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Retailers Are Rethinking Loyalty Programs


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As consumer expectations and technology change at an alarming rate, so too must the elements of a successful, engaging customer loyalty program.

Traditional and one-size-fits-all loyalty programs often struggle to differentiate themselves enough where they can truly impact customer behavior and brand advocacy.

To achieve this goal of true differentiation, many brands have implemented premium loyalty programs.

A premium loyalty program can substantially increase engagement and loyalty levels for brands. Members are willing to pay a recurring fee for benefits they can use right away at any time and provides that immediacy element for members.

Unlike a traditional loyalty model, a premium loyalty program leverages that immediacy that brings emotional customer engagement and the all-important share of mind.

Traits of Premium Loyalty Programs

The most common trait among brands that offer premium loyalty programs is their willingness to truly listen to their customers, understand their pain points and desires, and address them.

Armed with these customer insights, brands can then offer the benefits/perks that customers really want. These programs are so valuable that members are willing to pay for membership.

For brands, customer focus never wanes inside a premium loyalty program. This attracts and retains a brand’s best customers and elevates their loyalty levels.

Brands That Have Joined the Rising Tide of Premium Loyalty Programs

Launched in 2005, Amazon Prime members are attracted to the program for its convenience (free two-day shipping), simplicity, and slew of benefits.

In March 2014, Amazon Prime had about 28 million members. That figure now exceeds 100 million global members.

Given its customer-centric focus, an abundance of engaging benefits, and its foray into the grocery industry via Whole Foods, Amazon (AMZN) continues to dazzle the retail world through its Prime program, showing everyone what loyalty success looks like.

Some of these benefits include unlimited video streaming, limited music streaming, unlimited photo storage, one free e-book per month, free audio books, and free games.

This customer-centric model has inspired many other retailers to rethink their respective approaches toward customer loyalty.

Boxed launched its Boxed Up program in April. For an annual $49 fee, customers receive 2 percent cash rewards, better discounts, special promotions, gifts, a free trial for 30 days, and free priority shipping for all orders more than $20.

Lids launched its Access Pass Premium loyalty program in March 2017 to recognize and reward its most loyal customers. For $5 per year, Access Pass Premium members receive various benefits, including 20% off headwear and embroidery.

In July 2016, AMC Theatres announced a relaunch of AMC Stubs to increase the appeal of its paid, premier tier and to add a free tier.

For a $15 annual membership fee, Premiere members enjoy services such as specially marked shorter lines at the box office and concession stand, free size upgrades on popcorn and soda, a free refill on large popcorn, up to $5 off movie tickets on Tuesdays, a birthday gift (free large popcorn and soda), no online ticket fees, and 100 reward points for every $1 spent.

GNC launched myGNC Pro Access in March 2016. For an annual $39.99 fee, myGNC Pro Access members receive additional perks such as free shipping, customized PRO boxes (with new products, samples and coupons based on the member’s lifestyle and goals), quarterly sale days, and much more. 

Overstock launched its Club O loyalty program in 2004. For $19.95 per year, customers enrolled in the program receive free shipping on every order, at least 5% in reward dollars for all purchases, and access to extra rewards on select products in the Extra Rewards Store. Members also receive 5% rewards from all participating restaurants, free returns on select products, discounted stock trading at $1.99 through Overstock’s FinanceHub™, and they can use their rewards for their membership fee as well as stack them with other promotional offers on Overstock.com.

The Impact of Premium Loyalty

Brands are investing in premium loyalty programs because company executives see clear and compelling results.

Premium loyalty programs positively impact customer loyalty and retention by providing immediate value to customers. They allow brands to meet and exceed customer expectations, gain keen behavioral insights, and create sustainable two-way relationships.

Retailers that think differently, challenging the traditional loyalty model by implementing a premium loyalty program, are earning increased levels of brand advocacy from their best customers.

At the end of the day, the brands above have created premium loyalty programs so valuable that their members are willing to pay for them.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Economy , Entrepreneurship , Marketing , Social Media


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