Photo: RetailWire
At a session Sunday at the NRF Big Show, Rick Gomez, EVP, chief marketing and digital officer, Target, explained why he decided against using points as the incentive when launching Target’s loyalty program last year.
“Points-based programs are great for some brands,” said Mr. Gomez. “But for a company that has been built around three magic words — “I Love Target ” — a point-based system was too limiting; really, it was just too transactional.”
Target Circle, which launched last October, has some transactional elements, including a one percent discount on all purchases and personalized discounts. But in launching Circle, Target ended a pilot of Target Red Perks, which offered 10 points for every dollar spent in-store or online. Once a member reached 5,000 points, they received five percent off their entire shopping trip at Target.
Perks, Mr. Gomez said, weren’t “just confusing to our guests, it was confusing to our team.”
One of the goals in launching Circle was to simplify rewards. Sign-up is free and only requires a phone number. Benefits start immediately. The one percent discount versus accumulated points makes the rewards easier to understand.
As part of the Circle rollout, Target rolled together the Cartwheel personalized-discounts program, social-savings app and the company mobile app into a single app. The retailer made its Red Card and gift cards accessible through the app, as well.
Mr. Gomez said Circle also provided “the ability to personalize in a more meaningful way” that a points-based program “prevented us from unlocking.”
Circle features Cartwheel’s best personalized offers and redemption rates, which are running twice as high as the standalone Cartwheel app. Customers are also able to vote on which charities their local store should support. Since October, more than $2.4 million has been donated to support almost 900 organizations nationwide.
Overall, Circle’s 50 million active users drove more than 40 percent of Target’s sales over the holiday season.
“When our brand is at its best, we're never complicated or transactional. We're easy and inspiring. We're personalized and intuitive,” said Mr. Gomez. “On our best days, Target is a brand that makes you feel good.”