Nordstrom notes

Nordstrom expands rewards to non-card holders

Nordstrom last week expanded its rewards program to allow customers without a Nordstrom card to earn points toward rewards.

Customers now have two ways to earn $20 Nordstrom Notes:

  • Without the card: Earn one point per dollar when paying without a Nordstrom card. Providing a mobile number enables members to earn points on purchases and redeem any accumulated $20 Nordstrom Notes.
  • With the card: Earn two points per dollar when using the Nordstrom Visa credit card, Nordstrom retail card or Nordstrom debit card. Cardholders also earn early access to the Anniversary Sale, private holiday shopping parties, free alterations and personal bonus point days.

At 2,000 points, members receive a $20 Nordstrom Note to spend on anything at Nordstrom, Nordstrom Rack or HauteLook.

“As customers’ definition of service continues to evolve, we are focused on being responsive and delivering services and experiences that are important to them,” said Erik Nordstrom, co-president, Nordstrom Inc., in a statement. He noted that more flexible rewards had been a customer request.

On its first-quarter conference call in mid-May, Nordstrom officials noted that only about one out of five customers are part of its rewards program, but they account for roughly 40 percent of sales.

“There’s an opportunity to engage in a whole other pool of customers and to bring them into our loyalty program,” said Michael Koppel, CFO and EVP, on the call. “We have seen over time a multiple increase in spend, roughly four times spend and three times more trips of those that are engaged in our loyalty program.”

Among its upscale competitors, Bloomingdale’s in 2012 introduced The Loyalist program that doesn’t require a credit card, but Neiman Marcus still requires one. Macy’s, Kohl’s and Penney have programs for non-card holders as well as richer ones for cardholders.

Source: Nordstrom

BrainTrust

"Honestly, I expect to see more and more retailers offer these kinds of loyalty options ..."

Nikki Baird

VP of Strategy, Aptos


"This is a great way to recruit practically everyone into their fold."

Liz Crawford

VP Planning, TPN Retail


"Just in time for the Half Yearly Sale!"

Patricia Vekich Waldron

Contributing Editor, RetailWire; Founder and CEO, Vision First


Discussion Questions

DISCUSSION QUESTIONS: Do you see more advantages than disadvantages in Nordstrom extending rewards benefits to non-card holders? Do you like tiered loyalty programs for card and non-card holders?

Poll

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Nikki Baird
Active Member
7 years ago

I’m not a store-brand card holder, so I have a hard time sympathizing with a strategy that forces store-brand card use. And I’ve seen enough data from Millennial studies that show that, financially educated by the Great Recession, they are leery of credit. Which means that benefits or not, it may be increasingly difficult to convince people to sign up for store-brand cards.

Combine that with the value in knowing all of your customers, across all of your channels, and I can see why Nordstrom is opening its loyalty program to all comers. And in doing so, they almost HAVE to differentiate between a non-card holder and a card holder. Otherwise, they risk gutting their card program, which I assume is profitable above and beyond the loyalty aspects.

Honestly, I expect to see more and more retailers offer these kinds of loyalty options — if only to increase their ability to track online and offline activities together by customer.

Max Goldberg
7 years ago

With sales down and its stock price taking a hit, Nordstrom needs to shake things up. Allowing non-Nordstrom card holders to participate in its loyalty program makes sense. This will give the company the ability to gather information from its shoppers and open a new avenue of communication with customers. Nordstrom has much to gain and little to lose.

Anne Howe
Anne Howe
Member
7 years ago

Like Nikki Baird, I don’t hold store credit cards either, so I’m glad I can now be included in the Nordstrom program, even if it’s slightly different than the program for card holders. The positive shopping experiences and quality of merchandise across multiple pricing tiers are bound to keep new members coming back, so I expect the company to reap the benefits of the decisions within the 2016 retail year.

Ross Ely
Ross Ely
7 years ago

Loyalty programs are challenging at retailers like Nordstrom, where the frequency and volume of purchases are low compared to other retail sectors such as grocery. Nordstrom’s shopper participation rate of only 20 percent underscores the difficulty they have in attracting shoppers to their rewards program.

Therefore, extending benefits to non-card holders is a great way to get more of their customers involved in the program. Removing barriers to participation will attract more shoppers to the program and increase its activity. Of course, by providing their mobile phone number, shoppers automatically “enroll” in the program which achieves Nordstrom’s goal of increasing participation rates.

Frank Riso
Frank Riso
7 years ago

I see great advantages for Nordstrom. I have said before that there are too many loyalty cards to carry and to be concerned with and to understand which one does what, etc. We no longer have branded credit cards because customers wanted to use only their MasterCard or Visa card. The same will be true about loyalty cards. Secondly, I do like tiered loyalty programs. One of the better ones is at Century 21 department stores. It is a regional group of stores with a special checkout for gold members and at times that is a great way to get out of the store quicker.

