Target Tries Again, With a New Loyalty Program

If at first you don’t succeed…

Target is preparing to launch a new loyalty program, eight months after announcing the end of its previous effort.

The big difference is that this loyalty program is not aimed at rewarding Target’s most loyal shoppers, but encouraging less loyal shoppers to shop more.

“Target Red” will make a limited debut in the Dallas-Fort Worth area in April, with aims of an eventual introduction nationwide. The main perk for shoppers who sign up is a 1% cash-back reward for every purchase, that can be applied to your next shopping trip.

Members will also get free next-day delivery with Target Restock, save 50% on a first-year $99 membership for same-day delivery with Shipt, and be able to vote for one of three local organizations that will benefit from Target’s community giving.

The catch? Target’s most loyal customers – its REDcard holders who earn a 5% discount on every purchase – are eligible for all of the perks except for the extra 1% cash back. “The program’s 1% back is not stackable,” Target explains. But “you can enjoy all the other perks while continuing to save 5% when using your REDcard.”

So what kind of loyalty program is this, exactly?

It appears to be aimed more at promoting Target’s various services than it is at rewarding existing loyalty. If Target can hook infrequent shoppers with a 1% discount, it can entice them to sign up for a REDcard account with the promise of even bigger savings.

A discount on Shipt memberships could also encourage more signups for the same-day delivery service, which Target acquired back in December. The more people who sign up for $50 memberships, the more who might willingly pay $99 for annual renewals. Similarly, free delivery for Target Restock orders could encourage sampling of that service.

And giving shoppers a say in how Target directs its charitable giving could ease some of the disappointment that many shoppers felt a few years ago when Target ended its “Take Charge of Education” program, which allowed REDcard holders to select a local school to receive 1% of the money they spent on Target purchases.

But to Target’s most loyal customers, many of these perks may sound better than they actually are. Home delivery is certainly convenient – but neither Shipt nor Target Restock accept coupons or Cartwheel discounts. You can’t use a REDcard to get a 5% discount on a Shipt order, and Target Restock doesn’t even honor in-store sale prices or gift card promotions.

So do you want to pay full price for products you can get for much less in a Target store, while saving a fraction of what you could save with a REDcard? Then Target Red is for you!

Target claims it developed the new program by going “straight to our guests to better understand what would be most meaningful to them in a loyalty program,” according to Target executive vice president and chief marketing officer Rick Gomez. “That’s what they’ll see reflected in this test — a free and easy way to be rewarded simply for shopping at Target.”

Target’s previous attempt to reward customers “simply for shopping at Target” ended last year. The company pulled the plug on Cartwheel Perks, more than two years after its test launch. Shoppers in five cities were able to earn points that could be redeemed for free products. It was an attempt to engage and excite frequent shoppers who were interested in earning more than just a flat discount in exchange for their loyalty.

But that program was fraught with fraud. Unscrupulous shoppers found ways to sign up for the program outside of the designated test cities. Then some of them created multiple accounts in order to earn multiple free items that they shared and sold online. And others took advantage of “glitches” that allowed some low-value perks to be used on much more expensive items.

Target insisted that the fraud had nothing at all to do with its decision to end the program. It said it made the move after “listening carefully to guest feedback”, and receiving “many learnings about how to engage and reward guests that we plan to leverage in the future.”

So that brings us to Target Red.

Frequent Target shoppers are unlikely to be overly impressed with Target Red’s rewards. And infrequent Target shoppers may not change their habits for the promise of a penny for every dollar they spend. But with REDcard membership leveling off, and increased online shopping and home-delivery competition from the likes of Amazon, Target has to try something to get more shoppers into the Target tent.

So beginning next month, we’ll see if Target Red works – or whether Target will once again return to the loyalty drawing board.