The New Era of Fashion Loyalty Programs

by Natasha Ambavle |

The pandemic and the consequent global lockdown have changed the dynamics of the fashion industry and impacted customer’s purchase habits. While loyalty has been of the many challenges, the fashion industry faced in the past, it has now become extremely imperative to increase customer retention rate in order to improve brand sustainability.

Here, we will explore how fashion loyalty programs can help in building customer loyalty, improving customer satisfaction and experience and positively impacting customer retention rate.

The Impact of The Pandemic on The Fashion Industry

The pandemic had a considerable impact on the fashion industry as a whole. There was a significant shift in the purchase patterns of consumers globally. Not only was the frequency of purchase impacted, but there were also categories in apparel that observed a paradigm shift in customer’s purchase habits. Formal/ corporate wear saw a sudden and massive decline, while home wear and loungewear brand categories were able to sustain their businesses. Like most industries, digitalization impacted the fashion industry too. While the eCommerce retailers were already gaining momentum before the pandemic, most high-street and luxury fashion brands found their brick-and-mortar stores more profitable, in the pre-COVID-19 era. Post-2020, the point-of-sale was suddenly shifted from physical stores to online stores, which especially had an impact on luxury fashion because the price of the luxury goods was always subject to change considering the country of purchase and such other factors.

Nonetheless, the fashion industry was swift to adapt to the new normal, building fully functional apps, websites, omnichannel and multichannel experiences almost over the night, but loyalty still remains a challenge for most fashion brands.

Challenges Faced by The Fashion Industry

  • Customer Retention – One of the major challenges faced by the luxury fashion industry is customer retention. The gap between the purchases of luxury goods is considerably longer than fast fashion brands and retailers. Also, the probability of repeat purchases especially with first-time buyers is low which impacts the customer attrition rate.
  • Creating Unparalleled Customer Experience – Luxury brands are all about creating a top-of-the-line customer experience, from pre-sale to post-sale purchases, however with the attitudinal shift of customer purchase patterns from physical stores to online, creating a distinguishable customer experience has become a challenge. In the luxury goods and fashion industry, it is important to stand out from the crowd and create an unmatched experience of customers that sets up apart from other brands and offers value for customer money and creating this digitally is a major challenge.
  • Fierce Competition – The fast-fashion as well as the high street fashion industry both have a common challenge which is the ever-growing competition, despite the financial strain brought on by the pandemic. A common nemesis is the emergence of online retailers, especially eCommerce giants like amazon that are now concentrating their attention on fashion. What marketers are calling the amazon era, is a worrisome factor for most fashion businesses globally.

How Fashion Loyalty Programs Can Help Address These Challenges

  • Improved Engagement – Engagement is everything and fast-fashion brands are seriously lagging behind when it comes to customer engagement, let alone building an emotional connect with the audience. A loyalty program can help improve customer engagement and create a mutually beneficial relationship between the brand and its customers.
  • Motivation to Repeat Purchases – As the lockdown restrictions are relaxing worldwide, brands are experiencing an influx for shoppers and online purchasers. Lockdown fatigue has led to, what marketers are calling revenge shopping and there is no better time to invest in luxury fashion loyalty programs to ensure repeat purchasers. Loyalty programs provide an additional motive for customers to shop from your brand, moreover, the best fashion loyalty programs excite the customers and keeps them engaged in the earning points and reward redemption cycle.
  • Competitive Edge – Although loyalty programs are not a novel concept in the fashion sector, not many brands have one. A loyalty program not only gives an incentive to customers to purchase from you but it also ensures repeat sales. In the vastly competitive fashion arena, fashion loyalty programs can give your brand a competitive edge and help you stand out from the crowd.
  • Enhanced Customer Experience – As highlighted earlier for luxury brands, delivering a better customer experience has become challenging, luxury brand loyalty programs can help in enhancing the overall customer experience and help to improve customer satisfaction, and inculcate brand affinity and loyalty among customers.

Key Learnings from Successful Loyalty Offerings in The Industry

  • Neiman Marcus – Tiers are a great way to keep things interesting and create aspirations and goals for customers. Neiman Marcus’s luxury fashion loyalty program has 8 tiers, awarding perks and benefits to members of every tier, with top tier members receiving the best perks, rewards and benefits. Customers of the brand strive to escalate through the tier to reach the top tier and get access to exclusive benefits.
  • H&M – H&M’s points program is famous for its simplicity and effectiveness. Customers are encouraged to purchase ‘more’ from the brand and receive points for every dollar they spend. After accumulating a certain number of points, customers can redeem them on their purchases. Members of H&M’s loyalty program also receive additional benefits like free delivery, and discounts on birthdays and special events.
  • Zara – A prominent name in the fast-fashion sector, Zara has an exclusive membership. Members of the Zara Club get early access to sales which is one of the USPs of the program. It grants special offers and discounts to members as well. The key learning here is that Zara’s program relies on the exclusivity factor which gives the brand its competitive edge.
  • Nordstrom – Nordstrom has a multi-tiered luxury fashion loyalty program. It is a great way to keep things interesting and offer more than one thing to engage customers and keep them motivated to continue their association with the brand. The program has something for every kind of customer be it a debit cardholder or a credit holder.
  • Van-Dal – Van-Dal has a unique program that harnesses the power of user-generated content. It rewards its customers for writing genuine reviews about the brand. It is a great way of creating organic content that positively influences the brand. Van-Dal’s loyalty program also rewards its customers on the basis of order value.

Creating a Customized Loyalty Program for Your Business

When it comes to a fashion loyalty program, it is often suggested to create a customized and bespoke program that is specifically designed for your business needs, brand aesthetics while considering your audience preference, demographic and purchase patterns.

Annex Cloud’s expertise in fashion loyalty programs has benefitted brands like DKNY, FYRE, Brahmin among others. Connect with our Loyalty Experience Manager to learn how you to could adopt loyalty strategies that will help you improve your retention rate and create a loyal customer base.

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