Photo: Gap, Inc.
Will an enhanced rewards program turn Gap’s customers into ‘lifelong loyalists’?
Gap Inc. announced yesterday that it has integrated the rewards issued under its various banners — Athleta, Banana Republic, Gap, Old Navy — into a single program, making it easier and faster for its multi-brand loyalists to earn points and reap benefits.
Members earn brand exclusive benefits, bonuses and other special perks when they join the program. They earn points no matter what chain they shop that can be used there or any of the other three under the Gap Inc. umbrella.
The new program will award members who use a Gap credit card with five points for every dollar they spend at one of the retailer’s properties. Those members using other forms of payment will earn a point for every dollar spent.
Gap, which began a relaunch of its program in the fall of last year, said it has signed up 19 million new members since then. That brings total membership for its credit card and rewards program to 37 million.
John Strain, chief customer, digital and technology officer at Gap Inc., said that the company’s goal for its new program was to convert “customers into lifelong loyalists.”
The retailer is seeking to recruit new members by rewarding them more quickly than it did with its previous program. Members are now able to use their points in increments of 100 rather than 500 as previously done.
Those who sign up for the free program are grouped into three categories — Core, Enthusiast and Icon — depending on purchases. Each move up the ladder results in greater perks.
Gap’s program also allows members who are less motivated by personal rewards to use their purchases to support worthy causes. They may use points to make contributions to one of five funds: Athleta Power of She Fund, Banana Republic BR x World Wildlife Fund, Gap DoSomething.org, Gap Inc. Equal Justice Initiative and Old Navy Imagine Mission Fund.
“We heard loud and clear from our most loyal customers that they value brands that are a force for good in the world,” said Chris Samway, head of rewards, loyalty & payments at Gap Inc. “With this in mind, we set out to design a program that gives our members opportunities to help make our communities stronger through programs that empower and support women, youth and the underserved, and bolsters our commitment to driving social change.”
Discussion Questions
DISCUSSION QUESTIONS: Will Gap’s new rewards program complement other actions the retailer is taking to solidify its operations and boost its various brand profiles? Do you think that the various elements of the rewards will help Gap in converting customers into lifelong loyalists as it hopes to do?
Poll
Loading …BrainTrust
Dave Bruno
Director, Retail Market Insights, Aptos
Matthew Pavich
Sr. Director Retail Innovation at Revionics, an Aptos Company
Enhancing its loyalty rewards program is a smart strategy, especially combining point earnings across all brands. The tiered levels in the Gap rewards program is a good idea, as it oftentimes inspires customers that are close to the next level to spend a little more to move to the next level. Making the higher levels of the reward program a little more lucrative, such as an extra point for every dollar they spend, would make incremental purchases more rewarding.
I think it makes enormous sense for Gap to integrate all its banners into a single loyalty program. Given the adjacent price points and overlap of categories, there is significant cross-shopping and a crossover of the brands. Having a single customer view is the first step towards maximizing the lifetime value of every customer.
Loyalty schemes only work if there is something worthwhile to be loyal to. In the case of brands like Old Navy and Athleta, I can see this working. However at the Gap brand and, to a lesser extent, Banana Republic, so many underlying issues have yet to be resolved. Until they are, no scheme or program will be particularly effective. Putting that to one side, creating a unified scheme across all brands is sensible from an efficiency, data management, and ease of use perspective.
It’s a smart move to allow flexibility across brands in a loyalty program – we haven’t seen many retailers attempt something like this before. Given the cult followings Athleta and Old Navy have, the Gap brand, which is in need of a revival, can hopefully benefit. The timing of this loyalty reboot is perfectly aligned with the upcoming operational and product assortment upgrades on the agenda for the Gap brand. That said, the brand must be careful. Gap has a history of over-discounting and slashing margins for a long time to drive sales, which isn’t a sustainable strategy. So, the new points scheme needs to avoid any continuation of that approach. This really needs to be a brand play and not a promotional plan.
I haven’t done much apparel shopping lately, and I mistakenly assumed that this cross-brand loyalty feature already existed. Gap makes it very easy to shop across brands, including shared shopping carts. It only follows that your rewards would be as easy to earn (and spend). I think this feature will be very popular with their customers, and I heartily applaud the option to donate points to Gap charities.
