Why Fashion Retailers Need to Launch a Loyalty Program Now

6 minute read

Fashion retail is a highly competitive industry that’s constantly seeking out new ways to stand out and gain loyal customers. For many retailers, like The North Face and Vans, implementing a loyalty program has been a successful customer retention strategy.

Today’s consumers have more choices than ever, and they want brand relationships that go beyond discounts. Differentiation is key to success. Loyalty programs deliver robust zero- and first-party data, enabling direct value-based engagement that builds lasting bonds while accelerating growth.

In this blog post, we’ll explore six reasons why fashion retailers should launch a loyalty program now:

Let’s dive in.

1. Build lasting emotional bonds

Most fashion retailers struggle with customer retention because they’re unable to create an emotional connection. Emotionally loyal customers consciously remain associated with the brand. This is not because of factors like price and packaging but based on emotional factors that govern their purchase decisions.

According to Gallup, companies that provide an emotional connection with customers outperform the sales growth of their competitors by 85%. Loyalty programs help fashion retailers build more meaningful relationships with their customers. They also allow fashion retailers engage with their customers on a more personal level. This can be done through personalized communications, reward notifications and targeted offers. Deloitte reports that a brand’s ability to leverage emotionally intelligent platforms, like Annex Cloud’s Loyalty Experience Platform, to recognize and use emotional and contextual data at scale is one of the biggest, most important opportunities.

“Brands that can create emotional connections with their customers and members will thrive. Rational benefits are still very important, but people need to feel connected to the brands they are loyal to. This can be done through experiences, alignment of interest, influencers, charity, or service. However, it must be relevant and valuable,” shares Tom Peace, Managing Director of The Loyalty People.

Results in action

The North Face XPLR Pass program does an excellent job of keeping their customers engaged and rewarding their engagement. XPLR members earn points for checking in at National Parks on the XPLR mobile app. This keeps members actively engaged and emotionally connected with The North Face brand while they’re out exploring.

Vans is another fashion retailer that dares to dream of loyalty beyond discounts. The Vans Family loyalty program creates an emotional connection with its members by providing them with exclusive access to Family-only benefits such as:

  • First dibs on new releases
  • Product giveaways
  • Premier experiences

The Vans Family loyalty program empowers the brand to create more meaningful relationships with its customers by encouraging its members to engage with the brand on their mobile app. Vans does this by offering incentives, such as points, in exchange for filling out surveys or sharing on social media.

Did You Know?

70% of consumers with high emotional engagement spend up to 2X or more on brands they’re loyal to

80% of emotionally engaged consumers promote the brand to family and friends

62% advocate for the brands on social networks

(Digital Transformation Institute)

2. Increase customer lifetime value (CLTV)

Loyalty programs are proven to increase CLTV by up to 30%. How? By increasing purchase frequency, spend per visit and by winning back potentially lost customers.

Customer Lifetime Value (CLTV) is a metric that represents the potential value of a customer over their entire lifetime. It considers the entire customer journey, from acquisition to retention and beyond. By understanding CLTV, businesses can measure the effectiveness of their marketing efforts and tailor their loyalty programs for maximum efficiency.

Fashion retailers are increasingly recognizing the value of loyalty programs in encouraging customers to come back time and time again. Without a loyalty program, only 20% of new customers will make a second purchase—but by offering incentives and meaningful engagements, fashion retailers can increase the likelihood their customers will return while personalizing experiences to create deeper connections—all contributing to a higher CLTV.

Data-driven loyalty programs can be tailored to suit the needs and preferences of customers, encouraging them to keep coming back for more of what they actually want. Fashion retailers can offer exclusive benefits to loyalty members, such as free parking at physical locations or early access to new products, to deliver unique benefits they can’t find anywhere else.

3. Increase customer acquisition

Loyalty programs not only keep existing customers coming back, they can also boost customer acquisition. This is particularly helpful in the competitive market of fashion retail, where standing out from the crowd can be a challenge.

Repeat customers refer 50% more people than one-time buyers (Bain & Co). People enjoy sharing things they love with others. Repeat customers that develop an affinity towards your brand can become strong brand advocates who promote you to others—and refer others to you. Referral programs incentivize your loyalty members to recommend your brand to their friends and family.

