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Loyalty trends and best practices

Loyalty Makeover: Fanatics

by Ashley Bienvenu
March 10, 2014
Loyalty Makeover: Fanatics

logo-fanatics

In this installment, we look at the loyalty program at Fanatics Inc, the $1 billion sports merchandising online retailer that also provides e-commerce services for professional teams. 500friends Loyalty Makeovers offer suggestions to retail brands for making the most of their loyalty initiatives.

What Fanatics Rewards look like today

Fanatics’ Fan Cash rewards are essentially discount credits applied to members’ future orders. For each purchase between $50 and $100, members earn a future discount worth 5% of the total; for purchases over $100, they get a future discount worth 10% of the total. Fan Cash is automatically credited to members’ accounts and doesn’t expire as long as members make at least one purchase per year. Members also get free three-day shipping.

First impressions

At #43 on the IR 500 list with sales of around $1 billion, Fanatics is becoming a major e-commerce player. However, after its key acquisition of Dreams in 2012 and $170m in new funding last year, Fanatics will increasingly be looking to power growth from its existing properties, and a more robust loyalty program could play a huge role in achieving that goal. As it stands, Fanatics Fan Cash is essentially a cents-off rebate that Fanatics is paying to many customers who would have bought anyway.

Makeover ideas:

  1. Personalize loyalty rewards: To increase the likelihood that Fan Cash drives incremental revenue and engenders long-term loyalty, Fanatics should create a premium status tier that recognizes cumulative spend. The tier's spending threshold should be just above the annual spend of Fanatics' 2nd and 3rd decile customers, which will incentivize these customers to buy more. Fanatics should also send personalized, automated offers to members who are close to achieving the higher status tier ("Buy $10 more to get more benefits") and to those who have not purchased for a while ("Double Fan Cash if you buy this weekend").

  2. Leverage Fan Cash to boost engagement between purchases: Currently, customers receive Fan Cash only for purchases. Fanatics could deepen its relationship with customers by issuing Fan Cash to reward behaviors between purchases, such as product reviews, referrals, or even just visiting one of Fanatics' properties. Offering Fan Cash for these types of actions creates additional motivation for members to engage and increases the likelihood that they'll eventually make more purchases.

  3. Rethink the expiration period: Fan Cash currently expires after one year of purchase inactivity. However, given that many Fanatics customers are probably engaged for the length of a sports season, the period when the bulk of lapsed customers stop purchasing is probably far shorter than that. With a shorter expiration period, Fanatics could trigger the kinds of expiration notices (mentioned above) more often, which can be extremely effective for generating sales and reducing churn. The expiration period should be set just shorter than the average time between purchases for priority customer segments.

Ashley Bienvenu is a Customer Retention and Loyalty Analyst at 500friends.  Is there a loyalty program you'd like to see featured in a 500friends Loyalty Makeover? Send Ashley a note at ashleyb@500friends.com.



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