How might Michaels Stores redesign its loyalty rewards program to increase customer engagement and repeat purchases?

Introduction

To redesign Michaels Stores' loyalty rewards program for increased customer engagement and repeat purchases, we need to analyze the current program, understand customer behavior, and identify opportunities for improvement. I'll outline a strategic approach to enhance the program's value proposition and drive customer loyalty.

Step 1

Clarifying Questions (5 mins)

• Looking at the current loyalty program, I'm thinking it might be underperforming in terms of customer retention. Could you share some key metrics like active user rate, average purchase frequency, and year-over-year retention for loyalty members versus non-members?

Why it matters: This helps us understand the program's current effectiveness and areas for improvement. Expected answer: Lower-than-industry-average retention rates and purchase frequency for loyalty members. Impact on approach: Would focus on increasing program value and engagement mechanisms.

• Considering Michaels' position as a craft retailer, I'm curious about the current reward structure. Does it primarily offer discounts, or are there experiential rewards like craft classes or early access to new products?

Why it matters: Determines if we need to diversify reward types to appeal to different customer segments. Expected answer: Mostly discount-based rewards with limited experiential offerings. Impact on approach: Would explore adding more craft-specific, experiential rewards to differentiate the program.

• Given the rise of online crafting communities, I'm wondering about the digital integration of the loyalty program. How well is the program integrated with Michaels' e-commerce platform and mobile app?

Why it matters: Identifies opportunities for omnichannel engagement and seamless customer experience. Expected answer: Limited integration, primarily focused on in-store purchases. Impact on approach: Would prioritize digital integration and mobile-first features to enhance accessibility and engagement.

• Considering the competitive landscape, how does Michaels' loyalty program compare to key competitors like Joann Fabrics or Hobby Lobby in terms of member benefits and ease of use?

Why it matters: Helps identify competitive advantages and areas for differentiation. Expected answer: Similar discount-based structure but lagging in digital features and personalization. Impact on approach: Would focus on unique, personalized rewards and seamless digital experience to stand out in the market.