If you’re a retail marketer, you have probably wondered, “What is a premium loyalty program?”
By definition, a premium loyalty program is a paid loyalty program. In other words, customers sign up and pay a fee upfront in exchange for valuable rewards that they can use right away.
It’s the opposite of a traditional, transaction-based loyalty program where the customer makes purchases over time to get rewards later.
But premium loyalty is about more than that simple definition. And it’s about more than just a paid program.
At its core, premium loyalty is about putting the customer at the center of everything you do.
That’s why successful retailers are thinking about premium loyalty programs as a part of their overall marketing strategies.
A Premium Loyalty Program Satisfies Customers’ Biggest Demand
Technology has made us very impatient.
Food is faster, people can catch a ride within a few minutes from their phones, and Prime is delivering quicker than ever. People communicate instantly via Snapchat. We live in a world where consumers want things now.
That’s why your customers expect instant gratification.
But traditional loyalty programs are slow. Members have to rack up points over time. Consumers don’t want to stick around with a retailer to wait for a discount. They’re constantly shopping the competition searching for the best deals.
However, when a customer signs up for a premium loyalty program, they don’t need to shop around. Premium loyalty programs are fast. That’s because the benefits are available to use immediately. There’s no need to make purchases over time to rack up points for discounts later.
The future belongs to those retailers that can provide instant gratification to their customers and do it all the time.
A Premium Loyalty Program Provides the Best Benefits 24/7
Immediate benefits are only the first piece. With premium loyalty, those immediate benefits are available all the time.
Once someone signs up for the program, they can use those benefits anytime.
That means that wherever and whenever someone is shopping your store, they know they’re getting the best possible value. There’s no need to wait for an email promotion or a 30% off coupon in the mail.
Traditional promotions have simply trained consumers to wait for discounts and they’re going to go wherever the discount is. That’s not loyalty. That’s why traditional loyalty programs are known as margin killers.
When you give your customers benefits that they can use anytime, they’ll engage with your brand more often. The key is making sure the program and benefits really connect with your customers.
A Premium Loyalty Program Puts the Customer at the Center
It’s a two-way street.
If you expect customers to invest in your premium loyalty program, you have to invest in them. Customers will pay for a program, but it has to offer benefits that they find extremely valuable.
Restoration Hardware has done a fantastic job with this.
The RH Grey Card not only gives its members rational benefits like 25% off (one $400 purchase and the program pays for itself), but they also provide experiential benefits in the form of interior design services.
It all comes down to asking, “What would make life truly better for my customers?”
To build a truly successful premium loyalty program, you must really know your customer, know what you can realistically offer, and be aware of what your competition is doing so you can differentiate.
A Premium Loyalty Program is for Your Best Customers
Premium loyalty isn’t for everyone.
Naturally, a fee adds a barrier to entry for the casual consumer. Free programs are, well, free after all. That means they are great at getting signups, but not great at differentiation. One size fits all.
A premium loyalty program targets the top tier of your customers. These are the people that already have a degree of affinity for your company. That’s part of the reason they’re willing to sign up in the first place.
Yes, it’s difficult to get a casual customer to sign up, but that’s okay. The goal with premium loyalty is to get your best customers engaging more and spending more when they do by offering them benefits that a free program can’t touch.
Free traditional programs and paid premium loyalty programs can even coexist very seamlessly for maximum brand exposure. 80% of your casual customers can easily be signed up for a free program, but may not want to cough up the cash for a paid program.
On the other hand, the top 20% of your customers, your best customers, are the ones who will gladly sign up if the value is there.
Is a Premium Loyalty Program Right for YOU?
If you want as many members as possible, then a free program could be the way to go. There’s little barrier to entry for joins and many consumers do still use them.
However, if you’re focus is on your best customers and trying to get them to engage more, then a traditional loyalty program probably won’t do the trick.
With premium loyalty, a brand can build even stronger relationships with its best customers by offering the best benefits.
A Premium Loyalty Program is the Best You Have to Offer
Premium loyalty is instant gratification, awesome 24/7 benefits, and putting the customer at the center of everything you. It’s giving your best customers the best you have to offer.
The future belongs to those brands that can figure out how to improve the lives of their customers. For retailers, the goal of premium loyalty is to build a program so valuable your customers are willing to pay for it.