In the summer of ’69, Doris and Dan Fisher opened the first Gap store in San Francisco (which also, by the way, sold vinyl records and tapes). Fast forward to 2010 – Gap is now one of the world’s largest specialty retailers, with approximately 3100 stores and fiscal 2009 revenues of $14.2 billion.
Gap has become a cultural icon by offering clothing and accessories rooted in cool, confident and casual styles for a global clientele. Competition for specialty retailers is tough, with fast-fashion masters like Zara and H&M driving Gap and other retailers to move fashions at an even faster rate to retain the attention of their increasingly diverted clientele.
Gap has continued to break ground over the years with its fresh approach to marketing, calling on the talents of widely known brands like Madonna, Sarah Jessica Parker, Clair Danes, and Lenny Kravitz to bring their clothes to life. Gap’s marketing is about forging connections with their audience, helping us to see ourselves – albeit hipper, slimmer, less inhibited selves – living and playing in Gap.
Gap broke new ground once again in November 2009 with a pilot loyalty program in Vancouver, right in RewardStream’s backyard. Many of our staff (well, the hip, slim and uninhibited wannabees among us…) had joined the program, so our recent Gap “Loyalty Scan” prompted a lot of discussion.
Program Background
In November 2009 Gap launched a pilot loyalty program called Sprize™ in ten stores in the Vancouver area. The program’s promise is “shopping turned on its head” or “now the bargains hunt you.” The program launch was marked with a unique marketing campaign which included “sprizing” in-store displays, mannequins suspended from the ceilings and up-ended cars on the street outside the heavily touristed Robson Street location.
The idea behind the program is a simple one. Members shop as usual, but if their purchases are marked down within a specified timeframe they earn discounts automatically. The big idea? No more scheduling shopping trips around sales, or watching for price adjustments and heading back to the store to claim your savings.
With Sprize, members who purchase qualifying items “may” automatically receive SprizeMoney for the difference between the best markdown price at that store and the price they paid for the item (excluding applicable taxes and promotional credits) in a 15 day period after the initial purchase. Gap claims that it takes about 31 days from the date of a qualifying purchase for SprizeMoney to be posted to the member’s account – this is the vesting period. SprizeMoney is a promotional store credit at participating Gap stores, and $1.00 in SprizeMoney is equivalent to CDN $1.00. Members can redeem SprizeMoney at participating Gap stores for merchandise within 30-days after SprizeMoney is posted to their account. (According to the website, SprizeMoney is posted within 48-72 hours after the 31 day vesting period.) So, SprizeMoney is “good” for a specific 30 day period.
In addition to the program website the program lives on Twitter and Facebook, where Gap actively pushes messages to followers and solicits feedback on the program.
What’s great …
At RewardStream, we were divided in our assessment of the program design. We agreed that the member experience – including the website, the program terms and conditions, the sign-up process, and their email marketing and Facebook and Twitter communications are all done very well. The Sprize brand is fresh and appealing and well communicated by the in-store sales associates.
The idea itself – having savings accrue to the purchaser simply and easily with no extra effort seems like a sound one. Hey, who doesn’t like to reap the benefits of price reductions without having to read flyers and stay on top of sales? The original program, which credited price reductions within 45 days to the member’s account and gave members a year to use their SprizeMoney, seemed very much aligned with the spirit of the program. We loved it. The way the program was originally conceived, we could see that shoppers might return to GAP more often to see what they can get for their SprizeMoney and would inevitably pick up more items than they intended. Good for Gap.
For Gap, the program is also an ingenious way to raise sales on overstock items and clear out this season’s stock to make room for next season’s. Less leftover stock means more stock purchases overall, and ultimately, more money in Gap’s pocket.
Room for improvement?
The program has undergone a significant change since it first launched in November 2009. Just six months into the pilot Gap took a hedgetrimmer to the timeframe for earning SprizeMoney, slashing it from a generous 45 days to just 15 days after initial purchase. And they took a chainsaw to the redemption period for SprizeMoney, chopping it back from 1 year to just 30 days. That’s right. SprizeMoney used to be redeemable for a full year; now it’s only useful for 30 days.
We felt strongly that these recent program changes have seriously compromised the essence of the program. In a recent tweet, Gap explained their program changes: “As you know, Sprize is a pilot which means we’ll continue to test and watch the program closely. The recent changes allow us to continue offering a unique price protection benefit while adding other exclusive Sprize member-only privileges - like MySprize Day and Private Sale events. We value your comments and want to hear what you have to say, so please send us an e-mail.”
On Facebook, followers gave their feedback on these changes, saying that since you can visit the store for a price adjustment within 15 days anyway, they’d rather do that and leave with cash than have SprizeMoney be held for a 31 day vesting period and then be forced to spend that money within 30 days or lose it. Others complained that they don’t live in Vancouver and only visit a few times a year to shop; their SprizeMoney will expire before they can spend it – having a 30 day window is not enough.
Tara Wilkinson, a business strategy consultant at The Strategy House in Vancouver, recently reviewed the program in Marketing Magazine. She looked at the program through a different filter – segmentation and Gap’s disregard for the very real differences in buyer behavior in this program design.
Her analysis? “In the apparel market, style orientation, trend following and price sensitivity are among the top attributes driving segmentation. Gap ignored this strategic tenet when it developed its new initiative, Sprize.” She says, “Sprize turns all customers into price customers. … customers who are driven by trends, fashion and impulse, get discounts they don’t seek. Bargain hunters don’t need to visit the stores as often to get deals, taking the fun out of the hunt. More product will ultimately be sold at a discount, reducing profits. All customers are treated equally.”
Wilkinson offers some constructive feedback, including this recommendation: “Since not all customers value discounts in the same way, they shouldn’t all be offered the same incentives. Web-based sales campaigns, which Gap also uses, can be effectively used to drive traffic as they can be easily tailored to appeal to different customer segments. For example, bargain hunters could be wooed with one-night only, deep discounts on end-of-season merchandise; fashion-first customers could be enticed with sneak previews of the next season’s collection; and brand ambassadors could be recruited to participate in design reviews.”
Closing thoughts….
We too were divided in our assessment of how well “turning shopping on its head” will ultimately work for Gap. Like Tara Wilkinson, we wonder if Gap is just giving away discounts needlessly when those who are discount-driven could visit the store within 7 days anyway for a one-time price adjustment. The program gives these shoppers an extra 8 days to earn a price adjustment but they will not receive it in cash and are limited in their time frame to receive the benefit of the price adjustment.
On the other hand, knowing that SprizeMoney will expire may cause shoppers to shop more frequently than they may otherwise have shopped, and there’s no question that using one’s SprizeMoney will drive incremental sales – after all, my SprizeMoney balance (which is still pending …) of $6.51 will be a nice “sprize” when I shop but chances are pretty good that I’ll spend more that $6.51. Good for Gap. I just have to keep track of the magical 30 days that I can visit Gap and spend my SprizeMoney. Good luck with that.
Finally, the rather clumsy vesting period + posting period + expiration period will make it hard to keep track of when Sprize money will be usable. I have yet to receive an email alerting me to the fact that my SprizeMoney has been awarded … maybe an email will help me keep track.
We’re all watching to see if Gap decides to roll this program out across Canada and the US.