Nordstrom’s Loyalty Program: A Marketing Success

by Sean Ogino |

Nordstrom’s Loyalty Program: A Marketing Success

There is an old business wisdom that acts as a pure guiding principle to all marketing and strategic plans: listen to your customer. Even if their opinions may not demand an immediate action, but those opinions will tell you about what they think and what they expect from you as a retailer. That’s what Nordstrom did this past May when it launched expanded Nordstrom Rewards in stores in the U.S., Canada, and Puerto Rico. Erik Nordstrom, the co-president of Nordstrom, has said that his customers, particularly the non-card holders, wanted more flexibility in a reward system. The business paid heed to their customers, and the updated version of Nordstrom’s loyalty program has seen spectacular results.

Previously, Nordstrom’s loyalty marketing solution was only open to customers who held a Nordstrom credit card. This was a high barrier to signups, especially in light of how many millennials avoid signing up for credit cards. The new rules for Nordstrom’s loyalty program dictate that non-credit cardholders earn one point per dollar spent. Cardholders get double the rewards, plus perks like early sale access, private shopping parties, free alterations, and more. After collecting 2000 points, members get a $20 Nordstrom Note to spend on anything at Nordstrom, Nordstrom Rack or HauteLook.

After looking at the success that this program has brought, one has to say that flexibility has worked for Nordstrom. Within just three months, the program has seen the addition of 1.7 million new loyalty enrollments.  The company now has approximately 6 million active Rewards customers as of Q2 2016, up nearly 30% from 4.7 million in the prior quarter. Of course, Nordstrom’s Anniversary Sale, which took place during the quarter, played a huge role in uplifting the enrollment in the loyalty program. But crediting its successes solely to the Anniversary Sale will be like under analyzing it.

The program almost diminished the barrier of sign up, which is still considered a necessary evil. It uses mobile phone numbers as identifiers instead of email. The time required for the traditionally dreaded process of sign up is minuscule. Similarly, the same mobile number enables members to earn points on purchases and redeem any accumulated $20 Nordstrom Notes. Here’s a video that the department store released explaining their updated program.

Despite this awe arousing and resounding success, Nordstrom is in no mood to become complacent. The initiatives of including new mobile features, improvements to the website, and enhanced selling tools have already begun. This fall may see the launch of its mobile feature that allows customers to reserve merchandise online. With changes like this, Nordstrom’s loyalty program is well on its way to its goal of 5 million sign-ups in the first year.

Tip: 75% of US companies with online loyalty programs generate a positive return on investment.

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