Target expands pilot of new loyalty tier

Dive Brief:

Target on Tuesday said it's expanding a pilot of a loyalty program, dubbed Target Circle, designed for customers who don't hold the retailer's store-branded REDcard credit or debit card.
The program is free and participants get 1% back to redeem later, according to a company blog post. The pilot has run in the Dallas-Fort Worth area and Feb. 19 expands to Charlotte, North Carolina; Denver; Indianapolis; Kansas City, Missouri; Kansas City, Kansas and Phoenix, the company said.
Target Circle members also can vote for local charities that would benefit from Target philanthropy and will receive targeted promotions based on past purchases and on birthdays. They also get free next-day delivery with Target Restock and half off the first year of a Target Shipt same-day delivery membership, according to a company spokesperson.

Dive Insight:

Target first launched this loyalty tier — part of a trend by retailers with store-branded cards to keep customers without those cards closer — almost a year ago.

Some things have changed, starting with the name (which was "Target Red" last March), perhaps to avoid confusion with its REDcard program. While REDcard holders don't get another 1% on top of their immediate 5% discount on their purchases, they can partake in the other sweeteners. (Cardholders also get free shipping on most online orders).

Retailers that don't pay attention to their non-card-holding customers miss out on a significant amount of data on their behavior. Furthermore, consumers, especially younger ones, are less likely to opt for yet another payment option in their wallets (digital or otherwise) or line item on their credit reports. For Target, this tier also addresses the slowdown in its REDcard program. Purchases through that payment rose from about 6% in 2010 to 19% in 2013, but that was rudely interrupted by the retailer's huge 2013 data breach, according to a report last year from The Minneapolis Star Tribune. Since then the company has experimented with various non-REDcard perks, especially through its mobile Cartwheel app, which has since been integrated into its flagship Target app.

Of course, Target is also battling Amazon Prime. Amazon's formidable membership includes many of Target's frequent customers — in higher income, younger and better educated demographics — according to marketing consultancy Magid. "We're building deeper relationships with guests and serving up the most personalized way to shop Target yet, all while encouraging everyone to choose Target again and again," Target Executive Vice President and Chief Marketing Officer Rick Gomez said in the company's post.