Although Gen Z and Millennials are more likely to support companies whose values align with their own, a survey by the business data platform Statista showed that a large majority of these generations consider themselves brand-conscious people. Of those surveyed, 60 percent of millennials said they hold onto brands they like, compared to 40 percent of Gen Z who said the same thing.
However, Covid-19 sparked a shift in consumer sentiment that rocked fashion brands around the world. An October 2020 report by McKinsey & Company found that 35 percent of U.S. consumers have tried a new brand and 77 percent have tried new shopping behaviors, including new channels and stores, since the pandemic began.
For brands, it is more important than ever to retain customers and provide convincing reasons to earn money with them. Introducing customer loyalty programs and adding other benefits to existing programs will help retain customer support. Historically, retaining a customer for every company has been less time-consuming and costly. Marketing consultancy Invesp reports that it can cost five times as much to acquire a new customer as it does to keep an existing one.
Whether a brand’s goal is to attract new or old customers, loyalty programs are proving to be an effective strategy.
Steve Morales, NYDJ’s vice president of marketing, said the brand’s newly launched rewards program was measurable in just five months. “We are currently seeing an average order value 10 percent higher,” he said. “It also gives us another alternative to doing promotions instead of having them across our website or adding them to our entire email list.”
But it’s not just about increasing customer spend and frequency. Nudie Jeans is about fostering a closer relationship with the customers who buy from the brand simply for their love of denim. “We don’t want to build a relationship based on discounts or finding the best deal,” said Mathias Jonasson, retail and e-commerce director at Nudie Jeans. “We want to build a mutual relationship based on common interests and a passion for fairly produced denim. Our program does not include sign-up vouchers or sales, but rather focuses on being part of a community of like-minded people. “
From birthday gifts to exclusive products, here’s a look at how the denim industry is using loyalty programs as brand building opportunities.
In October, G-Star Raw launched its program exclusively in Belgium and the Netherlands and has already won 123,000 loyalty members. The brand offers members one star for every euro they spend with the ability to earn more stars by accomplishing goals like adding profile information, signing up for the newsletter, and installing the app. The more stars the customer receives, the higher the loyalty level with level-based benefits such as early access to special offers or special product categories, events and free gifts. To date, the brand notes that the most popular perks among members are special birthday gifts and free shipping.
The G-Star program currently comprises 53 percent men and 41 percent women, members spend an average of 15 euros more than non-members. The company aims to expand the program to 500,000 registered customers this year, which it will achieve by rolling it out to other countries through in-app, online and in-store promotions.
Gap Inc. doubled its loyalty program during the pandemic, and its success has inspired the company to keep the momentum going. In a recent conference call with investors, Sonia Syngal, CEO of Gap Inc., attributed the company’s growing market share to increased investment in marketing, noting that dollars are pouring into rewards programs like Old Navy’s Navyist, Gap Good, Banana Republic and Athleta. She added that the program will continue to be a top priority in 2021, with the ultimate goal of “making every customer a loyalist”.
In September, the company launched a program in the United States and Puerto Rico to replace its Bright Rewards program. With the new facility, customers will receive 2 points for every US dollar spent on in-store and online purchases, and will receive rewards in increments of US $ 5 for future purchases for every 500 points earned. To encourage new signups, Gap Inc. is offering an additional 250 points to new members through October 31st.
In the fourth quarter alone, the company added 6.4 million new program participants. By the summer of this year, the company plans to implement and integrate a single loyalty program for all of its brands, with existing members seamlessly migrating to the new program. Syngal found that the merger will maintain engagement at the individual brand level while promoting cross-brand shopping. The updated loyalty program is broken down into bronze, silver and gold levels to allow flexibility in delivery speed and not overwhelm the supply chain.
The restart of its previous loyalty program was a successful pandemic strategy for American Eagle Outfitters, Inc. The company’s formerly known as “AEO Connected” “Real Rewards” program offers members benefits such as double points on jeans, access to members-only events and free shipping and returns and birthday vouchers. Like Gap Inc.’s program, American Eagle’s program offers rewards for both American Eagle and its sister brand, Aerie. It offers different levels of loyalty with increasingly valuable benefits as members climb the ladder of loyalty.
On a recent conference call, Executive Chairman and CEO Jay Schottenstein called the program a “home run” and added that it produced “a stronger customer experience, positive margin contribution and higher ROI.” He found that it not only attracts new customers, but also encourages more engagement.
Kut from the cloth
Kut From the Kloth launched its loyalty program in 2016, offering members one point for every dollar spent on the site, plus points for following the brand on Instagram, creating an account, referring a friend, and signing up for emails. Awards can be redeemed for discounts on future orders.
According to the brand, the program has brought unprecedented value to the company as it engages customers to engage on social media and refer friends. It also found that loyalty members, on average, spend twice as much per order and are 46 percent more likely to make a second purchase within 45 days.
The Swedish denim brand Nudie Jeans ended its loyalty program in May 2019 with a “sneak launch”, which generated a registration rate of 50 percent in the first three months. A simple message was added to the checkout that said, “We’ve always taken care of your jeans. Now we’ll take care of you. “
While the program doesn’t offer any discount-based initiatives, it does give members exclusive access to limited-edition products, repair and order histories, digital receipts, invitations to member events, and a behind-the-scenes look at headquarters and the people who work for Nudie Jeans. The program currently has 180,000 members, with a high enrollment rate from the repair shops and the brand’s website. And despite the lack of discounts, Jonasson stated that members buy more often than non-members.
Though its loyalty program didn’t start until January, NYDJ already has 10,000 members on its list. In addition to exclusive promotions and special prices for new products, customers who register receive the equivalent of 5 percent of redeemable points that they can spend on the website.
Customers can create a user account when shopping online or in-store. Currently, the brand is offering “Colon Days” and exclusive promotions to consumers who choose the loyalty program.
Levi’s reached out to its mobile app last January to try out the Red Tab Member Program. The program offers users free shipping with no minimum and personalized benefits based on their individual preferences, as well as access to collaborations with high-end fashion brands and products that are not available online.
Throughout the year, Levi’s loyalty members received an influx of perks that helped increase engagement. According to Haley Grevelding, Levi’s Senior Director, Content Marketing and Creative, the mobile-based rewards program is specifically tailored for the Levi’s superfan whose interests include details of a product’s history and supply chain, so be the first to be notified of something like a Japanese denim drop with selvedge. Members also receive a birthday present, two free changes per year, discounts on custom embroidery, direct printing on clothing and access to VIP events such as DIY workshops.
Madewell expanded its Madewell Insider loyalty program in August when it introduced new member perks. While it always offered perks like free shipping and customization and special birthday gifts, it started offering loyalty points for every dollar spent – doubling those points on jeans and charitable products like its Vote T-shirt, which goes to benefit the American Civil Liberties Union (ACLU).
As part of the updated program, members will be rewarded on a tiered basis, with Madewell Insider status based on how much the customer spends per calendar year. For every 250 points earned, members will receive a reward of USD 10. Madewell Star and Icon members (those who spend $ 500 and $ 1,000 respectively) earn triple points on select days throughout the year.
Madewell’s loyalty program was launched exclusively in the US in 2016 and reported a participation rate of 62 percent of customers in August.