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Have you heard about Taylor Swift, a singer with a global impact?

Last year, NYU announced a class based on her. In March and November 2023, Stanford and Harvard respectively announced they would do the same. Swift holds the record for most songs to ever chart on the US Billboard Hot 100 (188 songs), and in fall 2022 she became the first artist to own the entire Top 10 simultaneously. Finally, Taylor Swift’s 2023 “Eras Tour” is the first tour to gross $1 billion, surpassing Elton John (the previous record holder with $939 million for his “Farewell Yellow Brick Road” tour).

In one way or another, Taylor Swift has amazed the world with her music, persona and business skills for over a decade. Sparked by this buzz, the IADS took a look at this phenomenon to figure out how exactly this popstar branded herself and her music and how she became a master in influence. Her highly engaged community of fans is interesting to look into to understand how emotion is a key factor in enhancing loyalty.

Co-creation, the value of the middleman

Is control everything? 

One of the most notable copyright cases in the music industry happened when Taylor Swift tried to purchase her ‘masters’ (the original recordings of her songs) in an attempt to control her music. The story is that after leaving her former record label where she recorded her first six albums, Swift found out that her manager had acquired her ‘masters’, preventing her from using her own music. This is when she decided to re-record her albums. Dubbed “Taylor’s versions”, they instantly acquired a higher value than the original recordings. Compared to the original ones, the new versions resulted in +43% in streaming and +4512% in album sales.

In a way, Taylor Swift's copyright case could be compared to a brand reclaiming control ownership and trying to increase its margin by going direct-to-consumer hence skipping the multi-brand retailer. This has been a fantasy that DNVBs like Glossier thought they could fulfil before realising that 1) they needed physical outlets to show their products and increase their customer reach, and 2) multi-brand retailers were well equipped to offer them this physical outlet. In the case of Glossier, they opened (and closed) a few free-standing stores and ended up signing a deal with Sephora in the US and Canada. For smaller DNVBs, engaging with a multi-brand retailer is also a way to test the waters before going brick-and-mortar. So just any brand can pretend to be the Taylor Swift of its category.

Convenience and relevance 

In their defence, it is worth reminding that, as a middleman, department stores also have a large and diverse range of merchandise and are located in city centres most of the time. As a result, to be efficient with their time and resources, it could be a more rational decision for the customer to shop at their facilities rather than at a single retailer. Convenience is an important factor in the customer journey that can greatly influence the purchasing option. On top of customer ease, department stores offer other significant advantages. As they attract different types of customers, they often have a superior market knowledge compared to a single brand. Adding a middleman into the sales process is also in the interest of the brand, as they can gain insights into customer behaviour and the performance of competing businesses. This is increasingly the case thanks to the retail media growing business (see our latest white paper on the topic). Also, when it comes to fashion or lifestyle brands, they can gain more flare and coolness by being displayed and mixed with other labels. And above all, department stores assume most of the market risk.

The case of the collaboration between Beyonce and Flannels 

Retailers are evolving from being a pure marketplace to experience hubs or even cultural centres as mentioned in a previous IADS Exclusive. In that regard, department stores are and have always been cultural stakeholders and their cultural footprint is ever-present. Luxury brands are also embracing the cultural aspect of physical retail with the emerging trend of mega flagships such as the Dior one in Paris.

In the world of department stores, Flannels is currently rethinking the role of its London flagship store. They opened a new space dubbed Flannels X. Rather than a space designed to sell products, it is meant to become an ever-evolving cultural playground of pop-ups, gigs and exhibitions for cultural creators to exchange and broadcast ideas. On the occasion of Beyoncé’s tour coming to London in May 2023, Flannels X had a pop-up store showing the Beyoncé x Balmain couture collection for the first time, and also selling merchandise from Beyonce’s Renaissance World Tour. While positioning the store at the intersection of luxury and pop culture to offer more experiences, this initiative helps Flannels create a community of younger engaged customers able to develop influence. It also demonstrates the relevance of department stores when it comes to collaborating with artists or brands: in the case of Beyoncé, Flannels offers her a convenient outlet she wouldn’t have otherwise. And in the case of brands, department stores remain customer magnets.

Developing influence: the power of a community

Building a community  

Beyonce has the BeyHive and Taylor Swift has her Swifties. They analyse her social media posts, lyrics, and visuals and try to predict the artist’s next move. This type of superfans is crucial to the success of the artist: they are the people who buy everything from vinyl records to merchandising, collect memorabilia, spend hours streaming the newly dropped music on every platform possible, and get the most expensive ticket package at every tour. But there’s more.

