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Why I think H&M is example of a bad loyalty program

by 
 
Jul 3, 2019

Even great brands struggle to build a scalable customer loyalty solution that gives consumers what they crave for. When some brands reap a generous harvest of their loyalty programs, the others fail. Good news for small businesses, for sure, it’s not a matter of the budget. A market giant, H&M, invested lots of effort in building their Club for loyal customers and failed my expectations with poor experience. Read on to see why I think you can do better while investing less in your customer retention strategy.

Note

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.

Don’t you ever cross that line

If you ever buy in H&M, you’ve probably heard about their loyalty program and the H&M Club. If not, let me give you some overview of how it works. It starts out really well - if you download their app and register, 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 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.



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 on my mailbox. But just because I can unsubscribe at any time, doesn’t make it looks better. If I sign up for a loyalty 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.

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 an extraordinary behaviour.

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

The other problem with the H&M Club relates 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 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.

Customer experience in danger

When H&M launched their loyalty program in my country, 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 (everybody is in a rush today) 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 loyalty 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 experience in the first place.

Learn their lessons

The example of H&M proves that loyalty programs consisting of repeated actions performed in bulk aren’t enough, even with nice 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 truly 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 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.

I’m not coming back to the H&M Club, but I love the experience provided by Zalando or Kaya. In the next post, we'll discover more brands with loyalty campaigns worth learning from.

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