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It’s not uncommon for a rewards program to get a lift when it’s first introduced or refreshed. But how many stand the test of time after the “new” wears off? Not enough. Often the trouble can be traced back to a wobbly foundation with a weak value proposition. Get those fundamentals right, though, and your success could continue for years.
Talbots launched Classic Awards, one of the first retail credit card loyalty programs in the U.S., in 2001 after extensive testing. The goals were to increase the Talbots Charge card base, as well as drive usage and sales. The structure was simple and gave the program that essential, solid foundation: Charge customers earned 1 point per dollar spent and received a $25 reward when they earned 500 points.
The classic women’s apparel retailer considered the program an ongoing success, with an average 6% increase in sales annually and 91% rewards redemption.
But as time went by, Talbots faced undeniable challenges with its loyalty program. Not only was the retailer faced with increasingly competitive rewards programs from both bank and other retail private-label cards, but the portfolio size had remained flat, and penetration was beginning to show signs of decline.
Talbots’ loyalty program relaunch resulted in:
Nearly 57,000 new cardholders in one year
Increased credit penetration from 48% to 60% of sales
79% more spend by reward members versus non-members
Call in the Loyalty Program Pros
After extensive research, CCG recommended that Talbots leverage the high awareness and participation in the existing Classic Awards loyalty program, but expand it to track, reward and ultimately drive the behavior of non-Charge customers. Our transactional analysis combined with primary research showed that there was a significant opportunity to better serve these core customers. But part of the challenge in expanding the program was ensuring that we continued to encourage use of the Talbots Charge, which is more profitable for the retailer than other forms of tender.
CCG recommended that the refreshed Classic Awards be structured as an umbrella loyalty program comprised of three tiers based on a member’s payment method plus total spend.
Updating a Classic
CCG’s detailed recommendations and business case provided a comprehensive guideline, outlining: the overall program structure, benefits for each tier, marketing plan, business requirements, line-item budget for incremental costs, anticipated participation rates and ROI pro formas. We also partnered with Talbots on implementation and management of the program.
The new rewards program structure accomplishes the program goals to:
- Establish a one-to-one dialogue that fosters loyalty with non-Charge customers
- Encourage non-Charge customers to visit and spend more
- Maintain the simplicity and leverage the infrastructure of the existing Classic Awards program
- Provide greater benefits if customers pay with a Talbots Charge
A Recipe for Success: 3.5 Million Members and Growing
Despite launching during one of the worst periods for retail sales in recent history, the program drove member sales from the start. And Talbots Charge penetration reached its highest level in company history.
- Total Classic Awards participation grew more than 10%
- The rewards program added nearly 57,000 new cardholders in the first year
- Talbots Charge card penetration increased from 48% to 60% of sales
- Almost 30% of enrolled Classic Awards members were new to the database
- Overall, members spend 79% more and shop two times more than non-members
- The program has 3.5 million members, with half of them non-Charge customers — a group that never would have been tapped under the old program
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Are you next?
Are you ready to launch a customer loyalty program or refresh an existing rewards program? CCG’s retail marketing experts can provide everything from strategy, development and implementation, to measurement and refinement. Complete the form below or call us at 303.986.3000 to schedule a free consultation and see how we can help you.