Loyalty Programs

Why are DTC Loyalty Programs Effective?

July 25, 2022

The relationship between customers and retailers is changing… And it’s time for you to nurture it.

Shoppers aren’t just satisfied with making a transaction and being done with it. They want to get to know you and your brand!

The entire purchase journey – from consideration to post-purchase – needs to be treated as a continuous two-way value exchange deeply rooted in emotion and loyalty.

Why should you be focused on creating relationships through your loyalty program? According to a survey from Treasure Data:

  • 83% of shoppers are willing to hand over their personal data in exchange for loyalty rewards or product recommendations.
  • 82% of respondents indicated loyalty rewards motivate them to buy from certain retailers or brands.
  • 48% of shoppers would rather wait for their preferred brand to restock than purchase a similar product from another brand.

Combine this shift in consumer behavior with an increase in retailer demand for first-party data, and you then have the motivation behind the rise of DTC loyalty programs.

A powerful lever for many DTC brands, most free or paid loyalty programs provide first-time and returning customers with:

  • Exclusive discounts and promotions
  • Access to exclusive in-store events
  • Capture valuable customer data
  • Reward customers for reviews and UGC
  • Lead to increased purchasing and lifetime value

In turn, these offerings can increase brand affinity, in-store foot traffic, revenue, and customer LTV.

Most importantly, each of these initiatives captures valuable first-party data that can be used to build more accurate customer profiles and target segments to apply across all marketing channels. 👀

But to give up this valuable data, the offer needs to be worth it. And while price and convenience are important, many shoppers now expect brands to go above and beyond with their membership offerings.

We’ve highlighted three of our favorite membership programs below.

These aren’t your typical points-based loyalty programs, but rather unique and thoughtful initiatives designed to create meaningful relationships with customers.

👏 Prose

All Prose subscribers receive access to The Prose Salon. Positioned as a unique way to drive subscriptions and form quality relationships with customers, the Salon membership provides customers with a host of offerings around product education and wellness.

In addition to a 15% discount off all full-price products, Salon members receive free 15-minute consultations with hair-care specialists, early access to new products, and subscriptions to Prose magazine and wellness podcasts.

To further sweeten the deal, all members also receive a free Prose product after every 10th purchase. Sounds pretty dang sweet to us. 🤷‍♀️

“The goal is to combine the product with services and experience,” said Prose CEO Arnaud Plas in an interview with Glossy. “It’s more than a loyalty program. It comes back to offering a deeper, personalized, and elevated experience.”

Keep scrollin’ for two more examples of brands crushing loyalty programs. 👇

🤑 Italic Bold

Putting a unique spin on the DTC model is Italic. Italic directly connects customers to top manufacturers. By eliminating brands and distributors, customers receive designer-level quality at a fraction of the standard retail price.

While anyone can shop on the Italic site, the company strongly incentivizes shoppers to subscribe to their Italic Bold program. In addition to exclusive weekly promotions and access to new products, all Italic Bold members receive $120 in Italic Credit (in quarterly increments) each year.

This alone covers the cost of the membership. Tack on increased referral bonuses and cash rewards for leaving product reviews, and you have a deal that’s almost too good to be true.

While this program is more integral to Italic’s core business model, it still serves as a great example of how to offer customers value in every stage of the purchasing experience.

🏃‍♀️ Nike

The godfather of all loyalty programs, Nike’s membership program (NikePlus) is robust and designed with strategic intent. With the main rewards hub located in Nike’s mobile app, all members need to download the app to get the full benefits.

And wow, is it effective. As of 2021, over 300 million members had already signed up for NikePlus.

According to Nike, this tribe spends three times more than guest customers on the website. Built around the tenants of exclusivity, community, personalization, and omnichannel interaction, all members receive:

  • Free shipping
  • First-access to member-exclusive styles
  • Member-exclusive sneaker customizations
  • Invites to experiences like events, workshops, and workouts
  • Access to Nike experts for styling tips and product recommendations
  • Special offers and in-store benefits

It’s important to note that most DTC brands don’t start with loyalty programs.

For businesses with low SKU counts or infrequent reorderability, a loyalty or membership rewards program may never make sense. But with the right business, timing, and execution, loyalty programs are an ingenious way to acquire customers for life.

Do you have a loyalty program for shoppers? If so, when did you implement a loyalty program into your business model? Reply to this email and let us know!

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