structure, rewards members gain access to beauty treatments, early sales and even benefits at Freds, the on-site restaurant. As department stores consider loyalty revamps, they should also look to DSW which, with its DSW Rewards program, forged a model to effectively communicate revamps—prominently featuring the program on the homepage and in email communication to members of the previous program.

Mobile apps remain a relevant and important digital touchpoint for retailers to reach their most loyal customers as well. iOS apps are offered by 70% of analyzed department stores, earning 17 million downloads in the study period and driving 3.6 million app store ratings. La Redoute’s app, for example, surged with active users during French Days in spring and fall 2018—a local equivalent of Black Friday created in 2018 by the retailer and several peers—but fell sharply following the holiday. In contrast, DSW succeeded in steadily increasing its monthly active app users across devices with improvements like Apple Wallet integration, Venmo expedited payment and localization. Similarly, Saks Fifth Avenue offers push notifications and a mobile-optimized guide to Style Advisor, connecting customers with consultants offering fashion advice and making its app a useful tool for loyal customers to regularly check in.

While not every retailer needs an app, those that offer them must ensure they are beneficial beyond what is accessible on the mobile site. With Google planning to expand app deep linking from search ads, retailers have even greater incentive to ensure the usefulness of their apps for customers.