Yet Another Chapter in Kohl's Long History of Loyalty
It’s a tough time to be a department store. A recent Forbes summary of the situation highlighted how one-fifth of all department stores in the US have closed since 2018; and while very few retailers are immune from the difficult times that have befallen the economy, department stores are especially hard hit in the face of changing customer behaviors, outdated business models, and customer loyalty that has all but moved on.
But these challenges aren’t scaring Kohl’s. In fact, the brand is strengthening and updating its loyalty program, and is squarely aimed at winning over new customers while gaining share of wallet in an incomparably heated competitive landscape. The latest chapter in Kohl’s loyalty evolution is just another page in a storied history of navigating, optimizing, and experimenting with program formats to better reach its customers.
Kohl’s Through the Years
Kohl’s began its loyalty exploration in a paradigm familiar to many other department stores of the day: a simplified store branded credit card designed to connect shoppers with purchase incentives and rewards. And like many other retail institutions, the inherent challenges of connecting greater audiences became apparent. Those who did not qualify or were simply not interested in holding yet another card in their overflowing wallets were excluded from the program entirely.
Kohl’s began to look beyond this model with the introduction of their Yes2You Rewards program in 2014. Enacted as a multi-tender strategy, membership was free, and had several integrated technologies for an enhanced user experience; in 2016, Kohl’s introduced Kohl’s Pay, enabling customers to transact their purchases and simultaneously earn Yes2You Rewards loyalty points with a single tap using Apple Pay. The bottom line for members was a flexible platform that earned one point for every dollar spent and received a $5 reward after reaching 100 points. Over the years, the program grew to 30 million members. But in that time, department stores still shuttered; customer loyalty continued look past the sea of aisles and yearn for relevant relationships; and Kohl’s realized they had to change with the times to keep audience fandom fresh.
It's Game Time With Kohl’s Rewards
Kohl’s is earnestly trying to right the ship, and its latest program, “Kohl’s Rewards”, is evidence of their tenacity amidst difficult circumstances. The fundamental concept supporting the program remains unchanged from its predecessor: program members get 5% back in rewards. But there were several sticky points faulting Yes2You which have now been streamlined. For example, where Yes2You enforced separation between the main program platform and the company's periodic Kohl's Cash events, the updated Kohl’s Rewards reinforces unity. Instead of relying having a separate "points" currency, rewards are now disbursed as Kohl's Cash in $5 increments. Thus, everyday rewards earnings can be combined with rewards from the retailer's periodic special events that allow customers to earn $10 of Kohl's Cash for every $50 they spend. Kohl’s Rewards also doubles down on targeted reminder communications, updating members about unused cash balances to ensure the program value is always top-of-mind. Other program features include:
- Personalized deals
- Birthday gifts
- Relevant perks throughout the calendar year
- The ability to get a print out of the Kohl’s Rewards balance on shopping receipts
Loyalty in The Limelight
Kohl’s reported a challenging first quarter. Net sales fell to $2.16 billion from $3.82 billion a year ago, and the retailer reported a net loss of $541 million, or $3.50 per share, compared with a profit of $62 million, or 38 cents per a share, a year prior. But by reigning in a loyalty strategy that is personalized to audiences and unifies a disparate experience, the brand is hoping to turn around its slipping status. At the end of the day, Kohl’s can’t control the external environment or the obstacles introduced by uncertainty. But it can create a tactically sound plan to greet customers with a program that performs, and that’s what the brand is well on its way to achieving.