What makes a compelling loyalty program, according to The Yes’s Julie Bornstein

As the pandemic was changing the way consumers shop and think about fashion, former Stitch Fix COO Julie Bornstein and Google alum Amit Aggarwal were waiting in the wings with a tech alternative: The Yes, which takes an algorithm-driven approach to online shopping with quizzes that fine-tune product recommendations.

Two years in, the company is now focusing on loyalty. And with Bornstein on board—who helped create Sephora’s Beauty Insider program, a gold standard in the industry for customer rewards—The Yes has a handy blueprint.

Bornstein spoke with Retail Brew about what makes a compelling loyalty program.

Start small

Simplicity is the first step to getting consumers on board. “It has to be easy to understand,” Bornstein told us. “The more complicated the program is, the more you just lose people. And the harder it is to sign up, the more hoops you have, you lose people.”

• The Yes essentially removed the added to-do: When a shopper creates an account, they’re automatically enrolled in rewards as well.

It also made sure to take math out of the rewards equation. “We didn’t want [customers] to have to do mental gymnastics to figure out what the value is,” Bornstein explained. The Yes landed on 10% of however much a shopper spends on the platform. That money is then put into their “Yes Funds”—the company’s name for rewards—which can be used toward future purchases. “It’s a direct sort of reward for your continued business,” Bornstein said.

Smooth moves

In order for a loyalty program to serve your company in the long run, it has to be a sustainable operation. “It needs to be something that the business believes has a net benefit to the business, not necessarily because they make money on it, but because, overall, it is a strengthening device for their business,” she told us.

And companies shouldn’t shoehorn a loyalty program into their businesses. “With some businesses, you really want to establish your core business before you worry about adding a loyalty program,” Bornstein continued. “In other businesses…it almost needs to become part of the core product.”

• The Yes falls into the latter category. “Our value prop is about cutting through the noise and helping the customer find what she’s looking for in one place. So in our case, Yes Funds are part of our core value prop,” she explained.

Sephora, however, had different goals, Bornstein said. When the company came to the US in 1998, its aim was to build a new way to shop for cosmetics, and then focus on translating that experience online. Loyalty came later.

“We then realized that a huge unlock was to tie the experience together between stores and web. We also learned through research that customers shop [at] many places for beauty, so we wanted to give customers a chance to consolidate their purchases,” Bornstein said. “Beauty Insider let us do all three of those things. But it took us time to get to the point to know this and to build it out.”

Retain and reward

For a loyalty program to succeed, Bornstein said that retailers must focus on their most engaged customers. “If you look at pretty much any retail business, the majority of the business is done by a subset of the customers,” she said. “Those people are critical to retain, and they’re critical to reward.”

Bornstein said it’s a mistake to favor new customers when it comes to rewards. Repeat customers want to be acknowledged for their business, and they might look elsewhere if they don’t get that recognition.

“You learn, there’s a separation. There are some people who are super users…they’re going to be looking for more over time,” Bornstein said.