Dave Glaza
May 31,2024
3 min. to read

TARGET CIRCLE’S RELAUNCH: KEY TAKEAWAYS AND STRATEGIES FOR SUCCESS

In the dynamic world of retail, staying ahead of the curve is essential for maintaining customer engagement and driving sales. Target’s recent relaunch of its loyalty program, Target Circle, exemplifies this principle perfectly. Announced just a few months ago during their annual earnings call, the changes took effect on April 7th and have since made significant waves. In their Q1 earnings recap, Target shared some early results, which, when combined with our initial DIGITS April KPIs, offer a clear picture of the new program’s impact. Let’s dive into the highlights.

Target Circle

NEW SIGNUPS: A MIXED BAG

Target reported an impressive 1 million new signups during the earnings call, signaling a positive trajectory. However, with a user base of 100 million, DIGITS had hoped for a more substantial percentage increase. This modest growth underscores the necessity for continued robust marketing efforts to boost the topline user count further.

ENHANCED OFFER CATALOG: A NOTABLE INCREASE

One of the standout changes post-relaunch is the expansion of the offer catalog. Last April, Target Circle averaged 622 offers per week. This year, that number has risen to 776, marking a 20% increase. Notably, many of these offers are from non-traditional coupon businesses, particularly in electronics, entertainment, and home categories. This diversification not only attracts a broader audience but also provides more value to existing Circle members.

HIGHER SCALE AND UTILIZATION

The introduction of auto-apply functionality has significantly enhanced the program’s scale and utility. The average offer is now used in 63% of transactions, a 2.5X increase from previous levels. This seamless integration not only simplifies the user experience but also maximizes the impact of each offer, driving more frequent and substantial customer engagement.

PROMOTIONAL SPEND: A DOUBLE-EDGED SWORD

Target’s focus on promotions has intensified, particularly in response to challenges in topline sales mentioned during the earnings call. In April, promotional spend within our client base surged by 52% compared to the previous year. While this aggressive promotion strategy has driven short-term gains, it’s also raised concerns about sustainability for both vendors and Target’s budget.

LOWER INCREMENTALITY ON MASS PURCHASES

The auto-apply feature, while beneficial in many ways, has led to increased subsidization on mass purchases. This has resulted in a significant drop in incrementality, a key metric for measuring the additional sales generated by promotions. It’s crucial to address this issue to ensure that the benefits of the auto-apply feature don’t come at the expense of overall program effectiveness.

KEY TAKEAWAYS AND STRATEGIES FOR SUCCESS: WAYS TO WIN

To navigate these changes and maximize the benefits of the revamped Target Circle program, consider the following strategies:

Control Your Mass Offer Spend: Monitor and adjust your budget allocation to ensure that promotional spend remains sustainable and effective.

Run More Segmented Offers: Tailor promotions to specific customer segments to increase relevance and engagement.

Increase BOGO Offers: Buy-one-get-one promotions can drive higher perceived value and encourage larger basket sizes.

Know your market share: Request a customized report of all Target Circle offers and see which of your competitors were the most aggressive in driving sales!

By implementing these strategies, you can leverage the new features of Target Circle to drive growth and achieve a stronger return on investment. At DIGITS, we are committed to helping our clients navigate these changes and capitalize on new opportunities. Stay tuned for more insights and updates as we continue to analyze and optimize our approach to retail media.

Dave Glaza, Founder & CEO of DIGITS, remains committed to bringing digital capabilities to physical stores! 

LinkedIn: https://www.linkedin.com/in/davidglaza/

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