Tiered Loyalty Programs can build real loyalty sentiment and boost retention by introducing a switching cost – members don’t want to lose their status. Each tier is achieved through a combination of spend and/or frequency, and benefits are progressively added for each threshold. The loyalty tier qualification criteria can be tweaked to enable a manageable audience for the most select benefits. Tier Based Loyalty Programs are a good fit for organizations that are well equipped to deliver the extra services – the highly competitive luxury department store sector provides useful insights and creative thought starters for this type of program. Nordstrom’s Nordy Club builds on their famous service heritage with benefits that keep high value customers coming back.
Nordy Club Builds Emotional Loyalty and Revenue
Nordstrom’s introduced The Nordy Club a few years ago in a strong move to get beyond a pure points program. It features three loyalty tiers, with Influencers qualifying at $500, Ambassadors at $5,000 and Icons at $15,000 (Icon’s must also hold the Nordstrom credit card). The escalating benefits hit a number of different hot buttons that go beyond points to build loyalty sentiment.
Base Benefits
Nordy Club members earn 1 point per dollar spent, and receive a $10 certificate for every 1,000 points. This is a low 1% payout, though there are numerous bonus point opportunities and cardholder incentives that can double or triple this. However, even at a 3% payout, Nordy Club still has a sub-par payout rate compared to lower end department stores like JCPenney and Kohls which are at 5% to 7%, and Saks, which is at a 2% to 6% payout. So the appeal for Nordy Club, like the Nordstrom brand, is not centered on promotion.
Nordy Club offers Sentiment Builders to all members, just for joining. It’s important for loyalty programs to offer benefits that have immediate use, and Nordy’s answers with base benefits including early access to popular sales, free basic alterations and lifestyle workshops which provide a nice connection to trends in style and entertaining while also building sales by stimulating new ideas for uses of Nordstrom apparel and home goods.
- Early Access: First crack at sales and new product launches
- Value: Free basic alterations
- Lifestyle Workshops: Members can learn about the latest trends in style, entertaining and more
Benefits for Influencers ($500- $4,999 qualifying spend)
Influencers receive an elevated level of personalization and priority access. Members are allowed to select a up to three double points days per year for themselves, providing a novel approach to self-customization for the program. Members also receive priority access to style events sponsored by the brands:
- Priority Access: Early access to style events sponsored by the brands
- Personalization: Pick 3 double points days each year (higher tiers get additional days).
Benefits for Ambassador Level ($5,000 - $14,999 qualifying spend)
At $5K+, Ambassadors receive more exclusive treatment and Nordstrom to You – an innovative benefit that has high perceived value given that Nordstrom normally charges $300 for this service. It also happens to be a great revenue growth opportunity for high spending customers!
- Exclusivity: Access to invite-only events including each store’s holiday party
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Personalized Services: Nordstrom to You, where an in-home Stylist comes to your home to review your wardrobe offer expert styling advice.
Benefits for Icon Members ($15K+ spending and hold Nordstrom credit card).
Icon members are lavished with values, experiential benefits and additional exclusive benefits. Members can choose from a free dining or spa experience each year, including 3 guests – again, a smart revenue building opportunity among the guests who will undoubtedly walk away with greater affinity for the Nordstrom brand. The Icon tier also seeks to forge a stronger bond with the Personal Stylist, allowing shopping after hours by appointment when accompanied by their stylist. In addition, there are exclusive Icon events and dedicated customer care.
- Value: Unlimited free alterations, same day delivery and no fees of any kind
- Experiential: A free dining or spa experience for you and three guests. In addition, shop with your Stylist by appointment when the store is closed to the public with Nordstrom After Hours.
- Exclusivity: Icon only events, and Icon customer care
What are the benefits of having a tiered loyalty program?
Tiered Loyalty Programs enable brands to go beyond the transactional nature of points programs and build loyalty sentiment that lasts. The Nordy Club offers a nice range of Sentiment Builders to complement their rewards program, hitting a number of different hot buttons including the fashion lifestyle, exclusive treatment, personalized services and outstanding values. Their innovative benefits not only fit well with the brand, but each one provides additional revenue upside as well by inviting members to sample existing services. The calendar of special events is full, which provides members with a sense that things are always happening at Nordstrom. As a result, the program’s tiered benefits become the main focus of the program, allowing Nordstrom to place less focus on expensive rewards and promotions.
Contact Us for more information and a complimentary consultation on how to create a Tiered Loyalty Program.
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