Macy's Star rewards makes up for the mistakes of the past: Clarus' Caporaso

There’s a reason why Macy’s and other retailers have begun to overhaul their old loyalty programs. That reason, which is paramount to the success of all retailers, centers on one crucial building block: better customers.

That realization has led Macy’s to put major resources into a new loyalty program, Star Rewards, which is aimed at making up for the customer loyalty mistakes of the past.

With the release of their newest program, which focuses on rewards, rather than discounts for its cardholders, Macy’s has taken a major step toward righting a ship that has seen its sales sink for the past 10 quarters.

John Taggart/Bloomberg

It’s not alone. More and more companies have overhauled their programs, with great success.

GNC, which for years offered a simple points-based loyalty program, decided last year to create a system that not only provides customers with discounts, but also makes customers feel valued.

GNC even went so far to create two of those programs, which were separated into free and premium business models. Its premium loyalty program, myGNC PRO Access, has enjoyed huge success, and it has been retooled to give customers a unique experience. As of Q2 2017 that program had enrolled nearly 325,000 members since its launch; store visits by PRO members were double the amount by nonmembers; and PRO members had purchased twice as much and spent significantly more than a regular non-PRO customer.

Those numbers aren’t a fluke, either. Members of Prime, Amazon's enhanced premium loyalty program, spend five times more than non-Prime members.

Macy’s can have the same success, but it has to stick to the mantra of consistent and meaningful rewards for customers. While the 5% cash back, free shipping and 25% off any day the customer chooses is nice, Macy's still needs more to draw people in.

GNC’s program gives customers samples and exclusive sales days, and Amazon gives its customers streaming video and music, as well as many other features, so Macy’s has to push the envelope when continuing to build on the loyalty experience.

But to be fair, Macy’s CEO said the company is not done yet, with more features slated for 2018 and beyond. With announced special sales days and exclusive early access to new products in the future, Macy’s has to make good on those promises to create exclusivity around the program.

Exclusivity breeds brand confidence, and brand confidence means more loyalty. If Macy’s can rebuild that brand loyalty, it will definitely see visits and revenues rise. That very outcome is why building an engaging and useful loyalty program is important. Without that, your customers have no incentive to stay or, more important, to spend more.