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Loyalty trends and best practices

Loyalty Makeover: Carters and OshKosh

by Ashley Bienvenu
February 12, 2014
Loyalty Makeover: Carters and OshKosh

Carters_inc_home_carterosh_logo

Loyalty Makeover suggests ways for retail brands to make the most of their loyalty initiatives. In this installment, we look at the rewards programs at Carter's and sibling brand OshKosh. With $2.4 billion in annual sales and 18,000 stores, Carter's has been selling children's clothing since 1865.

What Carter's and B'Gosh Rewards look like today

The Carter's and OshKosh brands, which belong to the same company, run separate but identical rewards programs. For every $50 spent in-store with each brand, shoppers earn a $10 voucher towards future purchases of that brand. Rewards become valid one day after a purchase, and can be redeemed in-store upon presentation of a receipt.

First impressions

Carter's brands' rewards are simple and straightforward, making their value propositions easy to understand. Customers know that for every $50 spent in a single purchase, they will earn a $10 voucher towards their next purchase. While this simplicity is a positive, there are many ways in which a more robust loyalty program would be more effective at reducing churn and stimulating spending.

Makeover ideas:

  1. Expand the role of rewards Vouchers for one-time purchases are wonderful in their simplicity, but rewards that accrue over a longer period of time will better spur incremental purchases. For example, consider two customers, one who is about to spend $95 and one who is about to spend $105. The $95 customer might buy a small extra item to reach the $100 threshold for the next voucher, but the $105 customer probably would not go up to $150. With rewards that build across purchases, both customers have an easier time seeing the value in spending more. Another benefit of long-term accrual — whether through points or dollar cash back — is that Carter's would be able to power any of its promotions with loyalty incentives like double-points weekends. Currently, the company relies almost entirely on rampant discounting.

  2. Introduce rewards tiers With its flat voucher rate, the current reward system is essentially a cents-off rebate that is no more effective at promoting higher annual spend than persistent discounts. Carter's has the opportunity to boost customer lifetime value with greater rewards for higher spending. For example, the brand could use messages such as  “$10 for every $50 spent up to $200; $15 for every $50 spent above that." Even better would be to integrate tiers into a long-term reward structure, a la airline mileage programs, which would incent mid-tier customers to spend more.

  3. Bring rewards online, and leverage balances in store Both Carter's and OshKosh brands have highly trafficked e-commerce sites (Carters is #157 on the Internet Retailer 500 list). In today's omnichannel world, consumers expect to earn and redeem rewards no matter where they shop, whether in-store or online. By bringing rewards online, the brands can also use rewards to engage with customers between purchases, for activities such as reviewing products, linking social media accounts, or signing up for emails. If Carter's follows our recommendation for long-term reward accrual, in-store salespeople can look up point balances and remind shoppers that they are close to a new reward or tier.

  4. Merge programs to slash attrition and boost cross-brand purchases Carter's already promotes cross-brand shopping with tabs on its website (one for Carter's, one for OshKosh). However, shoppers can only redeem rewards for the brand on which they were accrued. Cross-brand reward accrual and redemption would create additional engagement opportunities, improve attrition, and spur cross-brand purchases. (Check out 1800Flowers.com Fresh Rewards, which uses 500friends LoyaltyPlus to extend loyalty across brands including 1800Flowers.com, Cheryl's, and The Popcorn Factory.) 

Is there a loyalty program you'd like to see featured in a 500friends Loyalty Makeover? Send me a note at ashleyb (at) 500friends.com.


Ashley Bienvenu is a Marketing Manager at 500friends.


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