In 2007, researchers Duncan Watts and Peter Dobbs interrogated influence as a phenomenon. Their work revealed that influence is not driven by individuals but by a critical mass of easily influenced individuals. In fact, their research suggests that the Beyoncés and Taylor Swifts of the world are only modestly more influential than average individuals. This may sound counter-intuitive, but the spread of ideas and behaviours depends less on the person who starts them, and more on how susceptible the group is to what is being spread. It would be irrelevant to deny Taylor Swift’s influence though, but her true influence is on the Swifties, who in turn influence their friends, their other connections and beyond. In other words, Swift influence power should be attributed to her ability to foster a community. Rather than trying to reach out to everyone, it’s more effective to speak to superfans.

Rewarding the superfans 

First, Taylor Swift rewards her super fans by reposting or commenting on their posts. But the superfans are granted more. They can receive an invitation to secret sessions which are small and intimate gatherings in Swift’s home, in which she hosts previews of her new albums. While it seems Taylor Swift has its own tier-based loyalty programme, it might be difficult for retailers to offer a similar kind of reward as it goes through a true form of intimacy. However, DNVBs such as Glossier succeeded in establishing direct lines of communication with their customers through their websites, social media, etc, which foster a strong sense of community and trust. Superfan customers feel heard and valued as if they were truly part of the brand's adventure and narrative. But they (the VICs and VVICs) need to be rewarded in an emotional way that could compare to what Swift is doing with her secret sessions. Retailers have taken notes.

Loyalty programmes: rewarding through emotion

The case of Sephora 

A recent example of rewarding VICs comes from Sephora. When reopening their Paris Champs-Elysées store in October 2023, they gave privileged access to some of their best customers, even before the stars flooded the opening party. Over the past decade, Sephora has become a champion in leveraging the emotional drivers of loyalty. Research has found that almost 75% of what drives customer engagement and loyalty are emotional perks. Sephora believes emotional rewards are the new currency of loyalty. Sure, the right balance of transactional and emotional is needed, but Sephora’s Beauty Insider programme leans toward the emotional side, especially since 2017 when they launched the Beauty Insider Community for their superfans. It was designed to be an opportunity for beauty addicts (spending more than $1000 per year) to come together, ask questions, comment on products and post beauty looks. It is also a great way to get product recommendations, not just from Sephora but from the community itself. It’s a real-time, real-talk forum that has become a great resource for the customers and for the retailer to collect precious data.

Other examples from the industry 

When inviting a handful of their best customers to their runway shows, luxury brands master the emotional part of loyalty. With competition being increasingly fierce, some of them upped the ante by inviting their superfans (their VVICs) to their showrooms. It is a way to offer access to a form of ‘behind the scenes’, but mostly they can choose the items they want months ahead of their official in-store release. Other luxury brands understand the power lying in rewards based on human interaction. For example, Brunello Cuccinelli himself meets and spends time with the top brand VICs.

During the IADS Operations Meeting dedicated to Chief Customer Officers, members talked about customers' rising expectations for non-tangible benefits. In that regard, The Mall increases the benefits related to status such as lounge access, free parking, pre-sales and special seats for events. To create an emotional bond, El Palacio de Hierro offers a bottle of wine or a meal at one of their restaurants for their best customers' birthdays. On its side, Boyner considers offering airport fast-track for their top-tier customers. They also found out that people ask for digital subscriptions like Spotify premium: the cost is low and appreciation is high.

Other examples are interesting to consider in the reward economy. Chewy (the US pet brand) sends its best pet owner customers free, personalised portraits of their cats and dogs. Moreover, when a customer loses their pet, Chewy sends a letter of condolence. This human touch is priceless for the ones receiving the letter and a guarantee those customers will be returning to Chewy as soon as they get a new pet. Moreover, by rewarding their best customers, brands and retailers generate meaningful word of mouth and earn media value. The fans who attend one of Swift’s secret sessions will tell everyone they know about it for years. The customer who gets an unexpected pet portrait from Chewy will share it on social media and offer Chewy free marketing.

Conclusion

The remarkable success of Taylor Swift offers insights for the retail industry, highlighting the power of community and emotional engagement in fostering customer loyalty. Swift's ability to build a dedicated community of fans, the Swifties, is a lesson in developing brand loyalty. Retailers can learn from this by developing their own communities and rewarding their most loyal customers, as exemplified by Sephora's Beauty Insider programme, which balances transactional and emotional rewards to foster a strong customer connection. In addition, the emotional aspect of customer rewards, a key component of Swift's success, is crucial. Retailers can create a lasting impact by offering unique experiences and personalised gestures that resonate emotionally with customers, much like Swift's secret sessions or Chewy's personalised pet portraits. Besides, in the digitalised world we are living in, boundaries between categories tend to fade away. It is an opportunity to learn from other industries as they share the same customer base as retailers. They might have different practices which can be inspiring for department stores.

Credits: IADS (Christine Montard)