For Canadian athletic apparel retailer Lululemon Athletica, its second-quarter fiscal performance was stellar, to say the least.
And one reason for the company’s rising success is its premium loyalty program that began with a pilot test in Edmonton last year.
Lululemon’s premium loyalty program hits not only on retention, but new customer acquisition as well. And it ties everything back to a memorable in-store experience.
It’s Strengthening Customer Relationships and Building New Ones
During Lululemon’s second-quarter earnings call last week, CEO Calvin McDonald addressed the success of the company’s premium loyalty program.
“Let me shift gears now and update you on membership,” McDonald said. “Our program remains very much a test. However, we are happy with the engagement we’re seeing from our members in the first three cities of Edmonton, Denver, and Austin. As we expected, our loyal guests make up the majority of members so far, but we have a number of members signing up for the program with their first purchase with our brand.”
So far the program has helped with customer retention and acquisition.
McDonald added: “We are seeing men connect with us via the program with over 20% of our members being male in Austin.”
The Program is Expanding
Another major test market has been added for Lululemon’s premium loyalty program.
“While we continue to test and learn, we won’t get into the specific economics of the program yet, but we recently launched in our fourth test market of Chicago,” McDonald explained. “With the opening of Lincoln Park, we’re excited to see the potential synergies that our membership program and experiential store can create together.”
The in-store experience can’t be underestimated for any retailer. The impact your store associates have on customer loyalty and brand advocacy is massive.
The Program Offers Value Beyond the Product
Since Lululemon launched its premium loyalty program test, consumers have found value beyond the product. This is exactly what you want in a successful premium loyalty program.
Successful loyalty programs combine transactional and experiential benefits to create differentiation.
Transactional benefits like free shipping and discounts are still important to consumers and they elicit an emotional response.
Before he became CEO at Lululemon in 2018, McDonald served in the same post at Sephora.
Sephora’s Beauty Insiders program not only includes points and discounts, but also exclusive experiences such as in-store makeovers for higher tier members.
Competition is heating up in the athleisure market and Lululemon’s program satisfies that emotional need to shop smartly by offering benefits like free shipping and a pair of pants or shorts.
But, there’s more to it.
The program also awards members curated events and workout classes. Those are the experiences that are more memorable and unique to Lululemon, satisfying an emotional desire for exclusivity.
These kinds of experiences become so valuable to customers and often become a part of their daily lives.
The Lululemon Membership Program Has a Clear Value Proposition
Lululemon’s premium loyalty program test has been successful because there is a clear value proposition.
For $128 annually, members receive a pair of pants or shorts.
Besides this enticing transactional value proposition, Lululemon mixes a slew of attractive experiential benefits to complete the loyalty loop.
Brands seek differentiation through experiences that build emotional connections and brand loyalty.
Understand your customers to know what experiential benefits will work for them.
Transactional benefits draw your customers in, and experiential benefits make them want to stay.
Do you think Lululemon is well on its way toward achieving this with its premium loyalty program?
Jim Tierney
Jim is our Loyalty Content Specialist, working closely with the B2B Marketing team. Aside from cranking out loyalty-related content, he is the proud father of two beautiful daughters, an avid runner and an old movie fanatic who calls Alfred Hitchcock his favorite director and Claude Rains his favorite actor.