Recently, Authentic Brands Group, which owns Forever 21, Brooks Brothers and Lucky Brand, announced its plans to introduce an umbrella loyalty program across a large number of brands within its organization. This is an interesting decision many multi-brand organizations face—is it better to keep loyalty specific to individual brands or to streamline the program to cover all of them? And regardless of which format you choose, how do you ensure you have designed the implementation and delivery of loyalty to be efficient and effective within the organization?
To Bundle Your Brands or Not to Bundle Your Brands…That is the Question
As you might expect, both unifying brands under one umbrella program and keeping them separate provide benefits and drawbacks, and organizations should keep these pros and cons in mind before deciding which path to take. Of course, the end-user experience should weigh heavily when evaluating approaches.
One of the first steps an organization can take to determine if it should offer a combined program is to consult its customer data to see if customers already shop across the brands. If this is the case, a combined program presents more opportunities for member rewards and benefits. Combining complementary brands can also create a synergy among them, helping to boost each others’ sales. This is the route that Foot Locker took when redesigning its Foot Locker FLX program. With a total of eight athletic apparel brands under one umbrella, including Lady Foot Locker and Champs Sports, Foot Locker recognized the value in capitalizing off of customers from each brand. In addition, Foot Locker combined its US and Europe loyalty programs so that members could accrue points regardless of where they shopped. Allowing customers to shop at any store and still get rewarded is a perk of membership in a unified loyalty program.
Another consideration: whether or not the public is generally aware of the connection between brands, as in the case of Williams-Sonoma and Pottery Barn, who reward consolidated spend across their family of brands as part of the Key Rewards loyalty program. In this situation, it makes sense to offer one program instead of keeping them separate. This is especially true if customers are aware of the connection between full-price and off-price, like with Nordstrom and Nordstrom Rack. The unified approach encourages cross-shopping, keeping share of wallet within the family of brands, and may also encourage customers to try out other brands.
In some cases, it may make sense to keep programs separate. Where there is limited consumer overlap or if there isn’t a natural connection between brands, combining programs doesn’t always make sense. We also see this solution when the individual brands have long-established loyalty programs. If a brand not only has an established program but also a highly loyal customer base, an element of risk is introduced if it decides to combine its program with another brand’s program. Like many other customer-centric decisions, there is no “right” formula to determining the best course of action without data and customer insights as guidance.
Working Smarter, Not Harder
Our multi-brand clients find they are most successful—and most efficient—when they create internal, operational consistency. When the brands operate separate programs, the more they operate similarly, from the martech stack to data collection and measurement plans, the more efficiency they gain, and program management becomes much easier.
It seems like a no-brainer to use the same martech stack across individual brands, but in many cases, multi-brand organizations were built by acquisition, and brands often bring their technology with them. If that is the case, it’s important to consider your company’s technology roadmap and identify where opportunities exist to consolidate systems. Using separate systems can lead to clunky member experiences and inequity in how members engage with each brand.
Most critically, brands should ensure that all customer data they collect—whether transactional, demographical, ethnographical, or attitudinal—remains the same across all brands. This uniformity includes how the data is managed, from how it is collected to how it is defined. Without this consistency, member and program performance cannot be directly compared across brands.
Creating Organizational Alignment and Governance
Regardless of how the organization decides to manage loyalty, there are a number of reasons why it’s important to create internal governance and data management teams to create and maintain alignment.
For management of customer data, it’s critical that the various stakeholders are in agreement with how data is measured and shared across brands, and how insights will be mined and applied. Over time, this cross-brand team will need to remain aligned on new measurements and data points, as well as the evolving nature of capturing and storing member data.
For a multi-brand program to really be successful, a governance model across the brands is vital. Ongoing program management, cross-brand promotions, cross-brand earning, and new features and benefits become the responsibility of a shared organization. This group—a loyalty steering committee of sorts—becomes the authority for how loyalty is managed and delivered across the brands, and ultimately how loyalty evolves to meet changing member demands and expectations.
Offering customers a loyalty program that spans across multiple brands might seem daunting, but taking a data-informed, customer-first approach can guide organizations in making the right decision for their brands. Regardless of whether multi-brand organizations go with a unified approach or keep their loyalty programs separate, having consolidated and comparable data across a multi-brand organization should be standard practice. Today’s customer expects more relevant and personalized interactions with their favorite brands, and it’s in brands’ best interest to exceed those expectations.
Managing Director, Integrated Loyalty Solutions