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At Half the Price, Nordstrom Enriches Loyalty Engagement

One can never accuse Nordstrom of not knowing its customers. The high-end merchant, which can easily set you back more than $500 for a pair of Jimmy Choos, is adding value where it knows its guests will most likely respond – in its loyalty rewards.

The Seattle-based merchant is tweaking its Fashion Rewards loyalty program, with about 2.6 million members, so that its rewards are less expensive to come by. With half as much spending as before, its regular members can earn tickets to shopping parties and other exclusive events.

It is an important and very insightful decision. According to a story in the Wall Street Journal, Nordstrom’s loyalty members make twice as many shopping trips and spend three times more than non-members.

I applaud the effort. Nordstrom, whose calling card has long been high-touch service, understands the value of its existing customers and is demonstrating just how well it knows these shoppers and identifying new value propositions to attract customers in desired segments. I see several key points:

* By lowering the thresholds on the loyalty program’s various opportunities, Nordstrom is attracting consumers in desired segments and building deeper connections with these members.
* At the same time, it is giving its shopping guests a sense of increased power – through more attainable rewards.
* In the process, Nordstrom’s Fashion Rewards members have the increased incentive and opportunity to demonstrate their personal interests and preferences.

But reducing the attainability of rewards is just the beginning. Once a customer is willing to engage in your loyalty program, you have the opportunity to further enhance her experience and build on what you know about her. This is where big ideas pay off.

Providing easier-to-achieve perks is a great first step, but leveraging the information you have about shopping patterns is where the real value will lie in building stronger connections with the customer at the individual level.

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