Retailers are modernizing traditional points-based memberships with innovative rewards and tools that entice shoppers to join. And savvy merchants are using the customer data goldmine they get from these plans to inform their marketing strategies and drive revenue.

Coffee shop customers often stop in to buy their favorite brew several times a week—if not daily. But shoe shoppers? Not so much. And Schuh, a United Kingdom-based footwear chain, is acutely aware that it’s not in a high-volume business.

Beyond niche sneakerheads and shoe devotees, the average consumer’s repeat purchase cycle for footwear is different: They buy when their shoes need replacing, for key occasions and ahead of season changes, hence the summer sandal rush, says Phil Hearn, the chain’s customer relationship management analytics manager.

To add to this challenge, Schuh is in a crowded market. Lots of retailers sell fashion footwear and trainers, he says. So, in an effort to maintain a connection to the customer until she’s ready for a new pair, which is critical to the chain’s success, Schuh recently began developing a customer loyalty program.

“That’s one of the key things—to really understand, ‘How are we going to get customers coming back to us specifically?’” Hearn says.

Loyalty programs can help retailers better the odds of earning repeat shoppers and increase spending from those who are already returning to an ecommerce site, according to industry experts. In fact, 27% of consumers said their rewards program membership prompted them to shop with a particular retailer during the holidays, according to a Digital Commerce 360 and Bizrate Insights survey of more than 1,130 online shoppers in January 2021.


But during the pandemic, 76% of consumers changed their shopping behavior in some way, including 37% who experimented with new brands, according to a survey conducted by consulting firm McKinsey & Co. That shift in customer loyalty made it all the more important for retailers to deepen relationships with their customer base to both siphon off up-for-grabs shoppers from competitors and retain existing ones. The effort often is aided by data analytics, which can identify and help customize marketing opportunities. Many retailers are aiming to do this by putting new spins on traditional loyalty programs, adding personalized offers, early access to sales, charitable giving elements or exclusive experiences.

A growing number of merchants are investing in memberships that incentivize shopping with rewards and other perks. And these programs work: 35.9% of retailers ranked in the 2021 Digital Commerce 360 Top 500 offered a free loyalty program in 2020, up from 26.0% the year before. That’s a 37.8% year-over-year increase. And Top 500 retailers with loyalty programs grew online sales by a median 32.1% in 2020—higher than the 27.1% for retailers without one.

Ecommerce technology vendor Salesforce Inc. has noticed that more retailers are keen to learn about loyalty programs. Loyalty has been a hot topic in conversations between Rob Garf, vice president of strategy and insights, and retail executives over the past six months. A recent Salesforce round table on driving loyalty in a cookie-less world was so popular that the company is hosting another.

To address the rising demand on this front, the company launched a loyalty management tool in February after running a pilot program. It lets retailers build and launch membership plans that can be quickly implemented and easily customized. That means retailers can evolve offerings over time based on popularity, seasonality and individual markets without having to rewrite code or update antiquated back-end systems, Salesforce says.


Loyalty programs are ‘treasure trove’ of data

Schuh participated in the pilot and is now deploying a loyalty program that will offer transactional-level discounts (or a dollar- or percentage-off discount applied to each eligible item or a group of qualifying items), unique perks with points earned for each purchase, access to special promotional events that provide bonus points and other rewards. A main goal of the program isn’t just to attract more loyal customers and sales increases, but also to unify online and store data across its 120 physical locations to get a single view of each shopper, Hearn says.

“There’s a lot of stuff that goes on in the store network that we can’t see as marketers because it’s not tracked beyond the point-of-sale system,” he says. If shoppers are motivated to identify themselves in store by the promise of earning points, then Hearn’s team can get visibility into those transactions, see how shoppers behave in stores and online—both key “marketing ecosystems”—and leverage any new insights.

“We are able to deliver better things for the customer based on the extended knowledge we’re going to have about our relationship with them,” he adds. “This is really going to take us to the next level in being that point of relevance for the customer when we’re talking to them and make sure we’re being as efficient and as effective as possible with our communications. Being able to feel like I understand the customer and their motivations and their differences in different regions and how they buy shoes—it’s so important.”

Loyalty programs can be a “treasure trove” of data, says Tom Caporaso, CEO at Clarus Commerce, a company that helps retailers develop and implement premium membership plans. And that source of customer information will be crucial once the calendar turns to January 2022, when browsers like Google Chrome, Firefox and Safari will no longer support third-party cookies that track online activity and help retarget visitors by showing them relevant product ads once they leave a site without completing a purchase, he adds.


Garf agrees, saying that the data consumers knowingly and willingly provide about themselves as they interact with a brand is “real currency—the pot at the end of the rainbow.” When a shopper completes an online order, retailers often then know that customer’s address, color and fabric preferences, size and more, but harnessing all of that information is difficult. Salesforce research shows retailers have, on average, 39 disparate systems to manage consumer engagement.

