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Retail Management Group Assignment| 18th Sept 2012 Case : Nordstrom Rewards its Customers
Group No: 22 Abhishek Anand 2011D05 Nagalinga Nayak 2011D17 Sumeet Chadgal 2011D18 Debarshi Saha

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Q.1) What are Design characteristics of effective Loyalty Program ?

It should Promote Repurchase 2. Ability to offer personalized promotions 3. Maximize Brand Interaction with Customers 4. Customer membership has multiple tiers
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Differentiated Reward Program based on shopping frequency II. Customers experience is materially different in the top tiers
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Customers choice to reap the rewards of loyalty plan through the channel of their choice

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Q.2) How effective is Nordstroms program in terms of developing customer loyalty ?

Nordstrom s note is redeemable for Nordstrom merchandise or services only, so the customer are inclined to buy its product ,which in turn increases its sales. 2. Customer also buys other products too in buying process 3. Nordstrom notes encourages its customer to move higher levels in loyalty program so that customers feel more privileged than others. 4. Various services offer to loyalty program card holders are aligned to their business e.g. free trial-size beauty products ,early access to Nordstrom s anniversary sale etc
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Q.3) Whom should Nordstrom target for its loyalty program ?

1. Aspiring middle class and upper class, as these people

more drawn towards spa and concierge services. 2. They should more focus on people aligned to fashion as they consult all fashion related services. 3. Loyalty program has to be designed with view of targeting whole family.

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Q.4) Is the Nordstrom program worth what it spends to reward customers ? Why or why not? Explain.
1. Yes it helps in repeat purchase, by use of Nordstrom

note$20 for every 2000 points. 2. It helps in customer retention by allowing privileged member to move to higher levels makes to have free access to beauty products, private shopping events.etc 3. It helps in building association with customer which leads to higher growth of the company in long term.

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Q.5) Are luxury more drawn to reward/loyalty programs than are those in other economic groups? Are they drawn to different types of programs ?
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Loyalty programs are used to creating a deeper relationship with consumers through the data they collect and through the brand experiences they provide. One needs to understand their customer base, their competitive set, and the underlying financial dynamics of their business before deciding how best to leverage their loyalty program.

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Characteristic of Luxury Reward Program: I. Special Treatment a) Luxury brands should focus on rewards programs that give affluent consumers special perks and experiences as opposed to coupons and deals for discounts II. Maintain prestige a) High-end brands should come up with rewards programs that are more about special treatment and are intermittent. III. Primp and pamper a) Affluent customers like receiving personalized recognition, like greetings at the door, remembering their preferences and previous

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Q.6) What do you see as the strengths or weaknesses of loyalty

programs such as Nordstroms Fashion Rewards or InCircle at Neiman Marcus ?

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Strength

Experiential Reward System II. Best Tiered Benefits a) Ability to use a fashion concierge service for getting hold of a must-have item, to securing reservations at the trendiest restaurants, access to a travel and events advisor to invitations for exclusive events. It proportionally differentiates how it treats program members based on how much they spend, and the tier they are in.
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Weakness
Difficult to continue program during low growth periods II. Easily transferrable, no specific recognition/ ownership system of card loyalty member

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