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Loyalty Review: Kohl's Yes2You

 As some of you know, I've spent over 15 years in the customer loyalty space. So, when I come across a new retail loyalty program, I can't help but see the pluses and minuses. After this many years, it's kind of ingrained. Periodically, I'll share my thoughts with you.

Today, it's Kohl's turn under the scope. Let's have a look, shall we? I've divided the review up into three sections: what's good about the program, what's bad about the program, and what I'd change about it. That last one has some actual value: I charged hundreds of dollars per hour for loyalty program consulting, and had over a dozen clients, before I moved to JustAnswer FT. But, being a pandemic and all, I'm giving it away for free here. Kohl's, you're welcome. Here we go!

The Good

  • Sign up is opt in

    • Seems odd to praise Kohl's for this, but in department store loyalty, this is a rarity, and a smart one. It means the customers who are opted in are already primed to be activated for offers,etc, because they chose to enroll.
    • Can't tell you how many retailers make the enrollment automatic, then boast of the numbers of loyalty members they have.
    • They sometimes make the claim that "over 90% of our sales come from loyalty members." What a meaningless statement for a program with automatic opt-in. You can bet that 95% of your members don't even know they are in your program.

  • Very digital first

    • No physical loyalty card
    • Enrollment is entirely digital; no paper
    • Very strong connection to the app
    • Rewards are all digital

  • Decent reward structure

  • 1 point per dollar spent
  • $5 for every 100 points
  • Good value proposition (not great)
  • Easy to understand by the customer
    • If the program is successful, I guarantee they change to a "10 points for every dollar" and "$5 for every 1000 points" to allow for greater multiplier opportunities (see the recent change to Starbucks Rewards)

  • Real-time e-mail to have me "activate" my enrollment:

  • Email address on activation page is prepopulated from the e-mail.
  • That's a simple step that alleviates customer annoyance and is often overlooked
  • Clear, understandable guidelines on password creation as automatic pop-up tool tip when you click in the password field:
  • This is wonderful UX, and any site that requires a password could learn this trick.
  • Password frustration is one of the leading reasons customers abandon sign ups
  • Offered a checkbox during activation for e-mail opt in, with the promise of a 15% one-time discount
  • Offers a clear value proposition to the customer
  • Great idea to offer the value proposition during activation, rather than hoping the customer doesn't want to uncheck a box
  • Offered me 100 points for activating
    • Great! A reason to activate. Nice job, Kohl's.
  • Activation e-mail was "signed" by the manager of the specific store I enrolled at:
  • Those personal touches are often some of the strongest longevity factors

Ok, so far, so good, right? Great. Now it's time to get some hard criticism. Sorry if it hurts, but it's better to be honest than flattering. Let's get started.

The Bad

  • I was offered no immediate gratification reward for signing up.

  • I asked, and the cashier said no, but I'd earn on all purchases.
  • I asked if the cashier would be bonused if I did sign up; she said no, but she hoped that management would see how effective she was at it, implying some sort of reward.

  • In-Store signup is at the PIN pad, with multiple screens and multiple data elements requested.

  • That delays lane speed, a big no no.
  • Ironically, the cashier said that it was a vast improvement: they used to give the customer a paper application, where the customer would then have to fill it out while still checking out, hand it back to the cashier, who would then have to scan the application in. WOW.

  • Activation

  • Activation link brings me to a standard login page.
  • Should be dedicated to loyalty enrollment; it's confusing what I am signing up for?
  • During activation, I am asked to enter my 9 digit loyalty ID.
  • Doesn't tell me where to get it.
  • I wasn't given a card in the store, so I have nothing.
  • Checking the activation e-mail, I couldn't find it...until I looked in the upper right corner:
  • That's right; the ID I need is in 6 point text, squished between my name and point balance.
  • Where's my 15% discount?
  • You offered during activation, but you never specified how I'd get it.
  • Worse, after activation is completed, you provide me a "wallet," which is specifically called out to contain my rewards and discounts. It ain't there. It ain't in my e-mail. So where is it?
  • You've just done the worst thing you can do to a new loyalty member: you enticed, and then not followed through. To the customer, you lied. Can you get them back if you fulfill later? Sure, but you won't get them all.
  • Where's my 100 points?
  • You promised me them during activation, yet they are not on my dashboard. Where are they? How soon will they appear? Talk to me....

  • Reward Expiration

  • Those 100 points automatically convert to a $5 reward at the first day of the month, but the subsequent $5 reward expires 30 days from issuance
    • While this is actually a smart tactic to keep points liability costs down, it cheapens the value of the program and makes the customer feel like they got conned.

