Why I Think H&M is an Example of a Bad Loyalty Program?

H&M invested lots of effort in building their H&M Loyalty Club for loyal customers and failed expectations with a poor customer experience. Read on to see why I think you can do better while investing less in your customer retention strategy.

Disclaimer: This article is written from a 1:1 perspective of a marketer and a 'millennial' consumer. I had a chance to join the H&M Club (in 2018, Poland) and decided to describe my long-term experience with their loyalty campaign.

I wrote this article to share some of my experiences with H&M rewards program and to show you how to do better.

You will learn:

• How H&M failed with their email marketing campaign.
• More about the necessity of having a loyalty mobile app.
• Butchered customer experience with in-store purchases.
• How not to commit these mistakes.

There's a lot to uncover here, so we'd better get started.

H&M loyalty program and their spammy email marketing strategy

If you ever buy in H&M, you’ve probably heard about their rewards program and the H&M Club. If not, let me give you an overview of how their rewards program works.

It starts out really well – if you download their loyalty mobile app and become an H&M Club Member, you get a one-time 10% discount on your order.

Then, every purchased thing gives you points which you can later exchange for other discounts and special offers. The mobile app is pretty impressive. It looks nice, you can shop through it and see your individual profile with the number of collected points and active promotions.

Learn more: How to design an effective customer dashboard?

And that’s the end of the good things. Even though the app seems great and the rules are pretty clear, my experience with their loyalty program was very poor. And even if it’s been almost a year since their first pitfall, it stays the same and I’m quite sure it’s for keeps.

The main reason why I turned my back on them right after joining the Club is this:

Of course now, in the GDPR era, I could easily get rid of these emails and save lots of space in my mailbox. But just because I can unsubscribe at any time, doesn’t make it look better. If I sign up for a rewards program or for a newsletter, I have a vision of personalized emails and special offers getting straight into my mailbox. What did H&M give me instead? Lots of SPAM. Thank you very much.

This is a very good example of a very bad email marketing strategy for your loyalty program. If you send emails every day or every 2-3 days, you cannot expect anything good. I really don’t care what’s in these emails, after a couple of days I simply stopped opening them.

When your customers share their email addresses with you, remember you not only get a chance to build 1:1 interaction. You also enter their private space. Even if a user loves your products, you need to keep in mind that it’s shopping and not a real-time relation of your marketing actions. I don’t shop for clothes every day or even every week, and I guess this is not extraordinary behavior.

And here’s lesson one – fit email frequency to shoppers’ habits. You can also inform them about how often you will send messages in case of the newsletter subscription. If your emails start to irritate your customers, sooner or later they’ll hit ‘unsubscribe’. And this is not the greatest harm that may happen. From then on, you’re on very thin ice leading straight to losing a loyal customer. Not right for your customer retention rate.

Give your customers a choice – H&M and loyalty app requirement

The other problem with the H&M Club is connected to their mobile app. Speaking precisely, to the requirement of having it. For a couple of years now, we’re still in the middle of discussion if mobile apps are dying and who exactly needs them. Around 2014, a big fallback on mobile apps started. Responsive websites became a great alternative that reduced the need for downloading a new app every time you want to shop via mobile device.

Anyway, I’m far from saying that H&M loyalty app is a bad idea. Actually, they showed how a good mobile app should be done. My problem (and not only mine) is that if I wanted to have every retailer’s app on my phone, I would have to save the majority of my phone space only for shopping apps.

Every time I was in H&M making a purchase, the staff asked me if I had their app to scan my unique code and assign points. Meanwhile, brands like Empik or Orsay let me give my name or my mobile phone to the staff and be a part of their customer loyalty program without forcing me to download any app.

What I miss in the H&M loyalty solution is, again, a little bit more personalization. There is a representative group of millennials and older generations of consumers who don’t want retailers’ apps on their phones just to show the code from time to time. Having the mobile app should be an option, not a requirement to participate in the rewards program.

Learn more: How to build a great mobile app for a rewards program? 

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Customer experience endangered by a loyalty program

When H&M launched their loyalty program in my country (Poland), and through long months after, you needed to be very patient when shopping in-store. All staff members invited customers to join the program and download the app before they finalized a purchase. You can imagine the outcome. Every interested customer (it was a 10% discount, so why not?) had to find the app, download it, register, and scan the code.

It may seem like too much complaining but if you’re in a rush (aren't everyone these days?) and you constantly face the same story while waiting in the queue, you start to be a little bit anxious. In the end, allowing customers to shop smoothly via mobile, cost the brand many disturbed experiences of their in-store customers. Again, not right for the customer retention rate.

In such cases, it may be a good idea to have a dedicated assistant in-store after the rewards program launch. Thanks to this, your team has time to invite people to join before they head to the checkout and prevent a prolonging queue. You can also follow the Lidl idea, which resolved the same issue by handing leaflets with detailed instructions to customers at the checkout. All customer engagement strategies should keep in mind the seamless shopping experience in the first place.

Learn more: How to design an extraordinary UX for a loyalty program?

Learn from H&M rewards program's pitfalls

The example of H&M proves that loyalty programs consisting of repeated actions performed in bulk aren’t enough, even with a robust loyalty program software. Massive invasion on the customer’s email and the very bad in-store experience have made me leave most Club offers undiscovered. Moreover, I stopped visiting the store as often as I used to. Personalization is the key to keeping loyal customers standing behind your brand. Instead of being too concentrated on expanding the program's reach, dig into the data of your best customers and focus on personalization.

Not every customer can be your loyal customer and the point of loyalty programs has never been to drag every customer into it. Think of unique codes dedicated to particular buyers, gift cards on their birthdays, and rewards adjusted to their shopping history.

Last but not least, whatever channel you decide to use to interact with program members, do not deliver anything that is anonymous, and don’t change your messages into flooding SPAM on any account.

If you want to see good rewards program examples, check our posts about Zooplus, Kaya and Zalando reward programs.

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Learn more: Explore Voucherify's Open Source Loyalty Accelerator

Avoid H&M Club's mistakes

A good customer loyalty software allows for the personalization of both promotional offers and promotional messages. It allows you to personalize the offers based on customer data, preferences, previous purchases and more. It helps you avoid spamming your customers with irrelevant, bulk messaging. It sends the same offer to one customer only once. It allows for rewards personalization and fine-grained customer segmentation in real-time, which helps you target your customers with the right incentives to get their attention and engagement. The best customer loyalty software connects with your CRM system and other databases to allow for the highest level of personalization based on the data you already have about your customers. Such customer loyalty software could help you avoid H&M's pitfall with bulk, irrelevant messaging and instead, create personalized messages, tailored rewards, and fine-grained customer segments to evoke loyalty in your customers.

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