This is a great move for Gap. They needed to show their customers that they are listening. Having an enhanced rewards program with all brands under one banner will give Gap a single view of the customer which is priceless.
The new loyalty program sounds like a winner, particularly with a nod to philanthropy. Gap’s other challenge, though, is to duplicate the success of its daughter brands and diversify its merchandise a little.
Gap combining all its brands’ loyalty programs into one makes sense for Gap and its customers. It will lower its cost of running the programs and doesn’t require its customer to be a member of multiple programs. It will also increase the likelihood that more of Gap’s customers will shop at its other brands.
It’s a well crafted loyalty program, especially allowing people to donate to worthy causes and shop across brands. However loyalty only goes so far without a solid brick-and-mortar strategy to support its underpinnings. Gap’s recent reduction of their store footprint and entry into Walmart are undermining their customer’s perception of the quality of these brands and risk hurting Gap’s ability to lift profit margins. And by linking Gap to Banana Republic, Athleta and Old Navy they risk all having this perception of waning quality bleed over into even their successful brands. I’ve been a loyal BR and Gap shopper for decades and have a wardrobe full of classic staples that have served me well for years, but they have lost their consistency and focus on what the customer really wants. Although their loyalty program is well built, shoppers don’t buy on loyalty alone, the product and brand story must align.
I really don’t see any downside to this move, in fact it is a smart strategy. I think what this will do is drive more customers into the stores and if Gap is listening, (I’m sure they will be), this will be a positive as to hearing consumer wants and needs of their operations.
It makes sense to integrate programs for customer convenience. Plus, the reward options represent another good tactical move. All of these changes should contribute to continuity of purchase. However I always protest the concept of brand or store loyalty. Loyalty to family, country, church and Alma Mater makes sense. Consumers owe no loyalty to brands and stores. Instead, these entities must be loyal to their customers. How? Simple — deliver on their promises!
It’s hard to believe it’s taken Gap this long to rethink and consolidate its rewards program! Cross-brand promotion and appropriate charitable contributions will drive sales and loyalty.
This approach sounds like a winner — it makes sense to combine all banners to drive loyalty across brands while also providing incentive to shop at other GAP banners. The ability to support worthy causes is also a nice touch that is not only smart business, but can actually drive meaningful change. Brand and retailer loyalty is increasingly important as customer leakage remains at very high levels. In order to allow this program to drive sustainable loyalty and lifetime value, GAP will need to leverage the best customer and loyalty analytics and make sure to promote the right offers and products for their most loyal consumers.
Gap needs to do everything possible to bring customers back to its core brands and having an integrated loyalty program across all brands is an important first step in a multi-step process to succeed. If anything, this is long overdue! The added bonus of tying in charitable contributions is another plus and shows they are listening to their customers. Now Gap needs to focus on the product — their namesake brand and Banana Republic have shown a weakness here while Old Navy and Athleta appear to remain strong. If they can focus on that and return to the types of fashion consumers want, they can build on this loyalty program and increase lifetime customer value.
This is an important move for Gap and their customers. It should also entice another 5%-10% of customers at each brand to join the program in the first place because the pace to rewards is accelerated. Of course, they could go further and collaborate with additional complementary brands — enhancing value further, and even generating a new revenue stream as partners pay for the points issued to common customers.
We will see this type of multi-brand collaboration accelerate significantly over the coming years — in part because it drives customer engagement, but importantly, because it also allows complementary brands to share customer insight — helping each partner better understand the profile of each customer and driving more personalized engagement.
I don’t think anyone dislikes “rewards” programs, but nor do I think customers seem to have the fetish for them that company marketing departments do: get something back … fine; just keep it simple.
The problem comes when these become a substitute rather than a companion to being a place people want to buy from. Many feel GAP has long been challenged on that front, and while this program doesn’t preclude addressing that issue, it shouldn’t be allowed to become a distraction.
Gap’s move is excellent: customer-centric and allowing for direct marketing and encouragement of already prevalent cross–brand shopping and purchasing behaviors. The addition of a charitable option for points also sends a strong message of Gap’s intention to focus on supporting the people who work and shop their brands and the communities they serve. The fact that this will also lead to more and more profitable customer relationships is the outcome of an intelligent strategy and emblematic of a modern and sustainable approach to capitalism.