Will Zappos reap rewards from its new loyalty program?

Discussion
Source: Zappos
Sep 30, 2016
Tom Ryan

Zappos’ first-ever loyalty program is a four-tier, progressive benefits platform that offers rewards for writing a review and logging onto Zappos.com across devices.

The program offers three ways to earn points:

  • 10 points for every dollar spent on a purchase;
  • 50 points for logging onto Zappos.com on any device (limited to one login per day);
  • 100 points for writing a review.

Customers may redeem every 1,000 points into $1 in Rewards Codes, which can be applied toward future purchases on Zappos.com.

The bigger incentive for customers may be accumulating points to gain access to the non-monetary benefits available in higher tiers of the program.

There are four tiers in the program: Silver, Gold, Platinum, and an invite-only Elite tier. Across all tier levels, members gain free, expedited shipping as well as a dedicated Zappos rewards line. With the program, Zappos claims to be the only retailer offering free two-business day and free one-business day shipping on all orders with no membership fees or minimum order values.

Zappos rewards
Source: zappos.com/rewards

Special perks for members in higher tiers include first access to exclusive products and sales; opportunities to suggest your own Zappos Rewards and test new features; free UPS pickups for returns; and free returns beyond its 365-day return policy.

“As we designed the Zappos Rewards program, our goal was to take our customer service to the next level,” said Arun Rajan, COO of Zappos.com. “We leaned on one of our company purposes — ‘To Live and Deliver WOW’ — and we trust this program will truly wow our customers.”

DISCUSSION QUESTIONS: What do you think of the Zappos Rewards program — how points are rewarded, the varied perks and the tier levels? How do you think the program will affect the relationship between Zappos and its customers?

Braintrust
"We keep hearing how modern branding centers around engagement and Zappos has found a way to keep their customers thinking about the brand. "
"I’m not convinced that shoppers will buy more in order to reach the next precious metal level of enlightenment."
"Their loyalty program design includes both hard and soft benefits and has a base reward plus a variable reward component."

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9 Comments on "Will Zappos reap rewards from its new loyalty program?"

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Bob Amster
BrainTrust

Looks credible. Loyalty programs, especially tiered ones, have to be monitored so they can be adjusted to suit the retailer and the customer they intended to surprise and delight. Let’s re-visit in nine months …

Max Goldberg
BrainTrust

My first take is that a lot of action is required by customers to gain little in the way of rewards. Zappos’s core story has been customer service. The company’s customer service is legendary. This loyalty program does little to build on Zappos’s core story.

Retailers should enter into loyalty programs with the knowledge that they are easy to start, and can be expensive to run and difficult to close. I don’t see how this rewards program benefits the company or consumers.

Adrian Weidmann
BrainTrust

My daughter is a huge fan of shopping on Zappos. When I asked her why, her first comment was free shipping. This was followed by less enthusiastic comments about price and selection. While I understand the various levels of their rewards program I’m not convinced that shoppers will buy more in order to reach the next precious metal level of enlightenment. The tiered approach may backfire and alienate loyal shoppers, especially the nebulous Elite invitation-only level. Brand loyalty is about being identified as a valued member of a community — a tribe, if you will. Introducing a caste system into the community may weaken the sense of community. Why not surprise your loyal customers with free return shipping and other rewards without advertising a tiered program? Your customers will definitely share their discovery with the global community and that may have far more value.

Jasmine Glasheen
Guest
Jasmine Glasheen
1 year 1 month ago

Granted, the monetary rewards aren’t substantial enough to be a draw. But the ability to earn free expedited shipping, returns and early access will keep the infrequent customer engaged.

We keep hearing how modern branding centers around engagement and Zappos has found a way to keep their customers thinking about the brand. Plus, it’s human nature to strive for Elite status — even when the perks are minimal.

Graeme McVie
BrainTrust
Most loyalty programs have two objectives: as a mechanism for identifying individual customers and as a way to differentially engage with and reward customers. Given that Zappos is an online retailer, they can already identify individual customers so their loyalty program is geared towards differentially engaging with and rewarding their most loyal customers. Their loyalty program design includes both hard and soft benefits and has a base reward plus a variable reward component. The base reward component (10 points for every dollar spent) allows them to include all customers and purchases in their reward program but they have kept the earn rate relatively low to keep the costs to a more manageable level. The tiering approach allows them to provide incentives for customers to repeat purchase and to engage with the brand through multiple devices and by writing reviews, which are an increasingly important aspect to online retailing.   The program looks to have been well thought out, but one of the keys to the success of the program will be how well Zappos analyzes their customer data and uses the insights to identify and reward their most loyal customers through hard and soft benefits and through the intelligent investment of variable rewards. They will… Read more »
Gene Detroyer
BrainTrust

It sounds nice. But for the people I know Zappos is already the go-to place for shoes and apparel. I don’t think the program will generate any new sales from these folks.

It may bring in some new customers and, importantly, it may make Zappos the first thought in their mind. But it is a bit complex and I am not sure in the end that any customer will pay attention to it. They will just do what is convenient for them.

Ken Morris
BrainTrust

The new Zappos Reward program offers a lot options for consumers to earn more points via engagement with the brand. Offering more points for every log-in to the account will help inspire members to be more active in the program and keep Zappos top of mind. The extra points for writing a review is a great way to get more reviews and hopefully mostly positive reviews. Many consumers look at reviews as part of their decision process, so they are a very important selling tool.

The added services levels for the different tiers is smart. Some of the service rewards may not seem like a big deal, but having several levels may increase engagement and purchases as many consumers aspire to climb the loyalty tier ladder to achieve the top level.

Patricia Vekich Waldron
Guest
Patricia Vekich Waldron
1 year 1 month ago

I am a big Zappos shopper and while this may attract new or more frequent visitors, it will not impact my patterns. Convenience, service and selection are why I shop Zappos.

Shep Hyken
BrainTrust

I like a good loyalty program that actually is focused on the customer’s loyalty versus a company’s marketing strategy. Zappos understands customer service and experience. And they know what their customers want and expect. I am excited to see how this is received. (I think it will be well received!)

wpDiscuz
Braintrust
"We keep hearing how modern branding centers around engagement and Zappos has found a way to keep their customers thinking about the brand. "
"I’m not convinced that shoppers will buy more in order to reach the next precious metal level of enlightenment."
"Their loyalty program design includes both hard and soft benefits and has a base reward plus a variable reward component."

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