Bob Amster
Trusted Member
7 years ago

The answer is strictly quantitative. The concept certainly works for the customers. As to whether it works for the retailer or not, there is an erosion of margin in exchange for a mobile number (now what?). If the rewards program does, in fact, result in an increase in the number of visits and dollars spent, the $20 price tag to Nordstrom, at its price points, may well be worth it.

David Slavick
Member
7 years ago

Nordstrom was a long-standing holdout for this type of multi-tender loyalty. The client said it best — we wanted to make it easy and simple for our valued customers to get benefits from us. It took a recession to make this a reality. The business metrics for their own credit card portfolio were so compelling for a long, long time, owning their own “paper” — to offer incremental benefit to a customer using other credit cards for payment was no longer a tough call given the significant slowdown in new card holder take rate coupled with preference to leverage spend with alternate tender — air miles linked or cash back.

Now Nordstrom will realize the benefit of identifying other buyers of their fabulous shoes and apparel plus leverage the program to drive incremental visits/lift average ticket. The cost of points and giveback of rewards makes Nordstrom much more promotional than ever before, given the brand is not a heavy coupon or sale-oriented chain. The ever-changing environment at the mall is making transformation a healthy move, even for a chain that has remained very true to their colors for decades. Change management will be a big focus here as the associate at Nordstrom, so well trained to delight the customer, must take on the loyalty program to ensure optimum understanding in order to drive preference.

Kim Garretson
Kim Garretson
7 years ago

I like the tiered concept IF the retailer adds something extra for card holders than just more points. Most retailers offer a price-matching service for credits/refunds if they or competitors drop the price on an item within about 30 days. But it’s on the consumer to discover this and file for the refund. What if a retailer offered cardholders the option of auto-monitoring its items — and the competitors’ — for that 30 days and automatically credited the shopper on price drops? Some major retailers are beginning to examine this option.

Liz Crawford
Member
7 years ago

I love it. This is a great way to recruit practically everyone into their fold. Nordstrom has lowered the barrier to membership so that it makes sense for an occasional shopper, opening the door to future trips. Smart move.

Brian Numainville
Active Member
7 years ago

The ability to gain information about a broader range of their shoppers while making it easier to participate in the program (without having to have a card) makes complete sense. Shoppers want an easier method to participate in rewards/loyalty programs — forcing the use of a card is so yesterday.

Shep Hyken
Active Member
7 years ago

The loyalty program is essentially an earned discount program. The advantage to having the Nordstrom card is that you earn your $20 discount twice as fast. Giving the non-card holders a chance to participate is the gateway to getting them to apply for the card to get the full benefit.

Brian Kelly
Brian Kelly
7 years ago

Media is quickly evolving toward greater one-to-one communication. Mass still rules, any doubters should read KSS Q1 earnings remarks. The Starbucks D2C model requires mass to drive high levels of short-term awareness for the high/low retailer.

Digital media requires customer data to prove its true personalization and efficiency value — it feeds the programmatic engine. And it informs predictive analytics.

Therefore tender neutral loyalty programs are essential. The cost for a robust view of the shopper will be paid with gross margin dollars until the value of promotional information can be leveraged. Will shoppers pay for an advance of the monthly promo calendar so as to better use time and avoid refunds on 30-day promo price window?

Or as we like to say, “retail ain’t for sissies!”

Kai Clarke
Kai Clarke
Active Member
7 years ago

Nordstrom is smart in expanding its reward program to include almost any one of their shoppers by moving to a two-tiered reward program. Dynamic reward programs, including multi-tiered ones which empower all shoppers to enjoy the benefits of the reward program, cease to alienate shoppers and, instead, extend a positive approach to the in-house shopping experience.

Phil Rubin
Member
7 years ago

Having worked with Nordstrom on Fashion Rewards (launched in 2007), it was always clear that an omni-tender approach to loyalty was ultimately required. It took a while, but what they launched was clearly expected given the changes made in 2014, which set the stage for a lower non-tender tier.

Nordstrom’s loyalty marketing challenges going forward, beyond the ones they spoke about May 12th when they announced earnings, will be twofold (see my take on this here):

1. Challenge #1: Managing their increasingly promotional orientation — remember they went from semi-annual sales to seven promotional periods last year — and balancing that with the incremental costs of this loyalty offering. This might make them competitive with other (overly) promotional retailers, but it’s well documented that unless you’re an off-price retailer it’s really hard to grow profits in the long term with a promotional strategy.

2. Improving the level of integration between the Rewards program and their relationship marketing and customer experience. The former has long been a challenge due to silos between full line stores and direct/e-commerce.

Overall, there is clearly a trend toward speciality retailers and department stores broadening their programs across tender and it’s one we have always embraced. Yet at this point it’s basically table-stakes and the future competitive frontier is integrating loyalty marketing into the broader customer experience. That’s the point of collecting all the data but retailers especially fail to translate them into customer-beneficial delivery of the value proposition beyond the $-off rewards.

Patricia Vekich Waldron
Active Member
7 years ago

Just in time for the Half Yearly Sale! I think it’s a great way to engage new shoppers while giving those of who are card-holders.