It’s still preppy, but it’s not personal.
That could be the synopsis of the challenges facing apparel chain J.Crew Group these days, based on the reasoning behind its new loyalty program, J.Crew Rewards. The all-American brand, which built its reputation on high-quality, classic styles for a creative and affluent (or creatively affluent) customer base, has launched the credit card–free program so anyone can access its rewards. And this, in turn, wil provide J.Crew with more data so it can better understand its well-heeled market.
Much rides on the effort. J.Crew’s once-solid market base is diminishing in numbers and the company is mired in debt. The retailer has posted 13 consecutive quarters of sales declines. In 2017, it reported a net loss of $125 million, compared with a loss of $23.5 million in 2016.
So J.Crew is turning to an expanded loyalty proposition, and more accurately the shopper data it will provide, to deliver more personalized promotions and experiences to its customers. Members can pay however they want, with or without a J.Crew credit card.
“There’s a real emphasis now at J.Crew on personalized engagement versus just site-wide promotion,” President and Chief Experience Officer Adam Brotman told Fortune. “This is laying the groundwork for that.”
But is personalization enough to bring back disillusioned brand fans? It is important, but J.Crew Rewards will require several other elements to save the brand.
From Devotion to Departure
An irony is that if J.Crew’s customers hadn’t been so devoted, they might have been more forgiving.
The brand had gained a near-cult following in the ’90s by elevating mere fashion to a lifestyle. One didn’t simply wear J.Crew, she or he was defined by it. Its camel-brown “Regent” blazer carried the workday into the evening with aplomb, winning the office’s biggest account and then making a splash at the art gallery opening (combined, of course, with the “perfect” linen shirt).
But financial issues emerged after J.Crew went private in 2011 with the help of private equity firms TPG Capital LP and Leonard Green & Partners. The $3 billion leveraged buyout sunk the company in debt — $1.7 billion in 2018.
This hamstrung J.Crew’s efforts to compete against low-priced competitors like Zara and niched online upstarts. Further, Crew fans did not care for its new styles, which at times seemed directionless and inconsistent, and shoppers complained the quality suffered.
J.Crew responded in part with regular price discounts, which trained shoppers to expect them. Its rewards program apparently was created to undo that conditioning, by replacing storewide promotions with more tailored offers.
Still, a loyalty program alone is not likely to save a brand.
4 Loyalty Essentials for Revival
A loyalty initiative is an effective tool to reinforce the qualities of a brand while it is on the mend, however. This is what J.Crew may be aspiring to, given the launch of the new payment-agnostic rewards. Following are four essentials the program requires to help revive J.Crew.
1. It makes the best use of data. When shoppers share data, they do so with the expectation that they will receive something of equal or greater value in return. This means J.Crew is accountable for the data it collects.
It would best account for that data by looking at it from the viewpoint of its customers, so it could base its decisions on what is important to them. In this respect, the addition of a payment-neutral program should be helpful, because it could enable J.Crew to layer the rewards program insights (because each member carries a unique identifier — a membership number) with those of its credit card. This assumes that J.Crew will align the rewards program insights with those already collected through its credit card program.
Generally, the biggest mistake retailers make when launching rewards programs is not determining what to do with the data — in particular, how to use it to benefit their customer. Fortunately, J.Crew already recognized the value the rewards data can bring to it, given the experience it has from using its credit card portfolio.
2. It creates and supports relevance. Data enables relevancy in terms of providing accuracy, but relevancy can only be achieved through authenticity. It occurs when a brand connects with its customers through communications that show it knows who its customers are and what they care about.
This goes beyond merely rewarding points and delivering promotions. Context and content are critical. Content can be tailored by segmenting customers based on purchase patterns and behavioral motivations — what the consumer has responded to before — and then creating messaging for each. The preferred channels through which the messages are extended, the context, can be adjusted by sending the offers at times most likely to capture awareness. Visual elements (children, an office) also can be changed to reflect specific life stages.
3. It gets emotional buy-in. This is where relevancy leads — to emotional loyalty. Think of what caused shoppers to love J.Crew from the start. It aligned with their aspirations and values, it had a distinct style and it offered a level of esteem. It didn’t matter if other retailers offered less-expensive alternatives; J.Crew embodied what was emotionally important to its shoppers.
Experience is crucial to achieving emotional loyalty, which J.Crew plans to accomplish with more personalized offers. To succeed, it will have to assign value to each customer’s preferences, even dreams, and then prove itself by sending offers and information that speak to those preferences, on a timely basis, without being abusive. Gaining emotional loyalty is a matter of gaining trust.
4. It enrolls employee help. Emotional loyalty is more likely to be achieved when all departments of the company, including at the store level, are encouraged to participate. It takes employee engagement to master shopper engagement, and any brand that thinks otherwise is fooling itself.
Among the best ways to ignite employee passion is by empowering them to make choices that improve the customer experience. Often, this means providing them with information to make better-informed decisions in real time. Department heads with access to the data can identify those employee encounters most likely to define the brand’s value among its fans and encourage activities to ensure these moments.
These four principles, in conjunction, accomplish what is essential to any retailer’s survival: They place the customer at the center of the brand’s purpose. When in the customer’s orbit, the brand has the full perspective to base every decision on what matters to that consumer at the time, whether it’s being preppy, professional or just lounging in linen.
Bryan Pearson a Featured Contributor to The Wise Marketer and is the President of LoyaltyOne, where he has been leveraging the knowledge of 120 million customer relationships over 20 years to create relevant communications and enhanced shopper experiences.