Target's free loyalty program nears 80M members 1 year after launch

Mike Mozart/Flicker

Nov. 12, 2020 retail dive

Dive Brief:

  • After rolling out Target Circle last October, Target's free loyalty program has reached nearly 80 million members, the company said.

  • Target Circle offers have totaled nearly $2 billion over the year since it rolled out. Rewards, where customers can earn 1% back on purchases, have reached nearly $200 million, according to Target.

  • Target said with the program it is offering almost one million more deals to customers during the holiday season than in 2019.

Dive Insight:

Target began testing its free loyalty program in March 2018, in the Dallas-Fort Worth area, before expanding it to more cities in early in 2019. By the time the company announced a nationwide rollout last fall, Target Circle had more than two million members.

That means membership over the course of the year spiked well over 70 million and now encompasses a big chunk of the U.S. population, who are clearly spending at Target given the rewards.

Customers have also directed $7 million to more than 2,500 nonprofit organizations through the program, which allows consumers to vote on the retailer's charitable initiatives.

Prior to Target Circle, the retailer's loyalty program was tied to its branded credit card. With its new program, it joined J. Crew, Nordstrom, Macy's and other retailers that created card-free loyalty programs.

Decoupling loyalty from credit cards gives retailers a broader audience and more data to create personalized marketing, among other uses, all of which can help drive traffic and sales. That is not to say that paid memberships don't have their perks for retailers. As Amazon and Costco know well, paying members are sticky and (rationally or not) more apt to make purchases because of the investment in a membership.

Store-branded credit cards that include perks, meanwhile, can provide retailers with hundreds of millions of dollars in interest revenue from users that is nearly all profit in many cases. For struggling department stores, that income can be a lifeline, making up for declining or negative profits from product sales. Macy's, for example, made $771 million in net credit card revenue in 2019, a figure that exceeded its net income for the year by more than $200 million.

Target, meanwhile, made $680 million from its credit card revenue sharing deal last year. That figure represents just a fifth of Target's net earnings for the year, meaning the retailer is far less dependent on its credit cards. Meanwhile, disentangling its loyalty program from its credit card has proved popular with its customers, with tens of millions signing up in the space of a year.

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