Does Retail Loyalty Have to be Hard?

Just listening to Dominik Olejko, Regional Customer Insights and Engagement Manager for H&M in Eastern Europe talk to Paula about H&M’s loyalty program makes me want to drop everything and check in on my own H&M account.

A couple of hundred dollars – and some useful first-hand research later, I realize I am one of the ‘loyal customers’ he’s talking about. But it’s not just me.

H&M is one of the few brands I and my much younger nieces – both love to shop at. What’s kept me loyal for over 17 years? And what keeps my Gen Z niece, who cares about very different things from me, coming back for more? 

In fact, if you are wondering how H&M keeps multiple generations of customers – over 150 million across 75 countries – ‘loyal’ in an industry where shopper monogamy seems almost impossible, here are 10 useful insights.

Disclaimer: H&M’s approach to loyalty (battle-tested by me and my niece) can’t guarantee brand exclusivity (it is fashion retail after all!) but it sure makes ‘being loyal’ an easier choice for customers.

1.   They make it easy to get onboard

Most of H&M’s members are acquired in-store. So, the in-store onboarding experience needs to be perfect. Well-trained in-store staff, an all-digital process supported by robust POS tech, and an instant bonus make sign-up friction-free and a no-brainer for shoppers.

 2.  They have a smart, staggered data collection strategy

Data is the lifeblood of loyalty but honestly, no brand needs it all at once. The H&M sign-up starts with just a name, birthdate, and password. As the relationship and trust grow, members get multiple opportunities and incentives to share more details, generating priceless zero- and first-party data over time.

3. They deliver a well-rounded value proposition

Beyond transactional pay-and-earn, engagement actions like rating and reviewing products, participating in digital and physical interactions, exclusive events, sale previews, and external brand collaborations can also earn rewards. As interactions increase, the quality of personalization improves.

4.   They connect loyalty to business goals

The program is designed to encourage speed to first engagement, to meet a KPI called ‘early repeat rate’. For instance, a sign-up discount or free first delivery helps the second purchase follow quickly after the first. This goal-clarity informs program design, and gets management rooting for its success.

5.    They are laser-focused on their core audience

There is a deep acknowledgment that active members are the brand’s core customers. Members are special. They always get more than other customers. Teams and processes are set up to listen to this core group at a regional and generational level and get as close to them as possible with qualitative and quantitative data.

6.  Their omnichannel engagement puts them where members are

As Dominik puts it, the customer-focused experience is connected across channels – online, offline, mobile app, and now on the metaverse – via a ‘digital thread’ which enables seamless purchases, returns, scan and buy, BOPIS or BORIS interactions, recognition, and rewards – no matter where the member chooses to engage. 

7.    A flexible and responsive program grows with members

This may be the secret to me and my niece both feeling connected to the same brand despite our vastly different expectations. Right from generational to regional preferences and local program partners, relevance is built around the common core of the program. 

8.    They are making sustainability a shared goal

Despite being a fast fashion brand, they have publicly stated concrete goals, but more importantly, they involve members in helping achieve these goals. For instance, earning ‘Conscious’ points or the recycling themes built into Looptopia on the metaverse.

9.   They experiment and innovate constantly

Most brands save their snazziest innovations for customer acquisition. But H&M’s loyalty program creates engaging new member experiences. Whether it’s the metaverse partnership with Roblox, the Disneyland contest, or the buy now-pay later option, there’s always something to make life more smooth, exciting, or both.

10.  The Loyalty Program is closely linked to the Customer Experience

Loyalty is firmly rooted in the customer experience. You cannot separate the two, and H&M doesn’t try to. When the brand walks the talk from the first interaction, it builds trust and sets up a stronger base for loyalty in terms of both – a transactional and emotional connection. Does your CX and loyalty strategy exist in two separate dimensions? 

👉Get the full episode with Dominik Olejko here 

👉 Am I missing anything? Share your bouquets and brickbats about H&M’s Loyalty program below.

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