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. Just ask Talbot’s.
Where It All Began
It was 2001 when Talbots initially launched Classic Awards, one of the first retail credit card loyalty programs in the U.S. The goals were clear: Increase the Talbots Charge card base, as well as drive usage and sales. The structure was simple: Charge customers earned 1 point per dollar spent and received a $25 reward when they earned 500 points.
By 2006, the classic women’s apparel retailer considered the program an ongoing success with an average 6 percent increase in sales annually and 91 percent redemption of rewards. But times were changing. Talbots was faced with increasingly competitive rewards programs from both banks and other retail private-label cards. And its portfolio size had remained flat, with penetration beginning to show signs of decline.
Talbots asked CCG to review Classic Awards with an eye towards refreshing the program.
How It Evolved
After transactional analysis and primary research, CCG found a significant opportunity to better serve Talbots’ core customers. We recommended that Talbots leverage the high awareness and participation in the existing Classic Awards program, but expand it to track, reward and ultimately drive the behavior of non-Charge customers.
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. The solution: Revamping Classic Awards into a three-tier structure based on member’s payment method and total spend.
- Members who pay with non-Talbots Charge methods participate in Classic Awards Red and earn .5 point per $1 spent.
- Members who use their Talbots Charge for payment are in the Platinum tier and earn 1 point per $1 spent.
- Once Platinum members spend $1,000 on their Charge, they move up to Black and earn 1.25 points per $1 spent.
- The Platinum and Black tiers also have escalating benefits, such as higher birthday bonuses and point rollover.
CCG built a solid foundation to help the retailer support this value proposition, providing detailed recommendations and a business case. We outlined the overall program structure, benefits for each tier, a 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 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
Where It Went
Initial results showed that, despite launching during one of the worst periods for retail sales in recent history, the program drove sales from members and Talbots Charge penetration reached its highest level in company history.
- Total Classic Awards participation was up more than 10 percent
- Almost 30 percent of enrolled Classic Awards members were new to the database
- Overall, members were spending 79 percent more and shopping two times more than non-members
In 2013, Talbots reported that Classic Awards members represented 70 percent of the business and there was 40 percent year-over-year participation growth in the Red segment.
Eight years later, in early 2015, we’re thrilled to report that the program now has 3.5 million members, with half of them non-Charge customers — a group that would never have been tapped under the old program.
Now, that’s what we call success!
Are you seeking a way to re-energize your loyalty program and give it long-term staying power? Put CCG’s three decades of expertise to work for you. Email or call 800.525.0313 for a complimentary consultation.
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