Macy’s new loyalty program should make customers happy. The loyalty program, called Star Rewards, gives frequent shoppers more benefits and offers special perks to those who shop most often. By design, it is simple to understand, should engage customers and entice them to shop more frequently. The program is in effect now. It may well replace the Plenti loyalty program (which is under review) since that offer was misunderstood by most customers and never succeeded in reversing 2+ years of declining sales.

Here is an outline of Star Rewards. It is a well-defined, three-tier program.

    1. If you spend $1200 (or more,) you receive a 25% off Star Pass Coupon which is good for 60 days. In addition, there is free shipping for one year and a Macy’s money cash back reward on all purchases of 5%.
    2. If you spend $500 to 1,199, you receive a 25% off Star Pass Coupon which is good for 60 days and free shipping.
    3. If you spend up to $499, you receive the 25% off Star Pass Coupon which is good for 60 days.

At a recent investor meeting, Macy’s management indicated that Platinum customers shop at stores about 18 times a year and spend about $2,010 annually, accounting for 46% of sales. Gold customers shop 9 times a year, spend about $574 annually and account for 19% of sales. Silver customers spend about $246 annually, shopping 3 times a year, and account for 23% of sales. That leaves about 12% of sales contributed by what I call the casual shopper; they may be a foreign visitor or from Mars.

Sustaining shopping frequency is a critical measure of a successful loyalty program. If the loyalty program achieves its goal and motivates shoppers to come more frequently, it would add sales volume and also enhance the credit program (a profitable initiative for the company). In today’s competitive market, Macy’s certainly needs its customers to shop more frequently in all their stores. The merchandise offerings must be exciting as well to make each store visit worthwhile.

The management team that has come together under Jeff Gennette is working to create new credibility for the stores with innovative and creative merchandise offerings and now this new loyalty program. Certainly, the frequent sale events, which have been necessary to drive sales, are dull and repetitive and do not support this vision. Rather, they reinforce a discount/deal approach as the driver of sales rather than promote a store positioning focused on achieving growth through building stronger customer loyalty. The mentality of just “beat last year” must change if the store wants to be creative in the future and thrive.

Right now, more sales are in the offing, I am sure, since my gut tells me that the terrible three hurricanes and sweltering summer weather in September hampered sales in many parts of the country. But, hopefully, that will not deter Gennette from his commitment to make Macy’s more engaging for customers.

New loyalty programs are in the offing at other retailers as well, according to the Sourcing Journal. American Eagle and DSW are both introducing programs that will reward shoppers for their loyalty. The DSW program will break its 25 million strong data base into tiers and reward the most engaged customers. I urge these companies, and others planning new loyalty efforts, to pay attention to what the Sourcing Journal reports customers want from such programs. Customers want quicker sign up to the programs and the ability to interact with their companies directly. They are looking for SMS, email and apps. In addition, they want digital wallets, push notifications and virtual assistance. That suggests that Amazon’s Alexa, Apple and Google should integrate with the loyalty programs for a win that could benefit everyone.

The new Macy’s loyalty program shows leadership in an industry that needs innovative ideas. I hope it will be technologically advanced so it aligns with what customers want and is ready to allow their best customers to communicate with them.

This was post was published on Forbes. You can read it here.

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