Target’s Cartweel App “Perks” Up a Bit

How Cartwheel Works

Cartwheel is Target’s 3-year-old mobile app that offers shoppers hundreds of savings on products and categories of their choosing. Participating Cartwheel shoppers—of whom there are 27 million—can select from a list of offers they’d like to add to their shopper profile. When they scan their Cartwheel barcode from a mobile device at store checkout, discounts apply to eligible items in their basket. Over time, customers earn “badges” that open up special offers and deeper discounts based on their shopping behavior. The app tracks a customer’s savings and aggregates users’ total savings—which add up to more than $600 million as of September 2016—over time.

“We think of Cartwheel as a way of taking what, for many people, had been a process of clipping the paper coupon from a circular and bringing it to the store, and integrating that experience into one digital, seamless app on your phone,” said Eddie Baeb, a spokesperson for Target.

In turn, Target is able to collect deep data on their customers’ purchases and behaviors to help them truly understand preferences and shopping habits. And not only is this data valuable to Target, it’s sought out by CPG companies and other vendors who sell their products through the retailer.

“What we have packaged is access to our guests,” said Kristi Argyilan, Target’s senior VP of media and guest engagement. “We use first-party data for a very active shopper who has a ring of influence—there are a lot of marketers that would love the opportunity to be able to place ads in front of those consumers,” she said.

“Perks” Pilots in 4 Markets

Last week the company unveiled a new loyalty rewards program as part of an update to its Cartwheel app. “Perks” is piloting in four markets – San Diego, Denver, Houston and St. Louis – chosen for either high or low adoption of app usage. “Perks” rewards Cartwheel shoppers with 10 points for every $1 they spend in stores. Once customers reach 5,000 points, they are eligible to choose a free rewards item from a list of 25 products designed to appeal to them based on shopping behavior. In other words, once a shopper spends $500, they earn a $10-20 “freebie,” be it a pair of shades, a yoga mat or laundry detergent.

Sounds like a retailer-customer win-win, right? Perhaps not so much for guests who favor shopping online given that Cartwheel savings are redeemable for purchases made in-store only. And while Target has hinted that Cartwheel—and inevitably “Perks” assuming a successful pilot test—may soon be made available for online purchases, the retailer must move faster should it wish to stay competitive in the dog fight that is today’s online marketplace.

We’ll give the Minneapolis-based retailer credit for continuing to collect and leverage data to effectively target customers with a curated promotional and rewards offering. But if Target wants to protect share from behemoth Amazon and differentiate from dangerous fellow mass retailers, it should get serious about offering a channel agnostic loyalty program that satisfies coupon-driven and rewards-motivated shoppers. And fast.