How did Farfetch Leverage Network Effects to Become One of the Leading E-commerce Platforms for Luxury Fashion?
How Does J. Crew’s Loyalty Programme Build Emotional Loyalty?
Engagement Opportunities Beyond Transactions
With Black Friday around the corner, consumers are preparing for a day of deals and discounts. But what if you could experience the excitement of exclusive benefits and rewards all year round, rather than just for one day? Enter the world of loyalty programmes. Traditionally used as a marketing tool to attract and retain customers, loyalty programmes reward those who purchase with a brand on a recurring basis. Nowadays, the true power of these programmes lies in their ability to forge profound emotional connections with customers by delivering hyper-personalised rewards and offers through both transactional and emotional rewards. In this context, we explore the Passport Loyalty Programme by the American clothing brand J.Crew, which offers engagement opportunities beyond transactions.
About J. Crew and Passport
Founded in 1983, J.Crew has since cemented its reputation as a timeless brand renowned for its everyday clothing, featuring a combination of affordable prices and high-quality craftsmanship. Under the leadership of Mickey Drexler as CEO and Jenna Lyons as Creative Director, J.Crew experienced a period of significant popularity and acclaim, often being considered an "it" brand, known for its preppy yet fashion-forward aesthetic.
However, ever since Drexler and Lyons' departure in 2017, the brand faced some challenges, and a deterioration of its reputation. As such, the company has been recently implementing a series of strategic shifts aimed at enhancing its product range by deviating from its traditional preppy style. An illustrative instance of this transformation is J.Crew's fresh approach to menswear, under the guidance of former Supreme veteran and founder of NOAH Clothing, Brendon Babenzien. In this new endeavour, the brand departs from its classic khaki and gingham patterns, opting for more contemporary, refined fabrics and silhouettes, reflecting a hipper and softer aesthetic.
Another notable transformation involves the departure from the traditional loyalty model that restricted perks to J.Crew credit cardholders. In 2018, J.Crew introduced J.Crew Rewards, a cardless, points-based programme allowing customers to earn one point for every dollar spent. However, in 2022, this was revamped and renamed J.Crew Passport, a free-to-join hybrid programme exclusively for U.S. customers. This enhanced programme retained the points-based structure but introduced three distinct tiers (green, navy, and gold access) and introduced added incentives such as complimentary monogramming. As members accumulate points, they ascend through the tiers, unlocking access to progressively exclusive benefits and rewards, including coveted invitations to special events. Additionally, J.Crew credit card holders, by virtue of their card membership, gain direct entry to the second tier, accumulate points at an accelerated rate, and enjoy exclusive benefits like complimentary alterations, elevating the overall loyalty experience.
J. Crew Rewards Table:
J.Crew Passport has a Hybrid format that cleverly combines features from both Points and Tiered Loyalty Programmes. The Points-based component ensures user-friendliness and rapid implementation, with a low barrier to entry and rewards that are perceived as easy to attain, positively impacting engagement. However, these transactional perks lack differentiation and may not foster genuine loyalty. Additionally, the absence of instant gratification can lead to attrition if points take too long to redeem, and if they fail to offer enough value to attract top-tier customers.
Conversely, Tiered Loyalty Programmes focus on high-value customers, delivering 1.8 times higher ROI compared to other program types1, as members are incentivized to spend 2.1 times more on average within the upper tiers2. These programmes offer more tailored experiences, customisation options, and greater switching costs, driven by the fear of losing coveted privileges, resulting in longer-lasting customer relationships. Nevertheless, barriers to entry or potential abandonment can arise when higher rewards seem unattainable or if progression to a higher level is excessively time-consuming. Complexity in program structure can also lead to confusion unless it's effectively communicated.
