It seems like loyalty is back. This year, Abercrombie & Fitch, L’Oréal Paris, Clinique, and Smashbox all relaunched their programs after closing them temporarily. Similarly, Lowe’s and NYX added programs for professionals in their respective sectors, and Bed Bath & Beyond launched a beta program for a $29 annual membership that includes features like free shipping and returns on all purchases.
Loyalty programs are a mainstay of data-focused brands looking to collect additional information about shoppers and increase customer engagement. As many as 48% of brands in L2’s Data and Targeting report had a loyalty program as of November, up from 40% in August. Eight brands added or relaunched a loyalty program, although one, Diane von Furstenberg, shuttered its DVF Insider program. In addition to the above examples, Desigual launched a tiered program in Europe and is expected to expand it to the US in 2018.
However, while the number of brands launching a loyalty program makes it seem easy, getting users to engage could prove difficult. Over the past three years, the number of loyalty memberships per consumer has increased, but the percentage of active memberships has decreased, plunging from 72% in 2014 to 47% in 2017.
In one success story, Sephora’s Beauty Insider loyalty program has garnered over 10 million members. The program also appears organically on first-page results for 47% of searches for prestige beauty loyalty programs (e.g. “estee lauder loyalty program”), making clear that it is possible for such programs to have staying power.