THE CLARUS Blog

Eighty-One Percent of Traditional Loyalty Program Members Would Pay for Premium Loyalty – Here’s Why

Traditional loyalty programs have been around forever, and most retailers operate one. They’re great at acquiring members and collecting valuable data on them. 

The challenge, however, is differentiation. According to our 2021 Premium Loyalty Data Study, 68% of respondents say their loyalty is more difficult to maintain than ever before. To build loyalty today, you need to offer a highly unique and valuable experience.  

Consumers want that feeling of exclusivity that is harder to achieve in points programs. Retailers must be customer-centric and understand pain points to offer true value in a loyalty program. 

 

Traditional Loyalty Programs Alone Aren’t Enough to Differentiate Your Brand  

While traditional programs serve a definite and useful purpose, consumers also want the option for better value. 

According to our the study above, nearly 80% of consumers say they don’t want to accumulate points anymore, and retailers’ loyalty programs should provide immediate benefits to maintain their loyalty.  

That’s why many members of traditional loyalty programs are attracted to premium loyalty programs. They come filled with the instant benefits that your customer desire. 

Our study shows that the top three benefits that motivate consumers to join a premium loyalty program are: Free shipping, instant discounts, and faster shipping. 

Traditional loyalty programs can serve as a springboard for consumers to join premium loyalty programs. Consider that 81% of consumers who belong to traditional loyalty programs would join that retailer’s premium loyalty program if the benefits were valuable. 

That figure rose from 67% in 2020.  

Transactional benefits are important to initially attract consumers, but experiential benefits are the ones that provide differentiation for your brand.  

That punch card mentality and points accumulation over time are trademarks of traditional loyalty programs. But in the Age of the Customer, which was magnified since the pandemic started, consumers want what they want, when they want it. 

 

How the Pandemic Has Impacted Customer Loyalty  

More than a year removed from the start of the pandemic, it’s clear COVID-19 changed everything for retail and pushed consumers online.  

It also impacted consumer behavior and some of those newly formed habits might be here to stay.  

Seventy-five percent of consumers have tried a new shopping habit since COVID-19 started.  

If there wasn’t before, now there is a magnified emphasis on convenience and value. Consumers want everything now and that includes loyalty program benefits.  

While it was easy for consumers to choose new retailers during the pandemic, premium loyalty members behaved the oppositeNearly three-quarters of consumers shopped more with retailers whose premium loyalty programs they were part of during the pandemic, and 41% shopped significantly more with those retailers. 

The value of premium loyalty members was apparent during the pandemic.  

As in 2020, 94% of premium loyalty members in 2021 shop with their favorite retailers at least once a month. But the percentage of members who shopped even more often — once a week or more — rose from 58% in 2020 to 67% in 2021.   

Premium loyalty members’ sustainable loyalty to their favorite brands amid disruptions like a recession and pandemic are key points retailers should remember. 

 

Consumers Want to Join Loyalty Programs That Offer Real Value  

Traditional loyalty members are increasingly willing to shift to premium loyalty for better benefits.  

As much as consumers are drawn to discounts and material benefits, receiving special treatment from a brand experience solidifies the customer-brand relationship and instills that feeling of exclusivity.  

Consumers receive that kind of treatment and those kinds of benefits in a premium loyalty program.  

REI is an example of a retailer that built its premium loyalty program around experiential benefits. The American retail and outdoor recreation services retailer charges a minimal $20 lifetime membership fee, which earns customers various transactional benefits.  

But what sets REI apart is its experiences. These  once-in-a-lifetime adventures transform customers into lifelong brand advocates.  

The old saying, “If you build it, they will come,” applies to loyalty programs too. Build something that offers unique and apparent value and your customers will join and be engaged. 

 

A Premium Loyalty Program Will Make Your Best Customers Significantly Better  

Traditional loyalty programs serve a purpose. They get customers in the door of your loyalty program and introduce them your loyalty ecosystem.  

But for your best customers, an even better experience goes a long way to build loyalty. 

The pandemic has shown that, despite consumer behavioral changes, members of premium loyalty programs were fiercely devoted to their respective brands. 

Offer a premium loyalty program and members of traditional programs will hop onboard because of the enticing, instant benefits. 

They’ll shop more, spend more when they do, engage more, and talk about you more.  

And according to our 2021 Loyalty Industry Data Study, 51% of retailers with premium loyalty programs say members are 4x as valuable as non-members. 

What’s not to like about that? 

For more interesting premium loyalty statistics, download the 2021 Premium Loyalty Data Study. 

 

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