Nordstrom makes change sure to anger customers

Remember when loyalty programs actually felt like a two-way street? You were loyal to a business and in return, they rewarded you with perks and freebies. 

Well, loyalty programs aren’t what they used to be. 

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Take Starbucks. When it launched its Rewards program in 2008, it offered customers a free beverage after 12 visits. 

Then, they changed the system to reward customers based on the amount they purchased. Over the years, Starbucks has slowly increased the amount customers have to spend to access a treat. There is still a loyalty incentive, but it’s not as great as it used to be. 

Obviously, programs evolve, but it seems like businesses are increasingly changing the terms to favor them rather than the … loyal customer. 

One brand that still does loyalty well is Sephora. You shop, they keep track of how much you spend, and based on your purchase history you get access to special sales and trial-size treats. Members also receive a fun birthday gift every year. 

I’m a rewards member at another similar skincare company but I have no idea what the ostensible rewards are because the company doesn’t make the program easy to understand. All that is to say … I am very loyal to Sephora.

Nordstrom has had a popular loyalty program, but the company is changing the terms, risking customer backlash. 

Image source: Shutterstock

Nordstrom loyalty programs have changed over the years

Nordstrom, a brand renowned for its customer service, had a rewards program for years before launching what it called its first “loyalty program” in 2018. 

The focus of “The Nordy Club” is personalization. Nordstrom encourages customers to create profiles on the store’s loyalty app.

Then, with each purchase, customers accumulate points that gradually unlock personalized experiences, like gaining access to a Nordstrom stylist and even having that stylist make house calls. Other Nordy Club experiences include invites to fashion shows and sale previews, free alterations, and same-day delivery. 

Of course, there is the most popular reward: Nordstrom Notes, i.e., coupons, that customers can use to shave dollars off of their purchases. 

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For years, customers have been able to accumulate Nordy Club rewards at both Nordstrom and its discount branches, Nordstrom Rack and “final clearance” stores called Last Chance. 

Nordstrom Rack purchases are now excluded from The Nordy Club

This week Nordstrom revealed that Nordstrom Rack or Last Chance purchases will no longer count toward The Nordy Club benefits. 

Instead, the company now has a separate rewards program for Rack customers, giving them a 5% discount when they use a Nordstrom credit card on eligible purchases. The goal is to provide instant discounts, special promotions, and early access for Nordstrom Rack shoppers, Deniz Anders, Nordstrom’s executive vice president and chief marketing officer, told Retail Dive. 

The Nordy Club benefit may also be a victim of its own success. Last year Fortune reported members of The Nordy Club were accumulating so many loyalty points that it was impacting the clothing retailer’s bottom line. And yet per an earnings call from the same period, leadership shared that purchases made by these loyal customers accounted for around 70% of the company’s sales.

In the meantime, hoping to capture more budget-conscious shoppers, Nordstrom has been expanding its Nordstrom Rack locations in the last couple of years. Last year, 23 Rack locations opened across the U.S. and this year, there are plans for 21 more. 

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