Buttoned-up loyalty: The case of Men’s Wearhouse and Jos. A. Bank
Merger. It’s a word that can send even the most fervently loyal employees scrambling to update their resumes and contact every recruiter within social media earshot. It also can cause angst among even the most loyal consumers, who fear the brand value and experience may change.
As a result, companies are getting better and better at navigating the turmoil associated with combining two workforces, two cultures, two … everything.
When the merger involves two popular men’s apparel chains — Jos. A. Bank and Men’s Wearhouse — it also means combining two loyalty programs, and that requires a different kind of navigation. This is especially the case when the two programs match up like pinstripes and plaid — each looking good on its own, but combined can cause enough confusion to land it on a worst-dressed list.
Few companies give much thought to how a merger can benefit their loyalty program members beyond a requisite communications and operational integration plan. Often, brands choose to exist separately, with their own identities, marketing budgets and loyalty programs firmly intact. Many defer loyalty program evolution to later stages of their integration roadmaps, preferring to tackle more familiar challenges early on.
But by doing so, those companies risk missing out on an opportunity to quickly capture additional market share — and mind share — of their respective loyal customers.
In this column, I want to explore how the Men’s Wearhouse and Jos. A. Bank merger would benefit from cross-brand loyalty program integration. But before doing so, let’s consider the benefits to be gained when two merging companies start unifying their loyalty strategies early on.
- Back-end efficiencies/cost savings: Even in circumstances where customer-facing programs remain distinct, the integration of information technology platforms, loyalty staffing and direct communications costs can generate a cost savings for the new organization of 5 percent to 10 percent.
- Greater strategic alignment: Developing a good loyalty strategy involves many key considerations, including marketing, creative, customer experience, operations, merchandising and location. Integrating all of these operations can make for difficult conversations, which is why having them early in the process will translate to better understanding, and more efficiency, later.
- Increased data and customer insight:Information that reveals broader customer behaviors frequently enables companies to capture quick wins, which are critical for maintaining momentum through the merger process.
- Greater utility and value to customers: Customers have very high brand standards these days, and they respond more enthusiastically to companies that continually test their ability to recognize and reward. Let’s face it, loyalty program changes that deliver increased value and utility to customers are newsworthy these days.
Tailoring the loyalty fit: Jos. A. Bank and Men’s Wearhouse
Men’s Wearhouse in March agreed to acquire Jos. A. Bank for roughly $1.8 billion, stitching up five months of bids and counter bids. The deal is expected to close in the third quarter, at which point the companies should take a close look at their loyalty strategies.
Men’s Wearhouse operates a well-defined program, Perfect Fit Rewards, which is quite rich compared with other specialty retailers. Included in the benefits are free shipping, $30 off tuxedo rentals and a $50 certificate for every $500 spent.
The loyalty strategy of Jos. A. Bank is less formally defined, with deals of the week and other soft benefits available on its website that can stimulate engagement with the brand.
Both cater to a similar audience: the male professional who needs a great-looking and great-fitting suit that won’t break the bank. Price ranges are similar at each brand and they both offer diverse products outside of formalwear, including big and tall sizes.
So how should Jos. A. Bank and Men’s Wearhouse proceed? Given the respective business models and the brand alignment, this combined company would benefit from increased loyalty program integration through a number of approaches:
Embrace multiple brands within a unified loyalty strategy:Once combined, the Jos A. Bank brand is expected to remain independent from Men’s Wearhouse. Consumers will recognize the differences between the stores, but the loyalty value equation shouldn’t vary. If the combined company offers a single way to earn across banners, then both entities will better serve their joint customers — and collect more consistent data. A good example of a company doing this well is Gap Inc., which has a unified loyalty strategy across Gap, Banana Republic and Old Navy.
Use Perfect Fit to deliver tailored experiences:A well-executed Perfect Fit program could serve as a platform from which to launch experiential loyalty initiatives that extend beyond suits — perhaps to include personal shoppers or invitations to VIP designer events. Access to such top-shelf services would place both stores top of mind when members make lower-consideration purchases.
Seek cost efficiencies that can be delivered back to the customer: In addition to the back-office cost savings and efficiencies, Men’s Wearhouse should examine the high level of rewards in its published program structure. The issue with having such a rich reward structure is that it limits a company’s ability to invest differently in high-potential customers who might not be sufficiently recognized and rewarded. It should keep directing rewards to the customers, but evolve the program so the company can be more nimble and flexible in how the rewards are delivered.
Create an insight engine for the combined organization:Both companies will have to establish who their best customers are across both organizations, which are their next-generation heavy hitters, and then how the combined loyalty platform can deliver efficient rewards, beyond broad pricing changes, that appeal to them. Practical tools like expanded segmentation, customer dashboard reporting and a centralized customer database will help to manage these issues.
Mergers are typically driven by the principle that combining the operations of two companies will result in an intrinsic competitive advantage. This could be a cost advantage, market share capture or expanded products or services. The same logic holds true for an organization’s loyalty strategy, which when executed well amplifies the overall corporate and brand strategy.
To not address this early in a merger is like buying the suit, but not investing in the effort to have it tailored.
(Photo by Fashionby He.)
Fred Thompson Fred directs the Retail Services Consulting Practice at LoyaltyOne. With more than 15 years of strategic marketing experience with major department stores, specialty stores and consumer product companies, he is responsible for designing loyalty strategy solutions for clients that amplify their brand positioning and deliver outstanding results.