Why Retailers Are Overhauling their Loyalty Programs for the Digital Age

While many shoppers would be happy to sign up for a retail loyalty program in hopes of cashing in on a freebie or two, for fashion firms, there is a much larger purpose beyond a one-time trade-off.

In addition to driving sales and winning over first-time customers, new-age companies recognize that effective loyalty programs are a major catalyst for building long-term connections with consumers — a necessary plan of action amid digital disruption in today’s highly competitive retail environment.

This week, Vans became the latest to join a growing list of footwear and apparel companies that are putting extra investment behind launching or revamping a loyalty program.

The action sports brand aims to attract both first-time and repeat shoppers with its experiential service — available online or with a separate app — through which users will receive insider information, access to members-only events and sneak previews of upcoming product releases. Similar to other companies’ existing loyalty programs, Vans will also award shoppers with points for purchasing products or interacting with the brand on the platform.

“The Vans Family loyalty program will engage our fans — from newcomers to loyalists — as individuals with unexpected experiences tailored to their personal interests,” said global brand president Doug Palladini. “In doing so, we are creating authentic connections with people who like Vans, deepening our relationships with them and creating new pathways to interact in relevant ways.”

To foster long-term consumer commitment, major names including Macy’s and DSW are also reinventing their loyalty programs. Last fall, the department store chain debuted the new Macy’s Star Rewards scheme to target its best customers at a period when shoppers were defecting to competitors like Amazon, Target and Walmart. The tiered system benefits cardholders who spent the most, offering them free shipping, additional savings and incentives that will roll out throughout the year, such as access to exclusive experiences.

“Macy’s customers have high expectations for their shopping experience, and earning and keeping their loyalty is now more important than ever,” CEO Jeff Gennette said at the time. “We are providing what matters most to her — an enhanced experience both in store and online, edited and elevated products, compelling value and an excellent loyalty offering.”

DSW also revealed that it would launch a revamped loyalty program this year, providing services that include shoe rentals and repairs as well as philanthropic connections for top shoppers. In addition, the footwear retailer is developing in-store technology that will allow associates to deliver personalized shopping experiences based on a customer’s wish list and purchase history.

“Today’s customers craves more than just a transaction; they want an experience,” said COO Michele Love when the strategy was announced in September. “Our new program will be loyalty-tailored to the customer’s level of engagement. It will go beyond points and tie back to our mission of inspiring self-expression.”

Incentivizing customers through experiences clearly marks the next step in the evolution of loyalty programs, strengthening a retailer’s relationship with its VIPs while creating a path for newcomers to become steadfast shoppers.

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