This holiday season is one unlike any other, as a result of pandemic-related supply chain disruptions increasing costs and limiting product assortments.
According to recent Salesforce data gleaned from the 24 top online retailers in the U.S. over the month of August, consumers can expect price increases of up to 20 percent—an uptick driven by the news that brands and retailers are expected to face a $223 billion increase on the cost of goods sold this fall and spend $163 billion more on ocean freight in the second half of 2021 than they did during the same period in 2020.
The anticipated increase is driving retailers to get creative in the ways they target their customers—and Madewell is looking to its loyalty program for a boost. The J.Crew Group-owned brand launched its loyalty program, Madewell Insider, exclusively in the U.S. in 2016 and expanded the program in 2020 to include new perks for members.
Leading up to the holiday shopping season, members received early access to Madewell’s Black Friday promotion, as well as a special gift with purchase on orders over $125, free monogramming and access to in-store stylists for gift support.
“This holiday season our goal is to ‘Make it Magic’ for our customers and get them excited to shop,” said Derek Yarbrough, Madewell chief marketing officer. “We are most excited about the opportunity to get our customer in-store and experience the full breadth of what our brand has to offer. We want to cement for our customers that Madewell is the top destination for an incredible shopping experience and there’s no better time of year to show what you’re made of than the holiday season.”
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While Madewell Insider has offered benefits like free shipping, customization and special birthday gifts for members since its launch, the brand began offering loyalty points for every dollar spent—and double the points for denim and charitable products—during its update in August 2020.
Under the new program, members are rewarded on a sliding scale, with Madewell Insider status determined by how much the customer spends each calendar year. For every 250 points earned, members receive a $10 reward. Madewell Star and Icon members (those who spend $500 and $1,000, respectively) earn triple points on select days throughout the year.
The 2020 update proved to be a success. The Madewell Insider program ended Q3 with 2.1 million active members, a 22 percent increase from 2020, and the brand reports that it drove 81 percent of total demand. As a result of the points system, customers who use their loyalty rewards have a higher average order value when they redeem rewards versus when they do not. Loyalty members also have a much higher frequency of purchase than non-loyalty members, according to Yarbrough.
“Our Insider program is the passport to the Madewell brand—it allows us to connect with our most loyal customers and foster meaningful relationships with them,” he told Rivet. “We believe membership is the foundation of the customer experience, and it serves as the primary mechanism to put the customer in the driver’s seat to access their account, order history, preferences and increasingly personalized touchpoints.”
Yarbrough projects the brand’s increased Insider efforts around the holiday season will “continue to drive participation growth through the end of the year.”
Breathing new life into customer loyalty programs is a popular strategy for brands as of recently, as the pandemic shifted consumer habits and may have made them less loyal to their favorite brands. An October 2020 McKinsey & Company report found that 35 percent of U.S. consumers have tried a new brand since beginning of the pandemic, and 77 percent have tried new shopping behaviors, including new channels and stores.
Upgrading its loyalty program is just one way Madewell is engaging its customer base. To further drive engagement—and rally behind fashion’s circular movement—the brand launched Madewell Forever, a resale program separate from the loyalty program and powered by ThredUp that incentivizes consumers to bring in their preowned denim to Madewell stores to earn Madewell shopping credit.