Neiman Marcus 2014 Annual Report Download - page 8

Table of Contents
InCircle Loyalty Program. Our InCircle loyalty program is designed to cultivate long-term relationships with our customers. Our loyalty program
focuses on our most active customers, and includes marketing features such as private in-store events and the ability to accumulate points for qualifying
purchases. Increased points are periodically offered in connection with promotional and other events. Upon attaining specified point levels, points are
automatically redeemed for gift cards. Approximately 40% of our total revenues in fiscal year 2015 were generated by our InCircle loyalty program members
who achieved reward status. On a per customer basis, these customers spend approximately 10.5 times more annually with us than our other customers.
Proprietary Credit Card Program. We maintain a proprietary credit card program through which credit is extended to customers and have a related
marketing and servicing alliance with affiliates of Capital One Financial Corporation (Capital One). Historically, our customers holding a proprietary credit
card, all of whom are members of our InCircle loyalty program, have tended to shop more frequently and have a higher level of spending than customers
paying with cash or third-party credit cards. In fiscal years 2015 and 2014, approximately 40% of our revenues were transacted through our proprietary credit
cards. We utilize data captured through our proprietary credit card program in connection with promotional events and customer relationship programs to
target specific customers based upon their past spending patterns for certain brands, merchandise categories and store locations.
Pursuant to an agreement with Capital One (the Program Agreement), Capital One offers proprietary credit card accounts to our customers under both
the Neiman Marcus and Bergdorf Goodman brand names. We receive payments from Capital One based on sales transacted on our proprietary credit cards.
We may receive additional payments based on the profitability of the portfolio as determined under the Program Agreement depending on a number of
factors, including credit losses. In addition, we receive payments from Capital One for marketing and servicing activities we provide to Capital One.
In connection with the Program Agreement, we have changed and may continue to change the terms of credit offered to our customers. In addition,
Capital One has discretion over certain policies and arrangements with credit card customers and may change these policies and arrangements in ways that
affect our relationships with these customers. The Program Agreement terminates July 2020 (renewable thereafter for three-year terms), subject to early
termination provisions.
Sales Associates. Our sales associates instill and reinforce a culture of relationship-based service valued by our customers. We compensate our sales
associates primarily on a commission basis and provide them with training in the areas of customer service, selling skills and product knowledge. Our sales
associates participate in active clienteling programs, utilizing both print and digital media, designed to initiate and maintain contact with our customers
between store visits and to provide personalized updates on the latest merchandise offerings and fashion trends. We empower our sales associates to act as
personal shoppers and, in many cases, as the personal style advisor to our customers. In our online operations, customers may interact with knowledgeable
sales associates using online chat capabilities offered on our websites or by dialing a toll-free telephone number.
We have equipped our sales force with smartphones enabled with our proprietary mobile technology, which has enabled our sales associates to
strengthen relationships with our customers in real time through text messages and e-mails. The mobile apps include our business dashboard, which shows
our sales associates a customer’s purchase history across channels, the customer’s alteration details and other service details. The sales associate is also given
product recommendations and reasons to contact customers for events or offers.
Our sales associates are experienced. Sales associates who have been with us for longer than one year have an average tenure of approximately ten
years and had a turnover rate in fiscal year 2015 of 14%. These tenured associates are highly productive, with more than 50% of them each generating over
$750,000 of revenues in fiscal year 2015.
Customer-Friendly Online Platforms. We believe that we offer a high level of service to customers shopping online through easy-to-use
smartphone apps and websites, site speeds and functionality and many customer-friendly features such as personalized recommendations, runway videos of
apparel, detailed product descriptions, sizing information, interviews with designers and multiple angle shots of merchandise. In addition, we place high
importance on quick, accurate product delivery and offer customers a variety of options to take delivery of their purchases and make returns, including free
shipping and returns, same-day delivery, buy online and pick up in store and buy online and pick up in department. We also offer customers an efficient and
friendly call center.
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We carry a broad selection of narrowly distributed, highly differentiated and distinctive luxury merchandise carefully curated by our highly skilled
merchandising groups. We believe our merchandising experience and in‑depth knowledge of our
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