These premium loyalty stats may come as a surprise, but this recent trend isn’t a new concept.
People have been paying to be members of Amazon Prime since 2005. And they’ve loved the special benefits that come with membership.
Although Amazon started the trend, 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.
So, is a premium loyalty program right for your customers? And what would they want out of your program?
We surveyed 3000 consumers in our 2020 Premium Loyalty Data Study to find out directly from the source.
These new stats can be a good starting point as you think through that question.
1. Nearly 70% of consumers agree their loyalty is more difficult for a retailer to maintain than ever before
In the Age of the Customer, this shouldn’t come as a huge surprise.
As a retailer, it’s very hard to keep your customers engaged. And since the pandemic began, customer loyalty has been even harder to attain.
Consider that 75% of U.S. consumers have changed their shopping behaviors since March.
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.
That means it’s more important than ever to build relationships with your customers.
The best way to achieve this by differentiating your brand not just on product or pricing levels, but on unique customer experiences as well. This is where premium loyalty shines.
So, will people join premium loyalty programs?
2. Sixty-six percent of consumers currently belong to a premium loyalty program.
As it turns out, consumers have already started to adopt premium loyalty programs in a big way. And we’re not just talking about Prime, which now has over 150 million members.
While not everyone can be Amazon or Walmart, 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 Walmart+ are looking to join another program in the next year if they find value in it. They enjoy instant benefits and VIP experiences.
People are already used to, no, expecting these programs. And they want to join more of them.
3. Sixty-nine percent of current premium loyalty members plan to join additional programs in the future.
As proven by Walmart, premium loyalty isn’t a “this or that” conversation. Forty-five percent of Walmart+ members reported that they also belong to Amazon Prime.
The key is focusing on your customers.
A few years ago, Walmart tried launched a similar program to Prime called ShippingPass. Ultimately, the program never took off and Walmart canceled it.
But Walmart+ is different.
Rather than trying to be a “me too” program, it takes into account Walmart’s unique customer base and doubles down on its strengths.
As a result of its physical footprint, Walmart has a leg up on grocery, pharmacy, and gas. In addition to free shipping, members enjoy mobile Scan & Go. This reduces waiting in checkout lines which helps with social distancing.
There’s a reason why everyone isn’t leaving Netflix for Disney+.
If you know your customers and can find unique ways to add value that other retailers can’t, your program can be the next one that Prime members also sign up for.
4. Seventy percent of consumers would be willing to join a premium loyalty program if their favorite retailers offered them and the benefits were valuable to them.
We all know how much of a challenge it can be to gain the loyalty of today’s consumers, but it all comes back to value.
They have a ton of information coming at them and 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 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.
Of course, the math has to make sense.
For example, the RH Membership program costs $100 annually. Members save 25% on every purchase. So, buying one $400 piece of furniture pays for the program. The math checks out.
But instead of just thinking in terms of purchases, think about what unique, VIP experiences you could offer.
RH offers complimentary interior design services to its members. This wouldn’t make sense for discount furniture retailers to provide, but consumers who are purchasing high-end furniture value this.
Could there be an aspect of your program that rewards with things like concert tickets, excursions, or sporting events?
Can you give your members the choice to use rewards towards charitable causes rather than products or discounts?
5. Sixty-six percent of consumers say free shipping is a perk that motivates them to join premium loyalty programs.
Do you know what the most important benefit is that would make someone want to join your premium loyalty program?
While experiential benefits are widely talked about, it’s important not to lose sight of transactional benefits like discounts, cashback, 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.
6. Sixty percent of consumers say that instant discounts are a perk that motivates them to join premium loyalty programs.
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. The days of making customers wait for rewards after racking up points are coming to an end.
7. Ninety-four percent of premium loyalty members shop with that retailer at least once a month.
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 touchpoints with your customers. For retailers, this is a prime opportunity to create more loyalty moments.
8. Eighty-eight percent of consumers who are satisfied with the special benefits offered by a retailer’s premium loyalty program will likely choose that retailer over a competitor that is offering a lower price.
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.
9. Thirty-one percent of consumers say they have yet to join a premium loyalty program because the retailers they shop with don’t offer them.
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?
If we can help answer any questions you have about loyalty, get in touch with us here.