How Target Got Loyalty Rewards Right

From airlines to coffee shops to retail stores, everybody has some sort of loyalty rewards program. Some loyalty rewards programs are effective, but many are not. Next week I’m speaking about loyalty programs at a conference and I’ll be sharing how Target got the loyalty rewards program right. Target’s loyalty program, the Target REDcard, delivers big discounts, gives perks customers actually care about, keeps customers choosing Target over the competition and gets customers talking. That’s what you want a loyalty rewards program to do.

5 ways Target Got Loyalty Rewards Right

  1. The Target REDcard functions as a debit card that draws funds from any checking account. It’s not a credit card so it doesn’t scare away customers who are trying to eliminate debt and it doesn’t eliminate customers who have less than great credit.
  2. Target customers get the payout of their rewards immediately. REDcard holders get 5% off of every Target and Target.com purchase, even sale and clearance items. Customers don’t have to wait to earn discounts quarterly or after reaching a benchmark.
  3. Target’s rewards are so valuable that customers are choosing to shop at Target even though a competitor may be closer or cheaper. Consumers love saving money and they love seeing this savings immediately. Saving money immediately is a strong deciding factor for many consumers and this is working in Target’s favor.
  4. REDcard holders get 5% off at Target.com and they get free shipping on Target.com. Consumers see free shipping with online retailers as a big perk. (Think free shipping at Zappos.com and with Amazon.com Prime)
  5. Target makes loyalty card holders feel good with donations to education. Target makes a donation to education equal to 1% of all REDcard purchases. That just feels good.

If you’re designing a loyalty rewards program or re-visiting your current loyalty program, consider offering payout of rewards immediately, give perks customers find valuable, and see if you can also make consumers feel good about doing business with you. When you do, you’ll find that you’re not just “signing people up” in your rewards program, but you’re truly driving loyalty and reducing customer defection.

 

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