How Lululemon is rethinking customer loyalty
Customer loyalty used to be all about saving points. There was this simple dynamic where, for instance, you bought 10 pieces of bread and then you received the 11th one for free. Today, customers no longer accept this unbalanced approach. They want companies to keep earning the right for their customers to stay loyal.
No more data
This change does not just have to do with the evolved attitude of customers. The story is a lot bigger than that. You know I have written quite a lot about the next new blockchain-based internet, which is called Web3 and where data ownership is supposed to come back to the user. The consequence of that is that organizations will have to make sure that they earn, and re-earn the trust of users so that they will grant them access to their data.
In fact, we don’t even have to wait for Web3 to happen, to experience this. Just look at the latest iOS of Apple and how easy they make it for us to not to be tracked throughout websites. The results of that were pretty impactful, actually: about 95% no longer want to be tracked on their Apple devices. Just think about what that means for a company like Meta: they lost 200 billion of their value in just a couple of days. Their inability to access user and consumer data puts enormous pressure on their business model. So it is crucial that you think hard today about how you will be able to earn and re-earn the right to customer data in the coming years.
Realizing the full potential
And that’s why I wanted to write about the athletic apparel retailer Lululemon. If you don’t know the company, they started out by selling yoga pants and other yoga wear but later expanded to also provide athletic wear, lifestyle apparel, accessories, and personal care products. And pretty successful, I might add. If you would have invested in them 10 years ago, your return would be about 2400%.
But their purpose goes beyond selling products. They want to make sure that everyone is realizing their full potential. They want to help people become healthier and look great in multiple ways. On top of their fashion and their stores, they acquired tech startup Mirror about a year ago. The latter allows customers to do a workout from the comfort of their own home, with a personal trainer and feedback from a mirror.
At first sight, you might think that Lululemon is changing lanes, right, with this acquisition? That they’re evolving from a fashion retailer to a technology company. But if you understand their purpose of empowering people to become healthier and realizing their full potential, you will realize that there’s more to it than that.
Value for data
In the next couple of months, they are going to launch their membership program. Members of Lululemon will enjoy access to clothes, events and fitness classes. The try out in Toronto was a huge success, and now they’re rolling it out to multiple markets. The paying model (there’s also a free version) is not cheap, though, costing about 128 dollars a year. But they’re putting a lot of value behind it: members get a limited amount of free clothes for that, which is almost compensating for the 128 dollars per year, and on top of that, they get access to fitness classes. That way, customers are not just becoming loyal just to Lululemon, they are also becoming part of the lifestyle community that the company is enabling.
And I think that is really smart. If you’re part of that lifestyle community and receive multiple benefits as a customer, then of course, you’re going to give your data to Lululemon. And one of the reasons is that the balance – which is really off in most companies – has been restored to more equal. To compare with Facebook: when they use my data, the value for them is much higher than the value that I receive back from them. With Lululemon, that balance is there and their customers really appreciate that. And that is why they “pay” them back with their loyalty and allow them to use their data. And I believe that in that aspect Lululemon has been deeply reinventing customer loyalty.
In my latest CX Update video, I talk a bit more about this great case: