Photo: Kohl’s
Kohl’s emphasizes cash in merging of rewards program
Kohl’s is unifying its three rewards program — Kohl’s Charge, Kohl’s Cash and Yes2You Rewards — in an overhaul that emphasizes cash back over points, offers rewards for non-cardholders for the first time and introduces Elite status for heavy spenders.
Among the changes:
- Cash back focus: Kohl’s Charge customers now earn 10 percent Kohl’s Cash on every purchase. Kohl’s Cash is redeemed in the future. Previously, Yes2You members earned one point for every dollar spent and a $5 reward for every 100 points. Members still earn $10 Kohl’s Cash for every $50 spent during special “Cash Bonus” events.
- Non-cardholder rewards: Customers without a Kohl’s Charge card will earn five percent Kohl’s Cash on every purchase regardless of how they pay. “Cash Bonus” events as well as other special sales events traditionally reserved for Kohl’s Charge cardholders — typically 15 percent, 20 percent and 30 percent off purchases — are also open to all Kohl’s Rewards members.
- Rewards reminders: Noting customers’ frustration over neglecting to redeem their Kohl’s Cash, Kohl’s will automatically keep track of customers’ Kohl’s Cash on the Kohl’s app and remind them of Kohl’s Cash balances at the register.
- Elite Member status: Available to Kohl’s Charge holders who spend more than $600 in a calendar year, Elite members receive free shipping from Kohls.com all year, early access to Black Friday deals and other promotional events and queue priority on its customer service hotline.
Kohl’s chief marketing officer Greg Revelle told Bryan Pearson, president and CEO, LoyaltyOne, in a column for Forbes, that the changes were motivated to simplify its offerings across Kohl’s Charge, which accounts for nearly 60 percent of its purchases, Yes2You Rewards with 30 million active members and its popular Kohl’s Cash sales events.
He said, “We know maximizing all of the value offerings can be complex, so we saw an opportunity to unify all three rewards programs into a single, easy-to-use rewards platform.”
The program is being piloted across 100 stores in eight markets with full rollout slated for 2019.
- Kohl’s CMO Greg Revelle Reveals the Future of Loyalty: Kohl’s Rewards – Kohl’s
- Kohl’s Rewards – Kohl’s
- Kohl’s Launches New Rewards Program, Combining 3 Elements: What Shoppers Can Expect – Forbes
- Kohl’s joins rivals in revamping loyalty – Retail Dive
- Retail loyalty programs are no longer in the cards – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What do you think of the unification and updates Kohl’s has made with its rewards programs? Which changes do you expect will be most beneficial in engaging existing customers and acquiring new customers?
Poll
BrainTrust
Art Suriano
Chief Executive Officer, The TSi Company
Georganne Bender
Principal, KIZER & BENDER Speaking
To begin with my usual “full disclosure,” I worked for Kohl’s from 1982 to 2006. And our household continues to shop often at Kohl’s — what used to be called “MVC” level (most valuable customer) is now “elite” level.
The complexity of the various Kohl’s reward programs has long been a challenge for customers to untangle — despite efforts to simplify in the past. The new version sounds easy to understand, especially since it’s linked to the well-known “Kohl’s Cash” promotion. And doubling the reward level to 10 percent of purchases sounds like an aggressive chance to gain market share.
Kohl’s is making it simpler for customers to earn cash back, track their accounts and redeem awards, all while rewarding their best customers. What’s not to like? All retailers should look at simplifying their loyalty programs and rewarding heavy users.
I agree with your sentiments, Max. Reducing complexity by driving increased loyalty and simplicity is the recipe for success. This also further cements their private label credit card push which incentivizes customers to utilize their credit card to garner additional benefits. Depending on how their contract is laid out, this could be lucrative from an interchange fee savings perspective.
Everyone wins when you put the customer first.
I think the unification is smart and Kohl’s sees the need to simplify their programs. Less is more, and I’m sure customers were becoming confused and at times frustrated about which application to use and when. Hopefully, Kohl’s can keep it simple and let the customers enjoy the opportunities they will have when being loyal to the brand. It’s also important going forward that Kohl’s presents a bright and exciting marketing campaign to help existing customers understand the changes while attracting new ones. The only concern I have is the impact on their margins, and that can hurt profits going forward. So Kohl’s needs to pay close attention to not give away too much.
Kohl’s loyalty scheme has been a good driver of business for the retailer; however, there have been many niggles that it has become too complex and complaints about certain aspects. This reform seems to deal with these. It creates a simpler, more coherent scheme that I think shoppers will welcome.
As ever though, loyalty schemes are a secondary driver of loyalty: the proposition has to be there in the first place for loyalty to work!
It’s interesting to blend into the woodwork and watch Kohl’s cashiers juggle Kohl’s Cash and coupon transactions. Some shoppers are giddy, waiting to see the “Total Saved” line on their receipts.
