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Does J.C. Penney’s New Loyalty Program Go Far Enough for the Average Shopper?

Three days ago, venerable retailer J.C. Penney unveiled a new loyalty program accompanied by fervent hopes of increased customer engagement and brand advocacy.

For the 115-year-old retailer, the new JCPenney Rewards loyalty program marks a new chapter and one.
J.C. Penney spokesperson Kate Coultas told Loyalty360 that the new program includes a new website at jcp.com/rewards.

“This is a new program in comparison to our 2015 program,” Coultas explained. “We spent 2016 testing, analyzing, and refining various pilot programs across the country to create the best loyalty program for our customers. As we focus on growing revenue per customer, our customer loyalty program will be integral to enticing customers to shop often and spend more on every trip.”

Clay Walton-House, practice leader−customer retention & loyalty services at Lenati, isn’t so sure that the new loyalty program will be a hit with the average shopper.

“J.C. Penney’s rewards program refresh brings the program to parity with many of the better retail loyalty programs, but does it go far enough for the average shopper?” Walton-House told Loyalty360. “Improving the value-added utility of the rewards app is a big step, along with enriching the benefits and improving the customer-friendly nature of things like the points expiration policy. To be fair, these are real table stakes for best-practices in retail loyalty—and, sadly, many of differentiated benefits, like earning double points on Sephora spend at JCPenney or choosing your own ‘sale day’, are gated for high-spending credit card holders.”

And because of that, Walton-House said it could ultimately limit the impact of the program for two reasons.

“First, retail customer bases often follow the classic 80/20 rule—where 80 percent of revenue is driven by 20 percent of the base who are higher-value, more frequent shoppers,” Walton-House explained. “The ROI for retail loyalty programs often is found by engaging and growing the moderate frequency, moderate value customers, as they often have lower Share of Wallet and propensity to spend more—whereas the high-value customers are often already spending a significant share with you. The program may be too heavily weighted toward rewarding those who are already high-spend, versus growing those with the greatest propensity to spend more.”

The second reason is a design issue, he noted.

“This design may, ultimately, have limited impact,” Walton-House added. “The richer experiences are gated by credit card membership, a dynamic that actually bucks the trend in retail. Most retailers have seen that, as a general rule, the interest in store-branded credit cards is declining as consumers are wary about their credit and the number of accounts they open. This is reflected in many retailers moving away from credit-based programs and toward gender-neutral programs. Though J.C. Penney allows non-credit card holders to be part of the base level of the program, tying advancement to the addition of a credit card may be a step too far for many more casual shoppers, who might otherwise grow their spend given the right experiences and incentives.”

Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that J.C. Penney’s new loyalty program leaves a “challenging road ahead.”

“It’s even more challenging if its roadmap for loyalty is to match Kohl’s offering and to ramp up locations and reliance on Sephora to boost sales,” he explained. “There’s no identity in any of those strategies. In fact, it’s relying on Sephora’s brand to transform their own.”

With the new JCPenney Rewards program, every time a customer earns 200 points, the customer will receive a $10 reward, valid for a minimum of 45 days. There is no cap on the number of $10 rewards customers can accrue in a month and any remaining points will continue to roll over each month, as long as the customer remains an active JCPenney shopper. The $10 rewards can be used on a future JCPenney purchase in store and online at jcpenney.com. 

What’s more, JCPenney credit card members are automatically enrolled in the program and will earn one point for every dollar they spend. JCPenney Reward members who use any other form of payment will earn 1 point for every $2 they spend.

Members can expect special offers throughout the year, from member-only prices for select merchandise to limited Sephora inside JCPenney sample product offers, and even an extra coupon to use on their birthday. During bonus reward events, all members can receive $10 bonus rewards for every $50 spent up to $150.
Meanwhile, Gold and Platinum card members receive extra benefits such as a passbook of coupons, which includes a “Pick Your Own Sale Day,” along with additional coupons and special offers. Platinum cardmembers also receive a special “thank you” offer, Sephora inside JCPenney bonus point events, and Platinum Appreciation sale days. Gold and Platinum card member status will now be determined by the customer’s annual spend, regardless of how many times a customer shops JCPenney or JCPenney.com throughout the year.

Loyalty program members can manage their JCPenney Rewards accounts in the newly redesigned JCPenney mobile app. To encourage JCPenney Reward members to take advantage of these new features on the app, members that download the JCPenney app for the first time between July 16 and Aug. 31 will receive a $10 reward.

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