How J.C. Penney Built its Best-in-Class Loyalty Program
The steps J.C. Penney took to update its current Rewards program were spelled out by Sherina Smith, vice president of loyalty, CRM and multicultural marketing at the 2017 CRMC (Customer Relationship Management Conference) in Chicago yesterday.
During her presentation, Smith explained that J. C. Penney Rewards has been in operation since 2008, and has evolved over the years.
In 2008, the program was limited to only J.C. Penney credit card customers, and those customers needed 250 points (with $1 equaling one point) to receive a $10 reward. In addition, members were only allowed to receive one reward per month. In 2012, the program was changed so customers only needed 100 points for a $10 reward, and members didn't have to use a J.C. Penney credit card for their purchases. However, if they didn't use a J.C. Penney credit card, they were limited to one reward per month; credit card users could receive up to 10 rewards per month.
“That program stayed in place for quite a while,” Smith said. “Fast-forward to 2015, and, unfortunately for us, not a lot of people on our stakeholder list were very happy.”
One stakeholder, J.C Penney corporate, for example, thought the program was too expensive and there was no way to guarantee that it was creating loyalty. And other stakeholders — customers — “didn't think they were getting their pennies worth,” Smith said.
As such, J.C. Penney surveyed its customers to find out what was wrong with the current loyalty program as well as what they wanted in a new program. Penney's loyalty team also canvased other industries, including airlines, for learnings about best-in-class loyalty programs.
What did the retailer learn? J.C. Penney customers didn't like the monthly limits on earning rewards; they didn't like it when their points expired each month; and they didn't like that it took so long to actually receive their rewards.
J.C. Penney also learned that value matters to its customers. “It’s more than coupons and rewards,” Smith said. “It’s about having exclusive access and getting privileges other J.C. Penney customers don’t. Personalization was a given for these customers.”
After digging into the data, J.C. Penney launched a new loyalty program last year that both manages costs and optimizes customer experiences.
Currently, for example, if 100 points or more are earned in one month, customers receive a $10 reward. In addition, reward points don’t expire at the end of each month. Also, under the new program, J.C. Penney cardholders receive access to special events during the year where extra bonus points are earned, as well as receive special offers throughout the year.
There are also opportunities to be qualified for a gold card, which offers even more perks. For example, if $500 or more is spent on a J.C.Penney card on two different days in one year, then that card is eligible for gold status. Gold card members also get personalized passbooks with special deals and offers. Platinum cardholders enjoy the same benefits as gold cardholders, but the spending requirement is $1,000 over two days in a calendar year.
J.C. Penney's new rewards program is tied into its mobile app, Smith said, so members can easily access their points and coupons there, as well as track account balances.
The new loyalty program has been an unmitigated success. According to Smith, 68 percent of J.C. Penney’s revenue is now driven by loyalty customers, who spend 2.5 times more than the average customer. Furthermore, the company’s credit card penetration is up 200 basis points, and continuing to see growth.
Smith noted that J.C. Penney's Rewards program is constantly evolving, and a new, updated program will launch in July. (She didn't offer any details, however.)
In closing, Smith said key takeaways from her experience is that when creating or updating your loyalty program, make sure to “create opportunities to capture customers’ voices and respond to their needs via in-market pilot programs and customer research. Don’t be afraid to test, test and test again!”