How Target Finally Created the Right Loyalty Program

• Updated on: 2019-11-05
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PALM SPRINGS, Calif.—Target CMO Rick Gomez described the company’s new loyalty program, Target Circle, as the product of learning from previous missteps.

The retailer rolled out Target Circle earlier this year, and the company claims it’s now of the country’s fastest-growing loyalty programs, with 25 million sign-ups in the first four weeks.

But this wasn’t the retailer’s first attempt at a loyalty program: A former program, which launched as RedPerks and was later rebranded as Cartwheel Perks, closed in June 2017, less than a year after its September 2016 debut. Because of that program’s short lifespan, it was never launched nationwide, only operating in five test markets: Denver, San Diego, Houston, St. Louis and Raleigh-Durham, N.C.

On stage at Brandweek, Gomez said that ultimately, what didn’t work about RedPerks was that it didn’t wasn’t unique enough to set Target apart from its competitors.

“This point-based, transactional program we were working on, it simply wasn’t very good,” admitted Gomez. “It wasn’t very differentiated. It wasn’t producing the results that we needed.”

That lack of differentiation meant Target didn’t get the boost it had been hoping for. It proved to be an important lesson for the brand: If something isn’t working, even if you’ve been “putting a lot of energy” into it, as Gomez said Target had been, sometimes the best option is to start from scratch on something new.

“Despite everything we had put into this project, we pulled the plug on it,” Gomez said. “We went back to the drawing board with a goal of finding something that’s differentiated, not just better for Target but better for our guests.”

Perhaps the biggest aim in Target Circle’s creation, said Gomez, was to make it accessible to all of Target’s customers. There is no minimum spend required to sign up, and no annual fee to be a member. Customers get 1% back on every purchase, as well as early access to deals on Black Friday, personalized savings offers and a special surprise on their birthday. The program, he said, “allows Target to build a stronger relationship with all of our guests.”

Target Circle went nationwide in October, and the retailer is betting on it as being a boon to its bottom line during the holiday season—Gomez said that so far, they’ve seen that shoppers who are enrolled in Target Circle spend 2% to 5% more per order than shoppers who aren’t enrolled.

Though it’s taken a few years to find the right program to go wide with, Gomez said the trial and error period was worth the eventual result.

“In a little over two years, we’ve gone from a complete reset to having one of the fastest-growing loyalty programs in the U.S.,” Gomez said. “And we got there by empowering our team to start from a blank slate, to think differently and to put the consumer, our guests, all of them, at the center of our decision making.”