Transactional reward programs are easy, but do they build customer loyalty?
Another day, another retail loyalty program launch. Bath & Body Works earlier this week debuted its “new” rewards program, which was soft-launched in July after it began testing in March.
Bath & Body Works joins a slew of retailers and brands, including Lowe’s, Walmart and General Mills, that are doubling down on rewards to encourage customer loyalty in the face of rising prices. Is it a sustainable route to routine spending?
Navigate to bathandbodyworks.com and a splash screen incentivizes downloading the app to access the rewards program. “PERK ALERT: ALL NEW REWARDS MEMBERS GET $10 OFF A $30 PURCHASE! (Offer and details will be in your Wallet within 72 hours of joining),” it reads. App downloads jumped 147 percent in the first two days of launch, according to our findings, but it will take a couple of months before engagement can be observed.
On its face, Bath & Body Works rewards look similar to Sephora Beauty Insider rewards: both programs enable customers to earn points with every dollar spent. Sephora notably, however, does not focus its program on “transactional loyalty” or “doing whatever it takes to make the next sale, which usually hinges on a discount,” as the retailer’s VP of loyalty, Allegra Stanley told Forbes in 2020.
Sephora did not join the bandwagon of rewards program updates this year; instead, it launched another digital experience to encourage loyalty, “auto-replenish,” or subscription refills of products. In July, it went further, partnering with Klarna to offer buy now, pay later for auto-replenish subscriptions.
Arguably both subscriptions and rewards programs are oversaturated and require delicate design to drive value for both the consumer and the business itself. Kearny Global Consulting wrote this spring that a subscription apocalypse is on the horizon. It found that more than half of subscribers wanted to reduce their paid subscription exposure to about $50 per month. Overall 40 percent of the consumers think they have too many subscriptions.
Meanwhile, recent research from Forrester, Brand Keys and Novous Loyalty acknowledges the prevalence of rewards programs these days and points to transactional rewards — especially when auto-applied — as the most conducive to retaining loyalty.
Insider Intelligence published research from Brand Keys about simplicity as the key to loyalty program success. Sixty-one percent of survey respondents rated the automatic application of rewards (versus required redemption) as a reason they would use a loyalty program more often.
A recent Forrester report on customer loyalty found that “value propositions remained centered on cash back redeemable at the brand.”
Novous Loyalty writes this month that programs are “over-saturated” and “cash credits were preferred the most and placed at top position followed by discount vouchers, free surprise rewards & Gift Card Loyalty Program.”
- Bath & Body Works Launches Nationwide Loyalty Program – Bath & Body Works/Globe Newswire
- How To Make A Great Loyalty Program Even Better? Sephora Has The Answer. – Forbes
- As Starbucks and J. Crew enhance their rewards programs, consumers crave simplicity – Insider Intelligence
- Forrest Study Shows Customer Loyalty Is Entering a new Season of Growth – The Wise Marketer
- How to Succeed & Gain Brand Loyalty in an Over-Saturated Market of Points Programs? – Novous Loyalty
DISCUSSION QUESTIONS: What are the keys to creating real customer loyalty? Do you think recent retail rewards program updates focused on discounts are more effective, equally effective or less effective than the approach taken by Sephora?