Despite a disappointing fiscal performance in the second quarter, AMC Theatres CEO Adam Aron is confident the company will hit its successful stride once again due, in large part, to strategic changes made in the AMC Stubs loyalty program.
AMC recently restructured its loyalty program, making AMC Stubs into a $15 per year paid tier and free one. Ron believes the move can boost revenue by 5%.
Starting this fall, the paying Premiere customers will enjoy shorter ticket lines and venues with reserved seats will save the best rows for them. Paying members also will accumulate points they can apply toward ticket discounts at a faster rate than members of the free service.
What’s more, Aron believes the changes to the loyalty program could double the activity base of AMC Stubs within three years to about 40% — which is closer to airlines and hotels where more than half of customers belong to loyalty programs.
That’s not all. AMC Theatres plans to revamp its app and website, which Aron thinks can be a major differentiating factor for the company. The chain is testing a mobile service that will enable moviegoers at some venues to order food and beverages to be delivered to their seats at a time they specify.
AMC just hired its first VP of Pricing, who will oversee decisions across all of its businesses, including tickets and concessions.
The company ended 2015 with the plush seating at 1,400 screens in 102 theaters. Aron projects those figures to grow to 3,500 screens at 230 theaters by the end of 2018.
As for the second quarter, Aron blamed a dismal offering for movie fans. Total second-quarter industrywide attendance per screen fell 12% year-over-year, and industrywide box office revenue per screen was down 10.7%.
Evan Magliocca, Brand Marketing Manager, Baesman, told Loyalty360 that the changes to the AMC Stubs loyalty program are excellent.
“The paid and free options are a smart strategy with a low barrier to entry,” Magliocca explained. “The free program is a steppingstone for customers that haven’t overcome the threshold to upgrade yet. If those customers have a positive experience, they’re more likely to upgrade next year, increasing AMC’s Premiere market share. Consumers that were members prior to the new program’s rollout should also add to revenue gains for AMC since they are grandfathering in their most-engaged customers to the Premiere program.”
AMC designed a well-thought out program, Magliocca noted.
“Having two tiers—paid and free—allows customers to stay engaged,” he added. “If a member doesn’t renew, they’re automatically enrolled in the free version. That strategy will ensure a higher retention rate by avoiding lapsed customers. It also provides a chance to upsell on the paid version if you can keep non-renewed customers engaged with the brand over time.”
Re-launching the app might provide the most benefits with how much it changes the customer experience of going to the movies, Magliocca said.
“Ordering food at the touch of a button directly to your seat and having a “VIP” ticket line might make customers feel like they’re on the red carpet,” he explained. “AMC’s done well to provide another perk to the program that isn’t just points. Overall, the program changes improve the customer experience immensely. The tiered program versions and a VIP experience are good rewards to put the customer in charge, but some of the rewards are a bit streamlined—the birthday offer is constrained to a popcorn or soda—not much flexibility for such an important offer. Overall, the experience is a step forward. How AMC communicates these changes and listens to customer feedback will be paramount with Regal’s program to contend with in the marketplace.”
Brad Marg, COO at Clutch, told Loyalty360 that AMC has made some positive changes to its loyalty program.
“I like paid programs when it’s clear that the consumer will get value from the cost of the membership,” Marg said. “It sounds like, in this case, consumers will be get benefits, especially if they are frequency AMC patrons. I like moving the non-renewal folks to the free program, but ensuring that there is a clear difference in the service level. Also, AMC should consider noting those that didn’t renew, but who go to the theater and see what offer or changes will get them to join again. Great place to capture data. Revamping the website and app will do a lot. It shows the loyal fans that AMC hears them and values their opinions. They will also be the ones that get the most from the changes.”
Ron Rubbico, CEO of Pointillist, told Loyalty360 that although AMC is late to the game with its free version of the loyalty program (see Regal Cinemas), the free service is beneficial to both AMC and its customers.
“It will provide AMC an opportunity to engage its customers, track various activities (e.g. ticket vs. food purchase), and measure effectiveness of the program,” Rubbico explained. “On the other hand, the free Stubs members would also benefit from earning points future discounts/rewards without having to justify the cost of the program.”
By removing the customer’s barrier to entry, AMC will automatically increase retention in its member base, Rubbico noted.
“In addition, AMC will be able to better understand its customers’ behaviors to proactively reduce churn,” he added. “Clearly, the changes to the AMC Stubs program are designed to deliver a better customer experience, and we believe it has the potential to be very successful and attract members back to the AMC movie theaters. With the various viewing options available to consumers, such as on-demand or other movie theaters, it’s crucial for AMC to differentiate itself via customer experience to stay alive. The update to the AMC Stubs loyalty program is a great step by AMC to deliver a valuable and enjoyable experience to its customers. The long-term success of AMC hinges on its ability to measure the impact of its loyalty programs and tease apart what’s working and what’s not. It will be important for the company to understand its customers’ journeys and identify how problems in one area can negatively impact the customer satisfaction in another, leading to distortions in its overall loyalty metrics.”