THE CLARUS Blog

Retail Recap Q1 2019: Subscription Trend Heats Up the Loyalty World

In our first edition of Retail Recap for 2019, we saw the launch of the Apple Card, the upward trajectory tied to Major League Baseball’s innovative approach to customer loyalty, Burger King’s entry into the subscription market, and Starbucks’ positive changes to its successful loyalty program.

Here’s what we saw during the first quarter:

 

Apple Launched the Apple Card

The Apple Card is billed as an innovative, new kind of credit card created by Apple and designed to help customers lead a healthier financial life.

Apple Card is built into the Apple Wallet app on iPhone and offers customers a familiar experience with Apple Pay and the ability to manage their cards right on iPhone.

Apple Card simplifies the application process, eliminates fees, encourages customers to pay less interest, and provides a new level of privacy and security.

Our CEO, Tom Caporaso, offered his thoughts about the Apple Card to MarketWatch.

“The Apple Card is a smart move from a loyalty perspective,” Tom said. “Today consumers want to receive instant benefits from their reward programs, and by offering members cash back on a daily basis, the company is meeting this demand and differentiating itself from other credit cards that make members wait multiple days or until the end of the month to redeem benefits.”

Tom added: “By offering 3 percent cash back on Apple purchases made on the card through Apple Pay, the company is making another smart move to incentivize and reward members for leveraging their payment platform and staying loyal to the brand instead of shopping with third-party retailers.”

 

MLB Teams Pitched Subscription Loyalty to Fans

Before the start of the 2019 Major League Baseball season, The San Francisco Chronicle reported that the Oakland Athletics’ A’s Access has drawn a team record 7,000 new customers, and renewals for existing plans were running at 95 percent.

Last August we talked to Chris Giles, Chief Operating Officer for the Oakland A’s, about the team’s decision to eliminate traditional season tickets starting in the 2019 season.

Instead, team officials launched a new membership program called A’s Access. A’s Access includes elements of a premium loyalty program in that it offers attractive benefits for fans that are practical and elevates engagement.

Here are some other takeaways from our 2018 interview with Giles:

The program has already exceeded expectations.

Meanwhile, the New York Mets have joined some other MLB teams that are testing the subscription loyalty waters.

The Mets launched a new Netflix-style subscription program that allows Mets fans gain standing-room-only access to nearly every regular season home game.

For $39 a month, anyone with an iPhone or Android can sign up for the app-based program and download mobile tickets to 78 games this season. Then, they can scan their mobile tickets at the gate.

The program is named Amazin’ Mets Pass.

 

Get Your Free Coffee at Burger King

Given a decline in visitors to quick-service restaurants, Burger King recently announced an interesting move: A subscription program built around coffee.

Coffee chains like Starbucks and Dunkin’ Donuts offer rewards programs that involve points, but the BK Café program is completely different.

For $5 per month, members are entitled to one free small coffee per day. The only condition is that they must sign up and pay through the BK mobile app.

The more excitement BK builds around the program, the more they can get people in the door. And that means increased engagement!

 

Starbucks Enhanced Its Loyalty Program

Speaking of coffee, Starbucks made some positive changes to its loyalty program last month that take effect on April 16.

Starbucks restructured its loyalty program that now includes tiers. The updated program will let customers use points to buy packaged coffee and select merchandise for the first time.

Starbucks credit and debit card holders can accrue points forever with no expiration date.

The restructured program will eliminate the elite “Gold” status that customers achieved after spending $150 or earning 300 points.

According to the program changes, there will be one level and customer can start redeeming Stars (program currency) immediately after they are earned.

As of December 2018, Starbucks has 16 million active members of its loyalty program. That figure accounts for about 40 percent of the company’s U.S. transactions.

The best thing a brand can do is to truly listen to its customers, address their pain points, and provide relevant and attractive benefits.

It’s about constantly adapting and a willingness to change the program over time to meet the changing needs of customers.

We believe that Starbucks accomplishes this quite nicely with these changes to its loyalty program.

 

Loyalty Programs Can Create Emotional Connections With Customers

Retailers always look to build emotional connections with their customers.

Reaching this goal places retailers in a lofty position as they connect with customers on meaningful and sustainable levels.

In this article, Tom talks to StreetFight about the importance of loyalty programs and how they can create emotional connections that elevate customers’ lifetime value.

Tom says brands like Wayfair, Lululemon, and CVS have implemented premium loyalty tiers into their marketing strategies. Since these programs target a brand’s best customers, they make these shoppers exponentially more valuable—becoming so engaged that they become true advocates, and the brand becomes a part of the fabric of their daily lives.

“Brands have recognized that building customer loyalty is no longer just about points and discounts, but also strengthening relationships with consumers long-term,” Tom explains.

 

Subscription Loyalty is Trending Upward

It is apparent that subscription loyalty has taken off, just as Robbie Kellman Baxter told Clarus last September.

As various brands and professional sports teams enter the subscription loyalty world, other retailers are taking notice as they rethink their respective strategies.

This subscription trend seems to be a burgeoning area for loyalty marketers to consider as a key point of differentiation.

What do you think?

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