Dive Brief:
- Target is relying on its free and paid loyalty programs to help the retailer boost sales and enhance its overall customer experience, executives said on a Q4 2024 earnings call Tuesday.
- The retailer added 13 million members to its loyalty programs in 2024, according to Cara Sylvester, EVP and chief guest experience officer at Target. Sylvester said she believes the paid Target Circle 360 program can triple its membership over the next three years, though she didn’t provide current numbers for the program.
- In 2025, Target Circle 360 will start offering members monthly gifts, exclusive deals and access to limited-time offerings and partnerships ahead of other customers, according to Sylvester. The retailer is planning a travel-based loyalty partnership with Marriott Bonvoy as well.
Dive Insight:
Target’s loyalty programs are driving sales and collecting data to help fuel the retailer’s personalization and AI ambitions.
“As membership grows, we gather more insights about how guests prefer to save and shop with us,” Brian Cornell, CEO of Target, said during the call. “We apply those learnings to everything from marketing and digital design to assortment decisions and operational improvements.”
The retailer relaunched the Target Circle loyalty program in April 2024. It also introduced the paid Target Circle 360 program, which adds unlimited free same-day delivery for orders $35 and up, along with free two-day shipping, among other benefits.
The revamped programs are the result of consumer feedback, according to Cornell. The company sought to understand how it could better tailor experiences to customers’ needs and acted accordingly.
“What do they love about shopping at Target?” Cornell said. “What could we do better? What would build stronger connections with our brand?”
The effort is paying off with greater loyalty. Target Circle members spent three times more on average compared to non-members in 2024, according to Sylvester. Customers with Target Circle credit, debit or preloaded cards spent about six times more, and members who paid for Target Circle 360 spent an average of eight times more while shopping six times more frequently.
Loyalty is contributing to customer satisfaction as well. Target Circle 360’s same-day delivery service earns “continued growth in sky-high net promoter scores,” as does Target’s Drive Up service, which lets shoppers collect orders at a store without leaving their car, according to Michael Fiddelke, EVP and COO at Target.
Information collected from the loyalty program will help Target improve its personalization efforts, which could have an impact on its digital business. E-commerce sales grew nearly 9% to $20 billion in the fourth quarter of 2024, according to Fiddelke.
“Consumers not only want but expect Target to provide that same level of discovery and inspiration while scrolling our app as they get when strolling our physical aisles,” Sylvester said. “So that's a key focus.”
The retailer has been refining its AI-powered algorithms to offer better product recommendations and improve search functionality, according to Sylvester. The changes may be invisible to shoppers, but Target’s internal testing revealed that they enabled hundreds of millions of dollars in sales.
Target’s plans for 2025 encompass the in-store experience as well as digital journeys. The retailer is focusing on reliability, including through consistently fast checkout and high in-stock rates, to help turn traffic gains into sales growth.
