Though Gen Z and millennials are more likely to support businesses whose values align with their own, a survey from business data platform Statista showed that a large majority these generations consider themselves brand-conscious people. Of the respondents, 60 percent of millennials said they stick to brands they liked, compared to 40 percent of Gen Z who said the same.
Covid-19, however, triggered a shift in consumer sentiment that rattled fashion brands around the world. An October 2020 McKinsey & Company report found that 35 percent of U.S. consumers have tried a new brand since beginning of the pandemic, and 77 percent have tried new shopping behaviors, including new channels and stores.
Now more than ever, it’s crucial for brands to engage customers and give compelling reasons to spend with them. Introducing customer loyalty programs and adding more benefits to existing ones are helping to lock in customer support. Retaining a customer for any company is historically less time- and cost-intensive. Marketing consultancy Invesp reported that it can cost five times as much to attract a new customer than to retain an existing one.
Whether a brand’s goal is to attract new or keep old customers, loyalty programs are proving to be an effective strategy.
Steve Morales, vice president of marketing of NYDJ, said the brand’s newly launched rewards program is already measurable after just five months. “We are currently seeing 10 percent higher average order value,” he said. “It also gives us another alternative for promotions rather than offering them sitewide or putting them out to our whole email list.”
But it’s not all about increasing customer spend and frequency. For Nudie Jeans, it’s about promoting a closer relationship with customers who buy from the brand simply because of their love for denim. “We don’t want to build a relationship based on discounts or finding the best deal,” said Mathias Jonasson, Nudie Jeans retail and e-commerce director. “We want to build a mutual relationship based on shared interests and a passion for denim produced in a fair way. Our program doesn’t include sign-up vouchers or sales, but rather focuses on being part of a community of like-minded people.”
From birthday giveaways, 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 gained 123,000 loyalty members. The brand offers members one star for every euro spent, with the opportunity to accrue more stars by completing goals like adding profile information, signing up for the newsletter and installing the app. The more stars the customer gets, the higher the loyalty tier, with level-based benefits such as early access to sale or special product categories, events and free gifts. To-date, the brand notes that the most popular benefits among members are special birthday gifts and free shipping.
G-Star’s program currently includes 53 percent men and 41 percent women, and members spend an average of 15 euros more than non-members. The company aims to grow the program to 500,000 registered customers this year, which it will accomplish by rolling it out into other countries through promotions on the app, online and in-store.
Gap Inc. doubled down on its loyalty program during the pandemic, and its success has inspired the company to continue the momentum. In a recent conference call with investors, Gap Inc. CEO Sonia Syngal attributed the company’s growing market share to an increased investment in marketing, noting that it’s shifting dollars into rewards programs like Old Navy’s Navyist, Gap Good, Banana Republic and Athleta. She added that in 2021, the program will continue to be a top priority, with an end goal of turning “every customer into a loyalist.”
In September, the company rolled out a program in the U.S. and Puerto Rico that replaced its Bright Rewards program. With the new setup, customers will earn 2 points for every $1 spent on in-store and online purchases and will earn rewards in $5 increments toward a future purchase for every 500 points earned. To promote new sign-ups, Gap Inc. is offering an additional 250 points for new members through Oct. 31.
In Q4 alone, the company enrolled 6.4 million new program members. By this summer, the company aims to implement and integrate one singular loyalty program across all of its brands, with existing members seamlessly transferred over into the new program. Syngal noted that the merge will maintain individual brand-level engagement and at the same time promote cross-brand shopping. The updated loyalty program will be broken down into bronze, silver and gold tiers to allow for flexibility in delivery speed so as not to overwhelm the supply chain.
Relaunching its former loyalty program was a successful pandemic strategy for American Eagle Outfitters, Inc. Previously branded as “AEO Connected,” the company’s “Real Rewards” program offers members benefits like double points on jeans, access to members-only events, free shipping and returns and birthday coupons. Like the Gap Inc. program, American Eagle’s program offers rewards across both American Eagle and its sister brand Aerie. It features different tiers of loyalty, with increasingly valuable benefits as members climb the loyalty ladder.
In a recent earnings call, executive chairman and CEO Jay Schottenstein referred to the program as a “home-run,” adding that it’s producing a “stronger customer experience, positive margin contribution and higher ROI.” He noted that it’s not only attracting new customers, but also inspiring more frequent engagement.
Kut From the Kloth
Kut From the Kloth launched its loyalty program in 2016, providing members one point for every dollar spent on the site, as well as points for following the brand on Instagram, creating an account, referring a friend and signing up for email. Rewards can be redeemed for discounts on future orders.
According to the brand, the program has brought unprecedented value to the company, as it incentivizes customers to engage on social media and refer friends. It also noted that loyalty members on average spend twice as much per order, and are 46 percent more likely to make a second purchase in 45 days.
Swedish denim brand Nudie Jeans bowed its loyalty program in May 2019 with a “sneak launch” that generated a 50 percent sign-up rate during the first three months. It added a simple message at checkout that stated, “We’ve always taken care of your jeans. Now we’ll take care of you.”
Though the program doesn’t offer discount-based initiatives, it does provide members with exclusive access to limited products, repair and order history, digital receipts, invites to member events and a look behind the scenes at the headquarters and the people who work at Nudie Jeans. The program currently has 180,000 members, with a high rate of sign-ups coming in from the brand’s repair shops and website. And despite the lack of discounting, Jonasson indicated that members tend to buy more frequently than non-members.
Though its loyalty program only launched in January, NYDJ has already added 10,000 members to its roster. Customers who sign up get the equivalent of 5 percent back in redeemable points to spend on the site, in addition to exclusive promotions and special pricing on new products.
Customers can create a user account when making a purchase either online or in-store. Currently, the brand is offering “double points days” and exclusive promotions to consumers who opt into the loyalty program.
Levi’s turned to its mobile app to pilot the Red Tab Member program last January. The program gives users free shipping with no minimum and personalized benefits based on their unique preferences, as well as access to its 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 boost engagement. According to Haley Grevelding, Levi’s senior director, content marketing and creative, the mobile-based rewards program is specifically tailored to the Levi’s super fan whose interests include details about the history and supply chain of a product, and will therefore be the first notified about something like a Japanese selvedge denim drop. Members will also receive a birthday gift, two free alterations a year, discounts on custom embroidery, direct-to-garment printing and access to VIP events like DIY workshops.
Madewell expanded its loyalty program, Madewell Insider, in August when it introduced new perks for members. While it always offered benefits like free shipping and customization and special birthday gifts, it began offering loyalty points for every dollar spent—and double the points for denim and charitable products such as its Vote T-shirt, which benefits the American Civil Liberties Union (ACLU).
Under the updated program, members are rewarded on sliding scale, with Madewell Insider status determined by how much the customer spends each calendar year. For every 250 points earned, members will receive a $10 reward. Madewell Star and Icon members (those who spend $500 and $1,000, respectively) will earn triple points on select days throughout the year.
Madewell’s loyalty program launched exclusively in the U.S. in 2016 and in August reported a 62 percent participation rate from customers.