Cotton On is rolling out a super-sized loyalty program: Will it work?

Retail experts say loyalty programs are becoming increasingly difficult to pull off in an online era, but that’s not stopping the Cotton On Group is looking to super-size a customer membership program.

The second-largest privately owned retail operation in Australia has introduced a loyalty scheme for the first time, offering New Zealand customers the first look at “Cotton On and Co Perks”.

The program works across all Cotton On Group brands, including the group’s Kids and Body ranges as well as stationery imprint Typo and Rubi Shoes.

Customers can earn points in store and through online shopping, with a $10 gift voucher available for every $100 spent. Members will also receive a voucher upon signing up and bonuses like birthday gifts.

Speaking to Inside Retail, Cotton head of customer loyalty Alex Haritou said there is a global rollout planned for the scheme, explaining the aim is to “allow us to gain an even better understanding of our customers’ needs and shopping habits” across all the company’s brands, while also showing customers they were valued.

The New Zealand sign-up site for the program promises shoppers an easy sign-up process and more payback than other loyalty cards. Customers are asked to provide their name, contact details, date of birth and interests.

Loyalty programs have tended to divide retail and sales experts over the years, but the broad consensus has been that traditional loyalty schemes don’t generate sales the way brands tend to expect.

Sales experts have previously told SmartCompany that incentives like a free item are no longer enough to drive loyalty alone.

Meanwhile, changes to loyalty schemes by big players like Woolworths have caused significant tension among shoppers when the rules of the program were changed.

Retail Oasis strategist Pippa Kulmar tells SmartCompany loyalty cards simply do not work the way many retailers expect, but she believes Cotton On’s approach to the idea does have positives.

“I think people still believe that loyalty programs actually generate loyalty, but for brands that do [generate] it, it’s usually more through community engagement [than cards],” she says.

Too many retailers have relied in the past on models that promise a free item for purchases, instead of creating schemes that let them track consumer behaviour and offer a better program in the long-run, she says.

In Cotton On Group’s case, bringing all of its standalone brands under one roof for a perks scheme could give the company a much better picture of how people spend money with them, Kulmar suggests.

“I think it would be interesting for them to use this to look for gaps in their range. Ask, ‘where is the product that customers are not buying from us?'” 

While using customer trends to plan future strategy and buying is the “unsexy part of the business”, Kulmar says it’s critical that businesses use this information in an era of “peak loyalty scheme”.

“In Australia, there really has been a lack of investment in data analytics,” she says.

Cotton On’s approach also seems to be an attempt to create an “ecosystem” around its brands, with customers rewarded for spending across a range of the group’s brands.

“They’re bringing all the brands together, through having that one program,” Kulmar says.

SmartCompany contacted Cotton On for further details of the Australian scheme’s rollout but did not receive a response prior to publication.

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