How a Furniture Store's Membership Program Drove 95% of Revenue - 7/23/24

The Loyalty Program That Redefined Furniture Retail

Welcome to The Retention Newsie by The Email Marketers.

Every week we bring you the best case studies, strategies, and tips around keeping more customers, turning them into raving fans, and increasing revenue.

Up this week:

  • 🛋 Restoration Hardware’s Bold Membership Move

  • 🤝 Building Customer Loyalty Across Time

  • 📊 Sendlane’s Guide on Evergreen Content, Selzy’s 2024 Benchmarks, and Forbes Report on First-Party Behavioral Data

Reading time: 4.5 minutes

How Restoration Hardware Revolutionized Loyalty

In a retail landscape dominated by discounts and flash sales, Restoration Hardware made a bold move that transformed the luxury furniture retailer's business model.

In 2016, CEO Gary Friedman eliminated their traditional discounting and promotional strategy, replacing it with a premium loyalty program called the RH Grey Card in an effort to redefine its relationship with customers.

The RH Grey Card program was designed to align perfectly with the brand's luxury positioning and their customers' desires. 

For an annual fee of $100 (later increased to $200), members receive a consistent 25% discount on all full-price items, 20% off sale items, and complimentary interior design services.

This bold strategy shift paid off spectacularly. Within a year of launch, 95% of RH's core business was driven by members. By 2024, the program had nearly 400,000 members, becoming the backbone of RH's customer base.

"Our lives are filled with complexity – and we long to break through the clutter to find simplicity. We want to shop for what we want, when we want and receive the greatest value."

Gary Friedman, Restoration Hardware (RH) CEO

The RH Grey Card program succeeds by offering clear, consistent value that resonates with their target market:

  1. Predictable Savings: The flat 25% discount on all purchases eliminates the need for customers to wait for sales or hunt for promo codes.

  2. Simplified Shopping: By eliminating promotional clutter, RH created a more luxurious, friction-free shopping experience.

  3. Brand Alignment: The program reinforces RH's premium positioning, moving away from discount-driven purchasing.

"With 95% of our core RH business driven by members, we can confidently declare our move from a promotional to membership model a success. Membership has enhanced our brand, streamlined our operations, and vastly improved the customer experience."

Gary Friedman, Restoration Hardware (RH) CEO

The results speak for themselves. In the quarter following the program's launch, RH saw a 13% increase in revenue to over $615 million. Same-store sales, which had decreased 3% the previous year, rose by 7%.

  • Align with Your Brand: RH's loyalty program reinforces its luxury positioning. Find your brand's identity and base your loyalty around it.

  • Simplify the Experience: Eliminate complex promotions to create a shopping experience that resonates with your target market.

  • Add Non-Monetary Value: Complimentary design services provide experiential benefits that create emotional connections beyond just discounts.

  • Be Bold in Strategy Shifts: Making big, data-driven changes means you have to be willing to completely change your strategies.

  • Focus on Customer Lifetime Value: Create a program that encourages repeat purchases and brand loyalty, and prioritize long-term customer relationships over short-term sales boosts.

Building Customer Loyalty Across Time

The best brands don't just acquire customers; they cultivate lifelong relationships. Building customer loyalty across time is the hallmark of truly successful brands.

But how do they achieve this? Let's dive into the key strategies that turn one-time buyers into devoted brand advocates.

Value Beyond the Product

Successful brands know customer loyalty comes from more than just a great product. They offer value beyond the transaction through educational blogs, entertaining social media, and storytelling that shares their journey and customer success stories.

A quick way to check that you're on the right path is to audit your current content. Are you providing value beyond your product? Identify gaps and create a content calendar that addresses these areas.

A Clear and Compelling Mission

Brands with a strong, relatable mission create a sense of belonging among their customers. Communicate why your brand exists beyond making a profit. Spend time making sure your actions align with your values and reflect your mission.

Finding tangible ways customers can participate in furthering your mission can further create a sense of community.

Foster Community

Building a community around your brand creates powerful bonds between customers.

Create members-only spaces (like Facebook groups or forums) where customers can connect.

Develop unique terms or phrases that resonate with your community. Create a branded hashtag campaign encouraging customers to share their experiences with your product, then feature the best submissions across your marketing channels.

By implementing these strategies, you're creating an experience customers want long-term. Loyalty isn't built overnight but through consistent, value-driven interactions that make customers feel seen, understood, and appreciated.

Your brand can be more than a product – it can be a badge of honor and a community your customer is proud to be a part of. Start building those lasting connections today.

  • Sendlane's guide on evergreen content explains how to create timeless marketing assets to boost email reputation and engage customers.

  • Forbes reports that the future of personalization hinges on first-party behavioral data, emphasizing its importance in retention marketing strategies.

  • This LinkedIn post reveals specific click data in email campaigns that improve retention marketing.

  • Selzy's 2024 benchmarks show email marketing dominance with 78% usage and improved deliverability.

  • Retailers revamp customer rewards programs to strengthen loyalty with digital experiences and personalization.

We help 8-& 9-figure e-commerce brands increase revenue and build strong customer relationships through retention marketing: Email, SMS, direct mail, subscriptions, memberships, loyalty programs, and more.