Disappointed with the performance of its existing credit card and in-store loyalty programs, Macy’s is planning to roll out a new, improved, and streamlined loyalty program in late 2017. The retailer hopes that this action will help encourage brand loyalty and ultimately revive the struggling chain. Recently, the company discovered that only 9 percent of its customers currently account for 46 percent of its sales, so it is clear that keeping loyal customers interested in coming back again and again can be one ingredient in the recipe for future success.

Loyalty programs generally work best when they offer a valued perk to members. Amazon’s Prime service offers its members free shipping options. Starbucks’s rewards program offers a convenient way to order and pay from a smartphone, then rewards frequent drinkers with a free cup of coffee after they earn a certain number of points. Retail insiders hope that Macy’s will take its cues from these other successful brands as it redevelops its own loyalty program. Offering services such as free shipping on online purchases, holiday gift wrapping, and tailoring could potentially help woo customers to make Macy’s their first-stop shopping destination and then keep them coming back to spend more.

Discussion Question:

1. What makes some loyalty programs successful, while others are not? Provide examples.
2. What is Macy’s doing to improve its loyalty program?

Source: Miriam Gottfried, The Wall Street Journal, June 15, 2017