The Simple Switch That Helped Nordstrom Rack Up 1.3M More Loyalty Members

Nordstrom, Inc. made a simple change to its Nordstrom Rewards loyalty program this May, but it has caused an explosion in sign-ups. The fashion specialty retailer expanded the program so that customers could join Nordstrom Rewards and earn benefits regardless of how they choose to pay for their purchases, making it easier for them earn $20 Nordstrom Notes.

Post expansion, customers earn one point per dollar when paying without a Nordstrom card and still earn the same two points per dollar when using a Nordstrom Visa credit card, Nordstrom retail card or Nordstrom debit card, as they did before.

"Our customers have asked us to make Nordstrom Rewards more flexible," said Erik Nordstrom, co-president,Nordstrom, Inc., at the time of the switchover in May. "They've told us they want to be able to earn points whether they use their Nordstrom card when they shop with us or pay in another way, and today we hope we've delivered on their request."

And it seems that Nordstrom did deliver. Through this expanded program, the company now has approximately 6 million active Rewards customers as of Q2 2016, up nearly 30% from 4.7 million in the prior quarter.

"Nordstrom Rewards serves as a powerful tool to drive incremental sales and trips," said Blake W. Nordstrom, Co-President & Director. "Even more importantly, it gives us an opportunity to strengthen relationships with customers. We're encouraged with the strong response. We now have around 6 million total Rewards customers who shopped with us over the last year, up significantly from 4.7 million last quarter."

Nordstrom's Anniversary Sale, which took place during the quarter, had an all-time high in sales volume and provided a tremendous opportunity to sign-up customers for the Rewards program, as it always has. But the company is also on a path to modernize its platform and increase the productivity of delivering features that improve the customer experience. The retailer implemented new technology solutions to support the expanded loyalty program and online search engine, which enable Nordstrom's to serve its customers in a "more personalized and relevant" way, according to the company.

"Our expanded loyalty program demonstrates our efforts to rebalance our marketing resources towards a greater focus on personalization," said Michael G. Koppel, CFO & EVP. "This will help us better serve customers and increase their lifetime value."

According to Erik Nordstrom, the real appeal of the loyalty program is that there's no barrier to sign up.

"It's an e-mail. The identifier is the customer's mobile number, and it takes a few seconds to sign-up and anyone can participate in it. So it's been received really well by customers who just see it as a very friction-free way of enhancing their and being rewarded for their shopping experience."

Signing up about 1.5 million customers into the non-tender program will bring benefits to the retail in the future. 

"It allows us to, number one, connect with them; and number two, deliver a much more personalized experience for them," said Erik Nordstrom. "So that's the longer-term unlock that we're particularly excited about."

The company also has initiatives underway that include new mobile features, improvements to the website, and enhanced selling tools.

This fall, Nordstrom will pilot a mobile feature that gives customers the ability to reserve merchandise online and try on in stores before committing to buying it.

In Nordstrom's e-commerce business, mobile is outpacing desktop and has been for some time, so you can expect to see the retailer push the envelope on its mobile initiatives. In the second quarter, the company improved its mobile app with features that enable customers to shop their store of choice and shop for items based on a visual search. 
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