Loyalty programs also help you reward influencer advocates for promoting your brand. The key to success lies in finding the right influencers who can effectively promote your brand and attract new customers. CEO and Founder of Loyalty & Reward Co Philip Shelper advises, “Engaged consumers actually want to be advocates for their favorite brands. Loyalty programs can turn members into advocates by providing them with a sense of belonging and exclusivity, then harness that positivity by making it really easy for them to invite family and friends to share in that amazing experience.”

4. Reduce churn

Loyalty programs play a vital role in helping fashion retailers decrease their churn rate. Churn is the rate at which customers stop buying from a retailer or brand. “The most successful brands look at loyalty and address churn starting day one and see them as an integral part of their growth strategy,” shares Erin Raese, SVP, Annex Cloud.

A loyalty strategy is one of the most effective ways to drive repeat purchases, move beyond transactional relationships, and build lasting bonds that reduce churn. Loyalty helps reduce churn by giving brands the power to:

Loyalty is the foundation for an ongoing value exchange—a give-and-take for both brands and members at multiple touchpoints across the customer journey. Each engagement increases the value of the member to the brand and the value of the brand to the member, actively reducing a brand’s churn rate. To learn more about churn, check out our Guide to Turning Churn into Lasting Customer Loyalty.

5. Deliver a better omnichannel retail loyalty program experience

Omnichannel is defined as a multichannel approach to marketing or sales that offers a seamless experience to customers, no matter where they choose to interact with a brand. Retailers that use three or more channels are seeing a nearly 500% higher order rate than those using a single channel (Omnisend).

According to Deloitte, brands much break down silos that fragment the customer experience. This allows brands to deliver the consistent experience consumers expect. Annex Cloud’s huge partner network ensures that retailers can not only collect unique zero- and first-party data but also push that data across their ecosystem to deliver personalized experiences at every touchpoint.

Omnichannel loyalty solutions use all channels in a way that best fits your customers’ needs, so they can benefit from a value-led experience. Allow customers to collect a voucher for viewing a product online, then make their purchase in-store using the voucher they received online. Loyalty technology enables retailers to recognize, know and reward customers—regardless of where the interactions and purchases take place.

Retailers that use three or more channels are seeing a nearly 500% higher order rate than those using a single channel.

 6. Anticipate customer behaviors & needs

Loyalty programs have become increasingly popular among fashion retailers, allowing them to anticipate customer needs and build trust with their customers. Fashion retailers are now able to access a wealth of data from their customers, such as purchase history, interests, lifestyle, product preferences and more.

Zero-party data (ZPD) is information that customers willingly, proactively and deliberately share with you in exchange for receiving better service, a more tailored customer experience and personalized rewards. ZPD requires explicit consent which loyalty programs provide and is usually gathered through interactive touchpoints like:

  • Surveys
  • Quizzes
  • Polls
  • Download forms
  • Loyalty membership registration
  • Customer profiles

With this data, fashion retailers can create a comprehensive picture of their customers and tailor their loyalty program to provide the most relevant rewards and offers versus making assumptions based on transaction data alone.

Progressive profiling allows fashion retailers to gain a better understanding of their customers over time. At the heart of progressive profiling, the customer actively shares their likes, dislikes, plans and dreams with the brand. This information provides fashion retailers with the valuable insights they need to create truly personal and extremely relevant experiences. Used well, these experiences will create lifelong emotional bonds between customer and brand.

Matt Reeves, Senior Vice President of Product Management, Annex Cloud provides expert insight on data collection saying, “This approach safeguards sensitive information and provides a more nuanced understanding of the customer, enabling us to deliver personalized, value-driven experiences that foster a lifetime of loyalty.”

Annex Cloud’s loyalty solution is a perfect fit

Loyalty programs are an excellent way for fashion retailers to increase customer retention, collect valuable data, create meaningful engagement, build lasting emotional bonds, stand out in the market and boost their bottom line. Annex Cloud has years of loyalty experience, and we know exactly how to help fashion retailers reap the benefits of loyalty programs. Our scalable, configurable and flexible Loyalty Experience Platform is easy to use and offers a range of features tailored to your unique needs. It’s time to take the plunge and build a loyalty program that unlocks the full potential of your brand.

Dare to dream of a loyalty program that accelerates growth while delivering exactly what your customers desire. Let’s talk about what that reality looks like for you.

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