Loyalty programs have evolved significantly. In the past, they were transactional – the more you spent, the more you received. Today’s consumers demand more profound engagement to earn their long-term loyalty. Companies must move beyond simple points systems and focus on creating meaningful experiences and personalized services.
Beto Casellas, Executive Vice President and Chief Customer Engagement Officer at Synchrony, emphasizes this shift: “Personalized offers and rewards are now essential for retailers to compete, and customer loyalty is rooted in experiences and services, not just products and points. Understanding your customer’s desired interactions and brand experience is crucial for fostering lasting relationships.”
In this evolving landscape, strategic thinking is paramount for retailers designing or refining loyalty programs. Placing the customer at the heart of every decision is key. Leonard Jennings, Senior Vice President of Loyalty Marketing at Synchrony, highlights the power of rewards that are achievable, meaningful, personal, and surprising. Let’s explore how leading companies, alongside insights from financial institutions like Synchrony Bank, are successfully employing these principles.
Making Rewards Achievable: The Sleep Number InnerCircle Program
Creating a compelling rewards program for infrequent, high-value purchases, like mattresses from Sleep Number, might seem challenging. However, their InnerCircle program cultivates remarkable customer enthusiasm. Instead of purchase-based rewards, members earn entries into sweepstakes for items like pillows and sheet sets by engaging in simple actions. These include providing survey feedback, sharing social media reviews, consuming sleep and health-related content, and, crucially, referring friends and family through digital channels. Each successful referral earns InnerCircle members a $100 reward redeemable at Sleep Number stores or online. The program also features tiered status levels with escalating rewards, and members maintain their tier status indefinitely. Lisa Erickson, Senior Director of CRM & Loyalty, explains that the program’s focus is on “building lifelong relationships by frequently engaging with our Insiders and supporting their best sleep through valuable program content.” This approach demonstrates the power of integrating a “refer a friend” aspect into a loyalty program to drive engagement and reward advocacy.
Relevance, Personalization, and Meaning: Lowe’s Customer-Centered Design
Home-improvement retailer Lowe’s prioritizes customer-centered design and in-store service as the foundation of its loyalty strategy. Ruth Crowley, Vice President of Customer Experience Design at Lowe’s, states, “You can’t simply launch a loyalty program and expect sales to follow. It must be genuinely relevant to the customer.” This customer-centric philosophy benefits both customers and store associates. For instance, when developing a new kitchen set, Lowe’s challenged conventional showroom layouts. “We aimed to see it through the customer’s eyes,” Crowley explains. They tested two kitchen layouts – a traditional one and an innovative design intended to simplify and reduce stress in the selection process, ultimately driving purchase decisions and loyalty. Customers overwhelmingly preferred the new solution. This insight, combined with feedback from store associates and collaboration with key suppliers, led to a redesigned kitchen set, implemented in 100 stores and expanding to hundreds more. Crowley emphasizes the need for continuous evolution to meet customer needs and support stores in a rapidly changing industry, stating, “One size doesn’t fit all.” While online research is prevalent (70% of customers), industry data reveals that most purchases (75%) still happen in physical stores. Creating a relevant, personalized, and meaningful in-store experience is therefore crucial. “We need to create an environment that communicates understanding, offers assistance, and provides a tailored experience in our stores,” Crowley concludes. “Empowering our associates to effectively serve each customer in the moment is paramount. Ultimately, we are in the people business.” While Lowe’s doesn’t explicitly highlight a “refer a friend” program in this example, the emphasis on personalized experience indirectly supports the idea that satisfied customers are more likely to recommend the brand.
Surprise and Delight: Tillys Differentiated Experiences
A generic, one-size-fits-all loyalty approach can be perceived as uninspired by customers, particularly in fashion retail. Jon Kubo, Tillys Chief Digital Officer, argues, “Our role as retailers now is to create truly engaging experiences.” Tillys employs a blended analog-digital strategy for its loyalty programs. They host in-store events featuring fashion influencers and integrate augmented reality experiences accessible through the Tillys mobile app. These initiatives not only attract and retain customers but also enable Tillys to gather valuable data. This data then informs the creation of more refined engagements and personalized offers. Tillys’ strategies have proven successful, with Kubo reporting six consecutive quarters of in-store growth. While not directly a “refer a friend” program, the “surprise and delight” approach, especially through digital and social channels, naturally encourages word-of-mouth referrals and sharing of positive brand experiences amongst friends.
Synchrony Disclosure: This content is subject to change and for informational purposes only. Consult with advisors for specific business, financial, legal, or tax matters. Synchrony makes no warranties and accepts no liability for losses arising from the use of this information. Opinions expressed are solely those of the interviewees. Your receipt of this material constitutes acceptance of these terms.
