Kohl's joins rivals in revamping loyalty

Dive Brief:

Kohl's this week will start testing a new loyalty program, Kohl's Rewards, in eight markets before rolling it out nationwide next year, the retailer told Retail Dive in an email.
Kohl's Rewards combines the discount department store's existing loyalty programs (Kohl's Charge, Yes2You Rewards and Kohl's Cash) into one loyalty platform, the company said.
The program is centered around the retailer's popular Kohl's Cash model: In Kohl's Rewards, members will earn Kohl's Cash on every purchase, and more if they use the Kohl's branded charge card. Card users earn 10% Kohl's Cash on every purchase, while non-card users earn 5%.

Dive Insight:

Kohl's is joining a host of retailers revamping their loyalty programs in recent months. Macy's, Target, DSW and others are scrambling to beef up rewards for their biggest fans, while also offering something to those who may not want to sign up for a paid membership or store credit card.

The trick for Kohl's is to make a good thing better, as loyal customers already love the "Kohl's cash" program and have been willing to plan trips around it in the past, analysts have said. There's also something to be said for finding the right balance between making customers happy and ensuring that coupons don't cut into the bottom line. Bed, Bath & Beyond's blue coupons are enduringly popular, but the retailer has struggled recently from what some analysts deem an over-reliance on them.

In a blog post on Tuesday, Kohl's Chief Marketing Officer Greg Revelle addressed these questions, namely: Why change a program that has already had success as it is?

"We listened to our customers, who gave us a challenge: they asked for more savings, made easier," he said. "With this input, we set out to evolve our loyalty platform to make it simpler, more convenient, and bring greater value."

Driving more shoppers to use its credit card could be crucial for the bottom line — Kohl's Charge garners the company nearly 60% of its sales, according to Revelle. While many retailers have found that cutting out non-members or non-card users prevents communication with or obtaining data from those customers, Revelle noted that the new loyalty program would be "easier to join, easier to track and easier to use."