“What progressive retailers are doing is rethinking their data strategy as it relates to loyalty so they can layer on intelligence, see patterns around a consumer’s profile and operationalize it,” Garf says. “Then you can do more dynamic segmentation with personalized emails and even product recommendations. Those mechanisms create higher lifetime value and are important in an age where it’s becoming more and more expensive and complex to acquire new customers.”

E.l.f. uses receipt scanner to gain insights on loyalty members

For beauty brand e.l.f. Cosmetics Inc., a loyalty program helped solve a challenge posed by its sizable wholesale segment. With more than half of the company’s total revenue coming from the brand’s products sold through Walmart Inc., Target Corp. and Ulta Beauty both in stores and online, e.l.f. had been blind to a large chunk of data on its customers’ purchasing habits, as retail chains typically don’t share transaction details with manufacturers. That made it difficult for the brand to get a complete picture of its omnichannel shoppers.

But in chief digital officer Ekta Chopra’s quest to beef up the company’s personalization, she sought a window into consumers’ other buying habits outside of the e.l.f. ecommerce site and app. The cosmetics brand launched a revamped loyalty program called e.l.f. Beauty Squad in August 2019, and it now has 2.4 million members—up 40% year over year thanks to the influx of first-time shoppers during the pandemic.

Ekta Chopra, chief digital officer at e.l.f. Cosmetics Inc.

Ekta Chopra, chief digital officer at e.l.f. Cosmetics Inc.

And its receipt-scanning capability has steadily become a “game changer,” Chopra says. Members of the free plan can scan or upload photos of their in-store or online receipts from other stores to or in the app to log their purchases of e.l.f. products. Shoppers earn reward points that can be redeemed for dollars off of future purchases. And e.l.f. learns valuable information about its consumers, helping the brand build customized profiles and better curate product suggestions.

The program has paid off. The brand began actively marketing the receipt scanner in April 2020, and within four months, the number of consumers using the feature grew by triple digits—an indication that people are willing to share their personal data when given an incentive, Chopra says. The receipt scanner—coupled with other campaigns to encourage shoppers to sign up or sign in when they visit e.l.f.’s site—caused the number of “identified users,” or site visitors who the brand recognizes and has some data on, to swell by 187%.

Chopra says e.l.f. is in the process of using that added transactional data to develop nuanced customer personas for each individual shopper. For example, Ekta, Jane and Derek each have different shopping journeys and preferences and should receive different messaging. Chopra expects to know that a shopper on the site also regularly buys at Ulta, only likes liquid foundation, favors brown lipstick hues and gravitates toward advanced beauty tools for her experimental phases.


“Once I go to the e.l.f. website, instead of just detecting that I’m in New York and welcoming me back, all of a sudden, the assortment and content I see on the homepage is very individualized to me,” Chopra says. “And the messaging is specific, too: ‘Hey, you bought your skin care nine months ago. Is it running out? Buy today, and you’ll get X.’ ‘Tell us—has your skin changed over time? If your skin has gone from oily to dry, here’s what you should try.’ That’s when things come into focus.”

The personalization moves are working. Beauty Squad members have higher average order values, purchase more frequently, boast stronger retention rates and generate almost 70% of sales on, according to the retailer.

Experts say it’s imperative for retailers to adapt loyalty memberships to changing consumer demands. They should never be “set-and-forget” plans, but rather, marketing teams should constantly find ways to add value. Clarus Commerce research shows that while members still love and expect transactional money-saving benefits like discounts, cash back, rewards or free shipping, those are baseline perks.

Garf agrees: In the current loyalty program “renaissance,” younger generations want retailers to make them feel special and unique by allowing them to preview new lines of clothing or purchase exclusive products before they’re widely available to the public. But most importantly, they are seeking experiential rewards, and the potential for partnerships is limitless, he adds.


David’s Bridal launches loyalty program

David’s Bridal Inc. has taken this approach, focusing on experiences and partnerships. The concept of a loyalty program built for a chain that sells wedding gowns may seem like a mismatch when every bride hopes to need just one special, high-ticket dress in her lifetime. The potential for repeat business is low. But the company found an innovative way to encourage customers to accumulate rewards for shopping using the Diamond Loyalty Program, its first-ever perks membership, which was rolled out in December.

“We were trying to get creative about how we conceived of lifetime value—maybe not the lifetime value of a person but of an event,” says Lizzy Ellingson, chief digital experience officer.

Lizzy Ellingson, chief digital experience officer at David's Bridal Inc.

Lizzy Ellingson, chief digital experience officer at David’s Bridal Inc.

When a shopper signs up for a free Diamond account, she receives a code (the member’s phone number also pulls up her profile) that can be shared with others who may be making wedding-related purchases so that points can be pooled on behalf of one couple. The top reward is a free honeymoon.


