Target Approaching Customer Loyalty “Quite Differently” Than in the Past

In mid-August, amid the wind down of Target’s Cartwheel Perks loyalty program, Ron Orgiefsky, managing director at emnos, told Loyalty360 that Target has been a progressive retailer for years, continually tweaking and adapting to keep things fresh and to keep up with market trends.

“Target’s move to pull back on excess promotion is driven by the desire to change value perception among its shoppers,” Orgiefsky explained at the time. “And both shopper segmentation and store segmentation help in the understanding of what to do and how to do it. It’s important to understand that value perception is different among different shopper segments, and even among those segments, often times different from one product category to the next. To maintain customer loyalty, balanced with sustaining necessary margin structure, both critical for the long-term success of a retailer, one must truly understand this right balance of promotions, not only in terms of to what degree to promote an item, but to whom an item should be promoted, and through which channel of communication.”

Target is focused on gaining customer trust and restoring brand loyalty through a thoughtful strategy around pricing and promotions.

Kate Hogenson, senior loyalty consultant, Kobie Marketing, told Loyalty360 in mid-August that she’s not sure that Target can win brand loyalty through pricing alone.

“Despite all of the less-than-stellar predictions, Target had a promising second quarter with increases in both in-store and a significant boost in digital traffic, demonstrating the success of its online strategy,” Hogenson explained. “But there was also cause for concern, at least some of the boost in traffic stemmed from price decreases. Pricing almost always seals the deal for individual transactions, especially now that it’s so easy to compare prices online. But it really does not differentiate a brand or create true customer loyalty beyond a single transaction. Customers want to feel they’re valued, but also that they’re saving money. If Target can build up trust in its low-price value proposition and prove its transparency to customers, it can create an emotional connection built on reciprocity instead of a transactional relationship built on everyday low prices. And that is what creates true customer loyalty.”

Loyalty360 talked to Carolyn Sakstrup, senior vice president of marketing at Target, this week to learn more about the company’s future customer loyalty focus. While she couldn’t share too many specifics, Sakstrup spoke about a strategic shift in thinking that will be realized more fully in the ensuing months.

“At Target, we recognize that transactional points programs are just one way to generate loyalty,” Sakstrup explained. “We believe that true loyalty is created when a brand can forge a relationship with those they serve and when there are strong functional and emotional benefits to it. And since every guest is different, brands need to offer a range of benefits that are dynamic and evolve as the relationship with their guests deepens.

Sakstrup added: “We are approaching loyalty quite differently than we have in the past, looking at how we can connect with and strengthen our relationship with every type of guest, from our most loyal shoppers to first-timers. Instead of one program, we are in the process of building and testing a broader platform of offerings that will give all of our guests a more exciting and rewarding shopping experience.”

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