Loyalty Programs – Does Yours Actually Retain Customers? 

Look. We all know it’s tough to attract new customers, and it’s even harder to keep them. With the large amount of new brands popping up each year in every industry imaginable, it’s more important than ever to maintain customer relations.

  
Who does a great job to keep wallets open? Hudson’s Bay. 

  • Daily contact through email notifying customers of the latest deals. 
  • Daily deals with steep discounts like 50%-70% off an exclusive item. 
  • Direct mailers with exclusive deals for VIPs.
  • Money spent in store collects points that can be used as cash to purchase additional items in store. Just keep shopping!

What happens when you take these steps? 

  1. Customers receive news regarding in-store promotions and exclusive deals through multiple channels – email, direct mail, social media. 
  2. The deals are real. We’ve all been there, the fake sales. A large SALE sign decorates the storefront, but when you go in it’s the last rack at the very back that’s on sale and each item is only $5 off the original price of $90. At Hudson’s Bay you actually get the 50% off and the additional 30%. Crazy but real.
  3. What? The money I spent here earns 4x points and I can redeem them to use as cash in store towards that new Kate Spade bag I really want? Fantastic. 

Who could use some improvment? Sephora. 

  
Though Sephora also follows the key points of keeping multiple communication channels open, offering gifts/free samples in exchange for points collected, they could use some help in event planning. 

As part of the Sephora customer loyalty program they offer exclusive events to what they call VIB (Beauty Insider) and VIB Rouge members.

Though VIB members spend over $1000 per year in stores and online, exclusive events tailored to these VIB Rouge members often hit “capacity”. So if these VIPs are slow to RSVP they actually don’t get to enjoy the benefits as promised. 

As experienced event planners, our suggestion to Sephora to improve their customer loyalty program would be to plan ahead. If you know there are 500 VIB Rouge members in your immediate store area, prepare for that amount of attendance and more. Setting an arbitrary capacity and turning away your VIPs for events that are supposed to be exclusive to them is bad business. It shows the customer how it’s more important to make it convenient for your staff to organize the event than to ensure all your loyal customers stay happy. 

The problem is resolved quite easily. Too many members in the area? Host the event for 2 days to ensure they can all attend. Not enough VIPs to justify the cost of extending your store hours for both days and paying extra for additional staff? First, let me call BS on that because your customers will come to spend way more money than the cost of having your staff there for extended hours. Second, you can just start the event earlier or end later to accommodate more attendees. 

This is just laziness on the brand’s part. So what happens when every year they accumulate more VIPs? More VIPs will be turned away from these exclusive events that were meant as a benefit for them. How counter intuitive. It’s a problem they should address if they want to keep growing their customers’ spending with their stores. 

So ask yourself. Is your customer loyalty program actually keeping customers? Does every component of the program show the customer that they are valued? Do you deliver on your stated membership benefits? 

Does Your Company Host “Sincere” Sales?

Do you host sincere sales or fake sales that don't even cover the cost of tax?

Do you host sincere sales or fake sales that don’t even cover the cost of tax?

Does your company host “sincere” sales?

What do we mean by this? How many times have you walked by a storefront lured in by the sign that says everything including the cash register is on sale and you walk in to find hilarious savings of…10%? I have been on both sides of the fence buying and selling so there is no bias here. When I propose a 10% discount off on retail customers say it doesn’t even save the tax – and I agree with them.

Don’t treat your customers like idiots.

Let’s take the most recent Black Friday Sales as an example. For those who frequent the mall once a month, you would notice that some stores continually have sales like 40% off your first item, Friends and Family sale 40% off, 30% off your entire purchase throughout the month of October and November. Come Black Friday, which is THE major shopping day for the US (and now apparently Canada), when your sale signs are $20 off $200, $30 off $300… of better yet, 30% off select items…if your store is one of these then don’t expect people to stroll in and open their wallets on Black Friday.

Don’t complain about slow sales on THE shopping day of the year if you can’t offer sincere sales. Remember! YOU HAVE COMPETITION! If customers see that you have sales every week, or even every month that are roughly the same as your Black Friday offer, then don’t expect us to waste time shopping your store on the big sale date, because other stores who don’t usually have sales, are making us a better offer.

Here’s an example. ZARA never has sales. This past Black Friday ZARA was 30% off the entire store. Where did a lot of people go to spend their money? ZARA. TOPSHOP rarely has large discounts. They had 50% off outerwear and sweaters on Black Friday.

The point is, YOU condition your customers. if you have sales every week, NO ONE will ever buy your items at full price (and they won’t believe your products carry the full-priced value). If you never have a sale and you have a decent offer (this means 30%+ off) then you can expect heavy sales traffic. I know this all depends on “policies” from headquarters, but if you are an independent store who has control over when to have your sales and what sales to offer your customers, please show your customers some sort of sales planning so we are happier when you do throw a sale and are more willing to shop with you.