There was an interesting article in the Wall Street Journal recently about how Nordstrom Inc. is enhancing its loyalty program by lowering the price of its rewards. As the article explains, "The store's frequent customers will be able to get perks like custom shopping parties and tickets to in-store fashion shows after shelling out just half as much as they used to spend to qualify for rewards."

The retailer has always had one of the most loyal and engaged member bases in the industry. The structure of their loyalty program and how they use the data collected through the program to make informed product, marketing and customer experience decisions are key to its success.

Nordstrom's loyalty program has been one of the primary reasons customers are loyal to the brand (sales in 2011 increased 13 percent over a similar period in 2010). Loyalty marketing is and should always be much bigger than points, thresholds or incentives. It is about changing and influencing behavior in a proactive manner that creates long-term brand advocates who, in turn, enter into a dialogue with the brand. This dialogue is filled with rich behavioral insight and the interaction gives Nordstrom the opportunity to listen to and respond in a manner and channel that these brand participants want and that keeps them engaged.

So, lessening the point and spend requirements for the upper tiers of the four-tier loyalty program (to 5,000 and 10,000 respectively) gives Nordstrom the opportunity to expand the base and, more importantly, consolidate the spend of their customers…