The Evolution of Loyalty
Traditional Loyalty programmes operate based on a transactional framework, wherein the relationship between a brand and its customers revolves around financial exchanges. This system typically involves the accrual of points, which can then be redeemed for monetary rewards. These rewards offer customers the chance to save on future purchases, often in the form of discounts, cashback, or coupons. While these incentives can provide tangible value, encourage sign-ups, and boost short-term sales, they possess certain drawbacks. Specifically, they tend to erode a brand's pricing power, lack distinctiveness and novelty, and have a propensity to become monotonous over time. It's worth noting that in this transaction-driven model, customers only receive rewards when an actual transaction occurs. Consequently, this limits the potential to generate more frequent and spontaneous spikes of excitement, as the opportunities to earn points are infrequent and too widely spaced to maintain sustained customer engagement.
77% of Loyalty Programmes based only on transactional behaviours commonly fail within two years of launch.
To foster lasting emotional loyalty and increase customer engagement, it's essential to recognize and reward a diverse range of interactions. These incentives shouldn't be limited solely to transactional activities; they should actively encourage engagement and advocacy that extends beyond the buying cycle and spans all available channels. These broader interactions are often referred to as 'emotional engagement incentives' and encompass actions such as promoting the brand on social media, writing reviews, participating in product-related quizzes, or referring friends to the brand.
Loyalty Programme Members spend 27% more when the brand establishes a positive emotional connection.
In return for their active engagement, customers should receive a combination of transactional and emotional rewards to effectively foster emotional loyalty. Emotional rewards encompass non-discount, experiential perks and distinctive benefits like exclusive experiences, events, and services. To maximize their impact, these rewards should be personalised and meticulously tailored to each individual's preferences and needs.
The Psychology of Loyalty Programmes
When it comes to building a loyal customer base, why are loyalty programmes able to influence customer behaviour? Psychological phenomena, human tendencies, and cognitive biases can drive the success of a loyalty strategy.
How J.Crew Passport Successfully Builds Emotional Loyalty
The programme presents multiple avenues for engagement, encompassing both transactional components, such as accruing points through purchases, and non-transactional methods, like providing bonus points for cashmere items and special bonus point days. In exchange, it offers a mix of transactional and emotional rewards – which encourage sign-ups and build engagement respectively.
Notably, the program diverges from the traditional approach to transactional rewards. Instead of offering extra discounts, it primarily centres around accumulating points for future purchases, with the only monetary incentive taking the form of a 'birthday gift.' This approach aims to deliver a financial benefit in a more emotionally resonant manner.
“J.Crew Passport was developed to go beyond the transaction and truly give customers greater access to the brand.” – Derek Yarbrough, CMO
.png)
Final Takeaways
J.Crew Passport stands out as an easily accessible Hybrid Loyalty Programme, blending the strengths of both Points and Tiered formats. Its seemingly straightforward design incorporates insights from consumer behaviour and modern loyalty models, which emphasise the importance of nurturing enduring emotional loyalty with consumers. J.Crew Passport excels in this regard. It harmoniously integrates conventional transactional components with emotional incentives and rewards and effectively communicates its features. The significance of this model is underscored by its influence on other major retailers, such as Yoox-Net-A-Porter and Farfetch, who have adopted it as a pivotal and lucrative component of their loyalty strategies.
References
-
Build a Bear Workshop and Adidas Execs Talk Emotional Connections and Consumer Loyalty
-
Loyalty program results: how a loyalty program can help you achieve business goals?
-
As Starbucks and J.Crew enhance their rewards programs, consumers crave simplicity
-
Luxury retailers are ladling on perks to please ultra-rich clients
Design and Communication
The programme's design, while deceptively simple, smartly draws on learnings from psychological behaviours. It boasts both accessibility and cost-free enrollment, providing instant gratification through a selection of enticing benefits that serve as a powerful lure for customer acquisition. However, it employs tiers to bolster customer retention and uphold a degree of exclusivity, with credit cardholders enjoying additional privileges.
The programme's messaging is refreshingly transparent, presented in an interactive format on the website, and complemented by visuals to ensure easy comprehension. Such clarity about the various tiers, their exclusive benefits, and the specific actions required to attain them heightens the appeal of signing up, especially for regular shoppers. It introduces gamification elements to the experience, fueling motivation for customers to sustain their engagement and spending.
This strategic approach acts as a disincentive for members to switch to a competitor, as it carries the risk of forfeiting their current status and associated benefits or having to recommence their progress from scratch.