Target testing alternative loyalty program

Dive Brief:

Target is testing a new tier for its loyalty program, dubbed "Target Red," that gives customers perks without having to sign up for its Redcard credit card, the company said on its corporate blog. The pilot is being conducted in the Dallas-Fort Worth area, the company said.
The free program accrues 1% of purchases toward future purchases, eliminates the $5 fee for its Restock subscription program and provides half off its new $99 Shipt home delivery membership. Members can also chime in on Target’s charitable contributions.
Redcard holders can register for "Target Red" to enjoy those benefits along with their existing 5% discount on all purchases and free delivery on all online purchases.

Dive Insight:

Purchases through Target’s Redcard rose from about 6% in 2010 to 19% in 2013, but that momentum was interrupted by the retailer's huge 2013 data breach, according to the Star Tribune. Since then the company has experimented with non-Redcard perks, especially through its mobile Cartwheel app, which has since been integrated into its flagship Target app.

This one boasts, "Free to join. No card necessary," according to the company's post, reflecting what customers told Target they want in a loyality program, according to a statement from Chief Marketing Officer Rick Gomez. Target hopes that the new loyalty tier being tested could be a ramp to full Redcard membership, Target spokesperson Joshua Thomas told the Minneapolis Star-Tribune.

The retailer is pitted against Amazon’s formidable Prime membership because they share customers — in higher income, younger and better educated demographics — according to marketing consultancy Magid. That closeness had some observers earlier this year speculating that Amazon could outright acquire the brick-and-mortar retailer.

But, beyond such a tie-up (which several observers have deemed interesting but unlikely), Target is destined to work to perfect any program that could make those core customers stickier, according to Kelly Jo Sands, executive vice president of marketing technology at marketing agency Ansira.

"TargetRed will help provide more targeted promotions along with the variety of other perks. Similar to Amazon Prime, I think are both moving in the right direction to keep up with the ever-evolving consumer journey," she told Retail Dive in an email. "Their Red Card has been a good source for keeping Target customers loyal, but has probably slowed after Target’s data breach. If they want to stay competitive and not lose out on business to its online competitors, they will need to approach it from another direction."