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Target puts a bullseye on loyalty, customer engagement with Circle strategy

The retailer's latest loyalty program strategy may win over lots of hearts and minds, say industry watchers, as it provides a compelling engagement aspect as well as a new reward opportunity.

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September 12, 2019 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

Target is rolling out a loyalty program, Target Circle, just in time for the holiday season with a debut on Oct. 6. The program requires no membership and offers customers the chance to earn 1% rewards on every Target trip, as well as early access to special sales and even a birthday treat during the year.

And, in an effort to have customers engage with the brand, the Minneapolis-based retailer is inviting Circle card holders to vote on non-profit organizations Target will support. Target Circle is  a complementary effort to Target's credit and debit RedCard, which offers 5% savings on purchases.

The response, so far, from industry watchers appears positive — especially the opportunity given to customers to have a say in a brand's philanthropic decisions.

"On the one hand, the community 'voting' benefit has been done by others, but only within the context of promotional periods. Other programs allow you to choose where to donate your own points but not where the corporate entity will donate their funds. It is new and different to make voting where Target will donate their funds part of the ongoing program structure," Kate Hogenson, Kobie senior loyalty consultant, told Retail Customer Experience in an email.

Hogenson terms Target's loyalty move as "huge," as its typically among top corporate donors.

"Others contribute more money but Target has a history of being among the top for percentage of profits donated. In 2015, Target shifted from donating to schools to donating to wellness — the donations to schools were popular and we saw it show up in our reciprocity research that they were still getting credit for it in 2017. However, there were people who noticed it was gone and Target did get criticism for it," she said.

The Circle program, according to Clarus Commerce CEO Tom Caporaso, a loyalty expert, will provide the retailer with an even balance between transactional and experiential benefits. That, he explained, will make it more likely that loyal shoppers will engage with the program on a daily or weekly basis.

"It offers the points, discounts and cash back that entice consumers to initially enroll in the program, but the experiential benefits like the ability to pick a nonprofit for Target to donate to are what will drive that emotional loyalty long-term," he told Retail Customer Experience in an email.

Today's consumers want to feel special and valued, said Caporaso, adding his firm's research reveals that customers can be easily swayed by competing offers and deals. That data revealed 70% of shoppers admit their loyalty to a brand is harder than ever to hold on to and so the Target program is arriving at an opportune time.

"While thousands of shoppers are already huge advocates of the Target brand, personalized perks like birthday discounts and opportunities to provide community feedback add a level of exclusivity for repeat buyers that want to make the experience better for themselves and their fellow shoppers. As Target continues to build stronger communication with their customers, they may see bigger excitement for Target Circle than previous loyalty programs that have come and gone," he said.

It's also an opportune time in another way for Target, given the retailer failed to break into the top 20 loyalty leaders in the 23rd annual Brand Keys Loyalty Leaders List.

The survey examined 921 brands in 110 categories. This year's list is led by Amazon, number one in online retail, with Apple, Trader Joe's and Nike all appearing in the top 20. One of the biggest leaps in loyalty this year was Old Navy, noted the report. Target is nowhere to be found even in the top 40 on the list.

Loyalty, noted the report, is a predictive indicator of brand success and the more loyal and engaged the consumer the better behavior with purchase, repurchase and brand recommendation.

Target's Circle program may help in its ongoing battle against Amazon, according to the 2019 Consumer Expectations Report from Avionos, which evaluated consumer preferences.

The data revealed 78% of consumers are most likely to buy from retailers that better personalize the experience and 63% are open to sharing personal data if retailers can better anticipate needs.

But what likely is of most interest to Target is this data point is that online shoppers name special loyalty promotions/deals as their top reason (25%) for purchasing with other brands and retailers over Amazon.

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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