Kohl’s gives its customers so many opportunities to save money they need a road map to keep track of it all. It just makes sense for the retailer to make it easier for customers to use and understand.
The key here is simplification, namely making it easier for heavy spenders to reap the benefits of their Kohl’s spending and for light users to become introduced to the benefits of Kohl’s Cash. Kohl’s Cash is a terrific method to “bring customers back to the store in a relatively short period of time. As a result customers normally spend incrementally more than the Kohl’s Cash they have earned. A win-win situation for Kohl’s and its customers, regardless of their spending levels.
The move to simplify is certainly the right approach, as is catering to the needs of non-cardholders which will help attract Millennials and other younger consumers. However, loyalty programs that are based on cashbacks sometimes lack the personalization approach and hence miss part of the benefit to consumers and the ability for hyper-targeting to microsegments. The right move is to combine the two approaches and use the rich behavioral data and purchase history to tailor personalized offers together with the cash rewards.
The extra 5 percent Kohl’s Cash that cardholders receive is definitely a good incentive — I’m interested what card signup bonuses this might be coupled with. I think a major opportunity will also come with leveraging the Elite Member status. $600 in a calendar year is certainly a reachable goal — and the timing perimeter sets their marketing team up well for a campaign around the holidays showcasing members progress year-to-date, encouraging spend in the final months to hit the status tier. Hopefully they can create some unique insider events/benefits outside of free shipping and BFCM access that will excite people enough to nudge their behavior!
This article also reminded me that I have Kohl’s Cash which expires in two days …
Brilliant! I have actually heard Kohl’s customers comparing (and bragging about) how much Kohl’s cash they had. And then we see customers walk into the their stores, filled with anticipation and excitement as to what kind of deal they will find. This program I believe will draw the customer closer than ever, especially with the “reminder” of rewards owned, as all had to keep on their toes about the expiration dates or lose the Kohl’s Cash! What has always amazed me is that through years of having a super aggressive loyalty program and deal prices, Kohl’s has maintained needed margins. I also believe that we will see more and more new sign-ups for this program, which could affect maintained margins. However, Kohl’s is a very smart company, and I know they are prepared and have planned for this launch. I tip my hat to them!
Consolidating the three programs is clearly the right thing to do, but one has to wonder what took so long.
Kohl’s pricing/reward cash eligibility is a marvel to behold. Now I could be wrong but the way I see it when cash back is eligible, list prices are highest and on-sale price is lower. But magically when the cash back period is over, out come the BOGOs and whatnot. Simplification has to make this more transparent, doesn’t it? Perhaps there needs to be the “in-between day” pricing for the unlucky shopper who can actually buy something that is not on sale in any way. We do love our bargains!
Simplifying the program is great — you shouldn’t need a graduate degree to understand how any loyalty program works! The reward reminders are key to getting customers back for an incremental visit. It will be interesting to see if they have a contact strategy and customer migration plan for those customers that are almost to “elite” status. If they can get the customer that spends $400-$599 to be even more loyal, it should pay dividends for them.
A needed adjustment; Kohl’s is going in the right direction by creating a universal program and simplifying the components. No one marketing incentive works for everyone — having several available throughout the same program casts a wider net that Kohl’s should see some positive results from. Their elite member status is especially well done in creating a specific spend threshold (not percentage) customers need to achieve to join. It gives customers something to shoot for and Kohl’s something very tangible to manage.
Kohl’s is smart to reduce complexity among their rewards programs. Shoppers don’t want to have to think about how to use their loyalty rewards, they just want to know that they are available to use when needed and that they get a tangible value out of being a loyalty program member. Continuing a department store trend of decoupling rewards from their charge cards is also wise for Kohl’s to do now. Smart loyalty programs make it easy for shoppers to join while maximizing rewards for the best customers. Lastly, any retailer app must integrate the loyalty program and provide full details on all the benefits the customer is supposed to receive from the program. This is a great driver for customers to use the app. That said, I’m not sure simplifying the loyalty program is going to do much to bring in new customers, but rather make their existing loyal customers much happier.
Brilliant move consolidating and simplifying this loyalty program, and a cash emphasis always wins. If customers can simply communicate the program to other customers — that’s how awareness and consideration is seeded. I’m very curious to see the next evolution of Kohl’s loyalty program with what could be the next stage of their Amazon partnership, and Amazon’s branded credit card.
Companies are right to keep things simple — though I might argue it should be as simple as not having programs at all and just having low prices and good service for everyone. People like more tangible givebacks, but how Kohl’s fares under that criteria I’m not sure. It seems rather complicated as explained here … hopefully in practice it isn’t.
Kohl’s loyalty program, while unified for simplicity, rewards its customers across the entire lifecycle (highly- to less-engaged existing customers and new customers). This approach allows customers to choose the reward structure that works best for them. They can unlock more rewards based on their engagement with the brand.