Need to make changes to your loyalty program? Take a lesson from Nordstrom

Take a lesson from Nordstrom

When we create our loyalty programs, we run models. We run the models again. And again. We try to factor in all of the potential outcomes.  We desire a program that drives new behaviors and also gains approval from our CFO. A program that drives revenue and enhances our bottom line. 

As diligent as we are in the beginning, a program that stands the test of time, will inevitably need to be changed to meet the changing needs of our customers and our organizations.

When you’re confronted with this situation, what do you do? You have all of these loyal customers. These customers have embraced your program, your brand, and the value you offered. Now you need to change that value and offer less. What do you do?

Nordstrom recently found itself in this situation. They needed to change the structure of their, relatively new, Nordy Club.  

They followed the following best practices:

Best Practice #1: Communicate Early

While the news you have to share isn’t what your customers want to hear, it’s important that you communicate. Giving customers time to learn about the changes and digest the changes is important. Plus giving customers time before the changes occur, they can plan for the change. Perhaps they’ll spend more to reap more benefits before the changes happen.  

The Nordy Club program changes go into effect in May. Nordstrom started communicating with members in February. Sharing with best customers the changes that are coming their way. This communication came across many channels: email, online account, and even direct mail.  

Best Practice #2: Communicate Often

Communicating early allows you to communicate often. You want to make sure that all of your members are aware of the changes. You want to make sure they have the time to understand the changes, ask questions and adapt. Plus as marketers, we know it takes multiple touches for customers (and members) to pay attention and understand.  

Personally, I received a few emails on the topic. It wasn’t until I received the direct mail piece that I actually read the message and truly took in the program changes.  

Best Practice #3: Give, even though you’re taking away

Similar to a negotiation, try not to just take value away. Where you need to take something away, try to add value somewhere else.  

Nordstrom did this well. The message came as follows:

  • Now 3, up from 2 double points days
  • Points per dollar when you use your Nordstrom card you will go from 3 points per dollar to two
  • Get Notes Faster: $10 for every 1000 points earned instead of $20 for every 2000

These are smart gives – 

  • an accelerator in the additional double points day. Allowing members to gain some control in how they earn their points.    
  • Increased frequency of rewards. With the Notes being distributed more frequently, members will see their benefit faster. Research shows that reward earn and redemption frequency result in stronger more engagement.  

It’s never desirable to change a program structure, yet it’s often a reality. We’ve seen these best practices implemented successfully across many industries over the year. If you’re in a situation where you may need to change your program structure, the team at Annex Cloud is happy to help coach you through the process.

 
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