For every $1 spent for that couple’s account, the couple earns one point. Points can be accrued on everything bought in store or online, such as mother-of-the-bride outfits, sashes, baskets, ring bearer pillows, bridal party gifts, decorations and alterations.

The retailer and other businesses it partners with offer perks starting at signup, increasing the level of swag as the account advances to each of the four tiers. Members receive a tote full of goodies and a bridal bouquet once they reach 3,000 points and free streaming fitness classes and $200 gift cards for photography and flowers at 4,000 points. At the 5,000-point tier, members earn a free honeymoon package.

David’s Bridal loyalty program partners include Blue Nile, The Wedding Shop by Shutterfly, The Bouqs Co., Couples Resorts Jamaica, Nashville Music City and High Peaks Resort Lake Placid.

“We have spent significant time over the past year dreaming up ways to better serve our bride as she plans and prepares for her wedding,” says Jim Marcum, CEO of David’s Bridal. “Our goal with Diamond is to give her and her bridal party value she can’t find anywhere else, whether she is looking for additional ways to save, access to partners, or is coveting a one-of-a-kind getaway.”


In just six months since launch, the program has amassed more than 400,000 participants. And so far, Diamond members are spending 1.4 times more than non-members (when comparing average selling price) and account for more than half of the company’s sales, Ellingson says.

“We are very excited about Diamond’s growth—it just exploded,” she adds. “It speaks not only to the program but to the increase in demand this year. It works so well because Diamond is tied to an event rather than a single person.”

Walgreens shifts how it connects with customers

Walgreens Boots Alliance Inc. is also responding to shifts in customer expectations. After receiving feedback from its old Balance Rewards members, the retailer began reimagining its free loyalty program, launching the new myWalgreens at the end of November and starting to migrate over its 100 million enrollees over.

“We’ve shifted how we look at loyalty overall. Rather than it being solely about getting a discount or sale price, we look at it in terms of ‘How can we connect one on one with our customers and patients?’” says Alyssa Raine, group vice president of customer marketing platforms. “That’s so important given how personal health and community are, and when we can build a relationship, that’s good for business because it makes people want to engage with us more—in our digital channels or in store.”

Alyssa Raine, group vice president of customer marketing platforms at Walgreens Boots Alliance Inc.

Alyssa Raine, group vice president of customer marketing platforms at Walgreens Boots Alliance Inc.

The pharmacy chain, which has more than 9,000 locations, nixed its old point system after hearing consumers found it confusing. Instead, the new program allows shoppers to receive 1% back on purchases in Walgreens Cash and 5% back on Walgreens-branded products.

While loyalty membership still automatically unlocks sales prices, the benefits have evolved. Members can earn additional Walgreens Cash by reaching health goals like hitting a certain number of steps after syncing their account with connected devices. Data amassed by the loyalty program, which now consolidates in-store, in-app and online interactions, allows Walgreens to be more sophisticated in personalizing messaging and deals.

When myWalgreens members log into their accounts, they are informed of real-time environmental and health forecasts in their specific neighborhood—for example, not just Chicagoland, Chicago or Lincoln Park, but the hyperlocal Old Town Triangle, Raine says. That includes allergens, ultraviolet index, COVID-19 and flu alerts that also link to related products and services like information on supporting immunity, scheduling a vaccination and finding a doctor to consult via phone.


“We’re trying to be focused on our customer and identify what their needs are and then provide them with the content, products and services that help them depending on what’s happening to them versus being like, ‘Here’s a blanket ad for a discount on a household product,” Raine says.

After COVID-19 and the national conversation about systemic racial disparities heightened people’s awareness of needs in their own backyard, Walgreens also added a community-based charitable giving component to its loyalty program. In April, the retailer allowed its loyalty members the option to donate any earned Walgreens Cash in support of local nonprofits. Using charitable giving technology vendor in/PACT Inc., Walgreens tapped into a network of U.S. neighborhood charities focused on youth, social impact and health equity.

Walgreens has received “phenomenal” positive feedback for recognizing people’s desire to make a difference by offering the community donation tool, Raine says. In the first month after launch, loyalty program members donated thousands of dollars, with an average of $3 per donation. Once Walgreens markets the program more, Raine says the influence on communities could be huge given that the retailer interacts with eight million people daily across its store network, website and app.

Since the myWalgreens launch, app engagement has increased by 30%, open and click-through rates are up double digits (sometimes as much as 50-90%), and traffic to and sales from digital channels have grown, Raine says. Additionally, the new program’s Net Promoter Score, an index that measures the willingness of customers to recommend a company’s products or services to others and a proxy for customer loyalty, is up 41% compared with the score registered by Walgreens’ old Balance Rewards, she says.


The tactics retailers like e.l.f., David’s Bridal and Walgreens are using to drive loyalty are redefining traditional plans. “These more modern iterations of loyalty programs are creating this genuine relationship with consumers and demonstrating the real value of what a retailer has to offer new and existing shoppers,” says Garf of Salesforce.