Target today announced its new data-driven loyalty program, Target Circle, will launch nationwide on October 6th, following a year and a half of beta testing in select markets. The program combines a variety of features, including 1% back on purchases, birthday rewards and personalized offers and savings designed to make the program more attractive to consumers.
It also includes a way for customers to vote on Target’s community giving initiatives, which helps direct Target’s giving to around 800 nonprofits in the U.S.
The new program is designed to lure customers who have yet to adopt Target’s store card, REDcard. While REDcard penetration today is around 23%, that number has remained fairly consistent over time — in fact, it’s down about one percentage point from a year ago.
With Target Circle, however, the retailer has another means of generating loyalty and establishing a connection with its customers on a more individualized basis.
A big part of that is the personalized aspect of the Target Circle program. In addition to the “birthday perks” (an easy way to grab some demographic data), customers will also get special discounts on the categories they “shop most often” — meaning, Target will be tapping into its treasure trove of customer purchase history to make recommendations from both in-store and online purchases along with other signals.
“As guests shop, Target leverages information about their shopping behaviors and purchases to share relevant offers that create an even more personalized, seamless shopping experience,” a company spokesperson explained, when asked for details about the data being used. “For example, a guest who frequently shops Target for baby products may receive a special offer on their next purchase of baby items.”
According to a recent retail study from Avionos, 78% of consumers are more likely to purchase from retailers that better personalize their experiences and 63% are more open to sharing personal information if retailers can better anticipate needs.
And as some may recall, Target is already scary good at personalization.
In one notable case, the retailer figured out a teen girl was pregnant before her father did, and sent her coupons for baby items. The dad, understandably, was angry — until he found out that Target was right.
That story was a high-profile example of the data collection and analysis big retailers are doing all the time, though. Target Circle simply formalizes this into an opt-in program instead of an opt-out experience.
As part of the changes, Target’s Cartwheel savings are rolling into Target Circle where they’ll be rebranded as Target Circle offers.
Circle members will also get early access to special sales throughout the year — that is, the events people line up for, like they did for the Lilly Pulitzer’s fashion line or, more recently, the quickly sold-out Vineyard Vines collection.
Target says, in time, it will come up with “even more personalized, relevant ways” to make shopping easier for its customers.
The new program is meant to complement the REDcard, which will increase the cashback to 5% when used. But REDcard holders can still join Circle to take advantage of the other perks.
“Our guests are at the center of everything we do, and we’re always looking for ways to create even easier, more rewarding shopping experiences that give them another reason to choose Target,” said Rick Gomez, Target executive vice president and chief marketing and digital officer, in a statement. “We worked directly with guests to develop Target Circle, and the program includes the benefits and perks they told us were most important to them, from earning on every trip to having the opportunity to help Target make a positive impact in their local communities,” he said.
The loyalty program had been in testing in Dallas-Ft. Worth, Charlotte, Denver, Indianapolis, Kansas City and Phoenix over the past 18 months.
Though not having Amazon’s scale, Target has done well at quickly innovating to keep up with today’s pace of e-commerce. In short order, it has made over its stores to make more room for order pickups and online grocery, and has launched and expanded new services like Target Restock (next-day), Shipt (same day delivery) and Drive Up (same day pickup). The changes have been paying off, with Target beating on its latest earnings with $18.42 billion in revenue and profits of $938 million.