The Lululemon Case: Prioritizing Customer Loyalty

Introduction Brands today are in a race against each other to attain the golden halo of brand loyalty. Current markets have seen a shift in the marketing strategies of businesses from customer acquisition to customer retention. Businesses are now focusing their efforts on creating brand loyalty in the minds of customers who are always at risk of flight at the slightest notion of advantage from some other brand. Lululemon has in its over two-decade-long existence managed to achieve the impossible task of gaining customer loyalty while distinguishing itself from other loyalty programs. Table of ContentsIntroductionWhy has it worked?1. Sense of belonging: 2. Rewards: 3. Reciprocity:4. Social Proof:Lululemon's Unique Approach to Differentiation 1. Niche targeting:2. Exclusivity:3. Building a community:Results of the Loyalty Program1. Increased revenue:2. Customer creation and retention:3. Brand evangelism:4. Brand Affinity:Winding Up Why has it worked? An analysis of Lululemon’s approach toward its customer loyalty programs gives a glimpse into their impact and why such programs are effective: 1. Sense of belonging: Human beings are social animals and crave being part of a community. Belonging to a community helps foster a feeling of trust and wellbeing in humans which drives them to actively seek community building. Lululemon realizing this innate human need to belong created a loyalty program for its customers. Lululemon’s loyalty program’s exclusive member benefits have helped create a platform for fitness professionals where they feel valued and recognized as part of a community. By tapping into the basic human psyche Lululemon has successfully managed to ensure that its customers remain engaged and loyal to the brand. 2. Rewards: The success of Lululemon loyalty programs can be attributed to the “feel good” factor associated with them. The benefits like discounts, special offers, and membership offers like exchange and credits on sales help foster a feeling of accomplishment and importance in the minds of customers which in turn drives repeated purchasing culminating in customer loyalty. 3. Reciprocity: Lululemon has successfully managed to harness the power of reciprocity- a psychological attribute that induces people to favorably reciprocate for any benefits received by them. Understanding the power of this psychological tool Lululemon has successfully encouraged repeat purchases by granting its members various benefits and discounts. 4. Social Proof: People respond better to products that existing customers hail. Positive reviews and testimonials by customers drive higher sales. The community of Lululemon fitness professionals and members plays an important role in building the brand’s reputation. The social proof and engagement that the Lululemon members create help attract and retain customers. Lululemon's Unique Approach to Differentiation Lululemon’s customer loyalty programs stand out from their competitors due to the following reasons: 1. Niche targeting: The differentiating factor of Lululemon’s membership programs is its specificity. The Lululemon membership program targets a specific niche- fitness professionals. Addressing this specific segment of the market sets Lululemon apart from its competitors. Exclusively targeting fitness professionals has been an interesting way to boost loyalty and make the Lululemon brand synonymous with fitness. Lululemon’s targeted approach has had the added advantage of leveraging the existing influence fitness professionals have on their followers and using it to increase its customer base. 2. Exclusivity: Another thing that sets Lululemon apart from its competitors is the exclusivity it offers. The focused fitness-related offers like access to exclusive events and sessions make the Lululemon membership program appealing. The exclusivity in addition to the premium products offered by the brand enhances the perceived program value and reinforces brand loyalty. Lululemon’s understanding of the role of “being made to feel important” on the human psyche and purchasing behavior has helped it attract and retain customers. 3. Building a community: Unlike its competitors, Lululemon’s membership loyalty program has shifted its focus from purchase rewards toward community building. Its unique strategy of creating a platform for its fitness-focused customers to engage and exchange experiences has been successful in building a strong sense of community which has fortified brand loyalty. Results of the Loyalty Program The undeniable effectiveness of Lululemon's loyalty program is evident from its: 1. Increased revenue: One of the most desirable results of Lululemon’s unique customer loyalty program has been increased revenue. Customer engagement through the customer communities and customer reviews and recommendations have had an incremental role in boosting sales. The exclusivity and sense of belonging to a community created by niche targeting have been responsible for inducing repeated purchases and creating brand loyalty. 2. Customer creation and retention: Lululemon famous for its fiercely loyal customer base has achieved this commendable position through its loyalty programs that incentivize customers to revisit and re-purchase Lululemon products. The brand experience created through events like in-shop and online fitness sessions has not only successfully retained existing customers but has also been a source of attraction for new customers to join the exclusive Lululemon membership. 3. Brand evangelism: Lululemon has strategically reaped the benefits of brand evangelism through its customer loyalty program. The brand’s customers have been very eloquent with their experiences with the brand and the added advantage of having fitness professionals as members has been their promotion of the brand through reviews and recommendations not only to their peers but also their clients. This word-of-mouth advocacy of the Brand has been an important contributor to Lululemon’s steady growth and rapidly increasing customer reach. 4. Brand Affinity: By consistently targeting fitness professionals Lululemon’s customer loyalty program has managed to embody its core vision “to be the experimental brand that ignites a community of people living the sweat life through sweat, grow and connect.” The popularity of its member communities is proof of its success in creating a brand that values and supports fitness professionals. This focus on customer experience has been the reason for the emotional connection between the brand and its target audience, fostering long-term loyalty and affinity. Winding Up Lululemon is a glowing example of a customer loyalty program gone right. A deep understanding of the human psyche and its impact on basic human decision-making has been instrumental in the formulation of its brilliant marketing strategy. Playing on the basic human need for a community, Lululemon has skillfully used this as a psychological trigger to foster a sense of community and exclusivity and influence the purchasing behavior of its customers. The niche-targeting strategy implemented by Lululemon has been key to driving up sales and developing brand loyalty. Lululemon has, in its nearly three decades of existence, changed the way companies view customer loyalty. In the words of Chip Wilson (founder of Lululemon), “Lululemon was a social experiment to determine if putting people development above profits would yield extraordinary profits. The experiment proved successful.” If you found this Review insightful, consider reading other blogs at Ikana Business Review to learn about the success and failure stories of other global brands.

The Lululemon Case: Prioritizing Customer Loyalty

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