Target Builds Loyalty With Personalized Discounts

Target has decided to keep its friends close and its fanatics closer with a revamped loyalty program.

When Target Circle launches next month, customers can register for a free membership that’ll include 1) earning 1% on all purchases 2) early access to sales and 3) personalized discounts.

So far, so much spending. After a six-market, 18-month pilot, Target said it's accumulated over 2 million Circle members who've completed more than 14 million transactions.

Loyalty programs are in their prime

• Starbucks Rewards has 16.8 million active members who use its app to track purchases and earn free drinks.
• Sephora’s free Beauty Insider program offers discounts and events for its 25 million members.
• Bluemercury expanded its 18-year-old rewards program to include a “sneak-peek" program that gives top customers samples and free full-size products.

But the greatest return on investment isn’t bringing customers into stores for multiple visits. It’s those customers’ data.

Membership details like birth dates and favorite times to shop help retailers create better customer experiences. Avionos reports that 63% of online shoppers are more willing to give up their info if brands can make personalized recommendations. Overall, 78% of online shoppers are more likely to purchase from a retailer that offers personalized discounts.

Armed with data, retention rates increase because retailers can offer a faster, more intimate shopping experience. In one case study, Xtrema Cookware found customer retention grew by 19% when it implemented a personalized loyalty program.

The takeaway: In the age of the promotion economy, all retailers offer discounts all the time. Personalized rewards keep customers coming back.