  • Website

    • You are determining "my store" based on geo information harvested from the browser, rather than the store I signed up for your loyalty program from.
    • You were clearly able to access that information in real-time to generate the activation e-mail, which specified the store manager, but you couldn't access that for a newly signed in and activated loyalty member? C'mon...

Ok, exam time is over. I know, it was harsh, but all programs have to modify to effectively motivate customers, and that means questioning your most sacred concepts. Now, time to give you what normally costs thousands of dollars: what I'd suggest Kohl's do. Open your checkbooks....

How I'd fix it/Improve it

  • Offer a 1 time bonus for signing up

  • You currently give 25% off to every Amazon customer who comes in to return an item (a really fascinating strategy), so you clearly value customer acquisition.
  • Give the same to a new loyalty signup.

  • In Store Signup

  • Capture simple opt-in and phone number at PIN pad.
  • Send an SMS with link to complete enrollment online, or respond with e-mail address to get a link sent to your e-mail.
  • There is a slight problem with that approach: SMS marketing is not 100%. There are some customers who don't have SMS turned on, or don't have that capability. So what to do?
  • Solution: Design for the exceptions:
  • Let the cashier add a notation through POS software that passes a unique ID to the customer.
  • If the customer signs up within 30 days and inputs the unique ID, they get credit for the purchase they made that day.
  • Reduces lane speed delays

  • Activation

  • Clone or mask the standard sign up page
    • Make it all about the loyalty program
    • Add a notation that by activating your account, you will also be given a account for your convenience
    • Give clear instructions on where to find the Rewards ID
  • Give the Rewards ID prominence in the activation e-mail
  • Make it clear that you will need it to complete activation
  • CNN: "Kohl's average shopper is 45, according to customer surveys from Cowen. That's a year older than Macy's (M) and JCPenney's (JCP) average shopper, two years older than Target's (TGT) and four years older than the average shopper at discount chains TJMaxx (TJX) and Marshalls."
  • Older demographic = make it easier to find the information needed.
  • Use larger fonts.
  • Reduce information in email.
  • Set clear expectations where and how the customer will get the 15% one time coupon they opted in for as part of activation.
  • If you can't do it on the page that asks for the opt in (and you really should), trigger a real time e-mail that informs them how they will get it.
  • If you insist on giving the customer a "wallet" for discounts and coupons, put the damned 15% coupon in there. Have it prepopulated for all new signups that opt in.\
  • Give me my 100 points you promised me!
  • Don't make me wait; have them automatically deposited in real time for every completed activation.
  • If there's some reason you can't (and there's really no good reason to immediately disappoint a new loyalty member, now is there?), Then at the very lease, tell me on the dashboard when I can expect them.
  • In recent comments by Kohl's CEO Michelle Gass, she commented how they were focused on purchase frequency

  • Capitalize on the personal touch

  • Imagine if "Daniel" was alerted when a newly activated loyal customer made their purchase in real-time, and could come over to introduce himself, say thanks in person, and offer assistance if needed.
  • That would change the customer's relationship to a faceless store to one of being a VIP and being treated as such.

  • Change Reward Expiration

    • In recent comments by Kohl's CEO Michelle Gass, she commented how they were focused on purchase frequency improvements .
    • If you have an issue with how frequently your customer purchases, yes, making rapidly expiring rewards is an incentive to making that happen.
    • However, it's usually a temporary lift: customers quickly tire of losing their rewards because they don't need a purchase, and it creates a negative feedback effect. Customers' purchase frequency declines due to the perceived devaluation of the rewards.

Well, there you have it. Kohl's has an interesting, easy to understand program that is being undermined by it's convoluted activation implementation, poor expectation setting, and baffling rewards delivery. The PIN pad sign up is one of the most fascinating aspects: it goes against every higher volume store program I've ever work on or seen, yet the employees seem to feel it's an improvement. But the best news? It's a program that can be made 100% better with simple fixes; that's something so many programs can't say.

Kohl's: you're welcome. Let me know if you want to chat. ;-)


David A Slavick said…
You have not "lost it", that is for sure. Brilliant observations and worth $50,000 for the ideas. Julie is a big time Kohl's shopper. I got my last pair of New Balance at Kohl's and my last few purchases of Under Armour plus lots of other clothes purchases there - pre and during pandemic. Kohl's Cash is handed out at POS at time of purchase and you have to redeem within two weeks generally - short and unfriendly window. Yes2You Rewards via the Credit Card which as you outlined is heavily promoted by staff, kudos to Store Operations, is stored in the back-end system and auto-redeemed at time of purchase - if not expired.

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