ASOS launched its new loyalty program –
ASOS A-LIST – on February 24th, 2016 and we think it’s one of the
best customer loyalty program examples.
At LoyaltyLion we have a unique perspective on their new program because ASOS’ ecommerce director for 14 years, James Hart, is an investor in LoyaltyLion. In fact, James Hart once said to the LoyaltyLion CEO: “nothing matters more in ecommerce than customer loyalty” – we couldn’t agree more and are thrilled to see ASOS launch this so we can use it as one of our great customer loyalty program examples.
In this blog we’ll answer the following about the ASOS loyalty program and provide our view:
- What does the program do?
- What’s good?
- What could ASOS do better?
What does the program do?
ASOS A-LIST is one of many customer loyalty program examples that use a points-based system. Shoppers earn 5 points for every £1 spent. Once a month a customer’s points are converted to vouchers and emailed to them, for instance, if they have earned 500 points they will be sent a £5 off voucher which can be entered at checkout. Vouchers are issued in £5 increments and expire 6 months after the date they are issued.
However, ASOS has gone one step further than just vouchers and have implemented tiers, called ASOS A-LIST Levels – another reason why it’s one of the best customer loyalty program examples. Shoppers are entered into a tier based on how much they spend, for example, £200 gets you into Level 2. There are four levels and shoppers earn different rewards depending on the level. Shoppers stay in the tier for 12 months, after 12 months they are demoted out of the tiers and have to earn the tier points again.
ASOS offers various rewards through the tier levels including, free next day shipping, 24-hour early access to sales or a reward from a partner, like “win with Krispy Kreme”. These rewards don’t require points and are available to anyone who reaches that level.
What’s good?
Tiers:
Tiers are a great way to reward the most loyal customers and to provide other shoppers with an incentive to shop more. The ASOS tiers are fairly achievable unlike a lot of airline tiers so shoppers will see the value.
Non-monetary rewards:
Giving non-monetary rewards has a lot of benefits, the first being it doesn’t cost ASOS anything. Also, shoppers tend to attach a higher perceived value to something like early access to a sale.
Finally, some of these non-monetary rewards can actually increase revenue. For example, if you invite your most loyal customers to purchase from the latest season’s clothing first, they’re going to appreciate the opportunity to be first and spend more.
What could ASOS do better?
Only rewarding purchases can be limiting:
Shoppers only earn points for what they spend. They earn nothing for their activity, such as creating an account, referring friends or connecting with Facebook. At LoyaltyLion we encourage retailers to reward engagement as well as expenditure because engagement with your brand will lead to deeper loyalty.
Forced redemption restricts choice:
Every month a shopper’s points are converted into vouchers e.g. if they have 500 points they will be sent a £5 voucher. This means the shopper cannot decide when to exchange their points. At LoyaltyLion we have observed that shoppers enjoy saving their points so they can redeem them for larger rewards.
Waiting periods can be aggravating:
Customers have to wait 29 days to use their points. The reason ASOS does this is to limit abuse, for example, if there was no waiting time, shoppers could buy a product, earn points, use those points and then return the original item. LoyaltyLion offers the same functionality, however, we have observed little abuse.
There is also a negative consequence of this waiting period: shoppers become aggravated and confused. This reduces the positive emotion a loyalty program should generate. Most of the stores using LoyaltyLion have significantly reduced this waiting period or removed it altogether.
A cap on points only caps the loyal:
ASOS limits customers to only 5,000 points a month, which means the most loyal will be hindered.
Closing thoughts
ASOS continues to lead the pack and has launched their program before similar retailers such as Boohoo, Missguided and PrettyLittleThing. However, it has taken ASOS over 24 months to design, build and implement their loyalty program, which shows the complexity involved.
So, how much have ASOS spent on building their loyalty program? And, how much have they lost in the past 24 months by not having the program live?
Cost to build: At least £1,000,000.
This is based on a very small team of just four developers, two designers and two managers full time for two years. In reality, many more people would have been involved, but probably not full time. This estimate does not include ongoing costs such as maintenance, feature innovation and hosting – meaning the full cost to ASOS is higher still.
Cost savings are one of the main reasons businesses choose SaaS solutions like LoyaltyLion.
Cost of the delay: ASOS lost $140,000,000.
The other reason businesses choose LoyaltyLion, is speed. Any retailer can use LoyaltyLion to create their own bespoke loyalty program in days, not years. We wanted to know how much revenue ASOS has lost due to their delay. Based on the results LoyaltyLion generates, we estimate that figure to be a staggering $140 million.
It is clear that even though ASOS spent two years developing this program, they will reap the rewards in the long run due to the enormous ROI of loyalty programs. However, we predict that other retailers won’t risk spending years developing their programs in-house.
Managing your program
