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Premium loyalty isn’t a new concept.
People have been paying to be members of Amazon Prime since 2005.
But as consumers gain more access to more information and more choices on where to spend their dollars, premium loyalty programs have been on the rise.
More major retailers are launching their own programs with great success.
With brands like RH, Lululemon, Overstock, and CVS Health offering premium loyalty programs to their customers, many more retailers are taking notice.
They’re doing their due diligence to gauge whether offering a premium loyalty tier is right for their customers.
So, is a premium loyalty program right for your customers? And what would they want out of your program?
These new stats can be a good starting point as you think through that question.
In the Age of the Customer, this shouldn’t come as a huge surprise. It’s very hard for retailers to keep their customers engaged.
Customers have more choices than ever before, and they are bombarded with an endless amount of information.
It’s easy to find the cheapest price, fastest shipping, and most convenience for just about any product.
And with seemingly endless DTC brands popping up all over, it doesn’t take much for consumers to be swayed by the competition.
That means it’s more important than ever for retailers to build relationships with their customers.
Retailers achieve this by differentiating themselves not just on product or pricing levels, but on unique customer experiences as well.
If it wasn’t enough of a challenge that loyalty is harder than ever, it seems that the overall opinion of consumers is that retailers should be doing more for them.
It’s not that people are inherently less loyal. It’s just that they need more reasons to be loyal to a specific brand.
It takes more than points, coupons, and discounts alone.
Most traditional loyalty programs get people to sign up and that’s where the relationship ends.
Other than sending emails from time to time, many traditional loyalty programs don’t do much to enhance the experience. They do little to differentiate.
With limitless buying options at their fingertips, your customers need a reason to stick with you.
In a premium loyalty program, members can use their benefits every time they engage.
We live in a subscription society, and people expect value from the things they are paying for. Just look at Netflix, Spotify, and Prime.
For the same reason, people are willing to pay for membership in a premium loyalty program, assuming the benefits are valuable.
It’s not just the benefits that are important, but also the frequency of them.
Delays in the delivery of loyalty program benefits can demotivate customers from engaging with retailers on a regular basis.
At a time when consumers can make a reservation or catch a ride within a matter of seconds, patience is difficult to come by.
Immediate and frequent benefits are expected.
Customers don’t simply want frequent benefits. They use them.
Since these programs can offer exponentially better benefits, consumers engage more regularly.
With a premium loyalty program, there is no need to accumulate points for discounts later.
The benefits are available 24/7, so members tend to engage more often and spend more when they do.
In the instant society we live in, people don’t mind paying for value that they can use all the time.
This means more store visits, more website transactions, and more touch points with your customers. For retailers, this is a prime opportunity to create more loyalty moments.
So now that you know the frequency of benefits that your members expect, what about the types of benefits?
While experiential benefits are widely talked about, it’s important not to lose sight of transactional benefits like discounts, cash back and free shipping.
These types of benefits make people feel smart. Let’s face it. Who doesn’t like feeling like they’re getting a great deal every time they shop?
Of course, exclusive deals, in-store experiences, and events are benefits that members enjoy.
Think of it this way.
Transactional benefits, like instant discounts, are the perks that get people in the door. They are what people interact with most.
But the experiential benefits make people feel special and allow for deeper differentiation.
The goal isn’t just enrolling people in your premium loyalty program. It’s about making them active members.
That’s why it’s important to have a balance.
If you do get the benefits right and the value is there for your members, a premium loyalty program becomes a very powerful thing.
In a world where choices are unlimited and competition is tougher than ever, it’s still possible to protect your customers.
For retailers that are getting it right and earning their customers’ loyalty through these programs, the benefits are huge.
Even though earning customer loyalty is challenging, your premium loyalty members would rather stick with you even if they can find an item or service for less money elsewhere.
And for retailers that do offer premium loyalty programs, this means they have a significant leg up on their competitors.
So, will people join?
As it turns out, consumers have already started to adopt premium loyalty programs in a big way. And we’re not just talking Prime, which now has over 100 million members.
While not everyone can be Amazon, there is still a big opportunity to protect your customers by offering a premium loyalty program.
Most people that already belong to a program like Prime or Club O are looking to join another program in the next year if they find value in it.
People are already used to, no, expecting these programs. They want to join more of them.
We all know how much of a challenge it can be to gain the loyalty of millennials.
They have a ton of information coming at them and are the first generation to grow up with technology. They know how to quickly find the best deal on whatever they’re looking for.
But they care deeply about intangible things like experiences and what your company stands for.
They are extremely loyal to things they care about and that align with their beliefs. It’s important for them to feel a sense of belonging.
That’s why you can make that part of the experience.
Instead of just thinking in terms of purchases, think about what unique, VIP experiences you could offer.
Could there be an aspect of your program that rewards with things like concert tickets, excursions or sporting events?
Could they be given a choice to use rewards towards charitable causes rather than products or discounts?
This is the most important stat of all because it shows the opportunity that’s awaiting your brand.
It’s true that loyalty is harder than ever, and customers expect more.
That’s why more retailers are offering premium loyalty programs with benefits that are valuable to their customers and can be used all the time. Benefits that increase engagement with customers.
And people are very willing to pay for loyalty programs that are valuable to them.
They are waiting for you to offer a premium loyalty program, so what are you waiting for?
All stats referenced are from the 2019 Premium Loyalty Study: Will Your Customers Pay for a Loyalty Program? To download the study for free and learn more, click here.
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