As brands like Wayfair, Lululemon, and Bed Bath and Beyond adopt subscription-based premium loyalty solutions, many companies are considering where a premium loyalty program fits as a part of their existing loyalty strategy.
More brands are rethinking their respective loyalty strategies today and some are opting for a premium loyalty program.
And for those brands attempting to create a long-term, sustainable loyalty plan, here are a few places where a premium program should fit into your overall loyalty strategy.
When You Want More Differentiation, Look to Premium Loyalty
Traditional points programs and private label credit cards are common in the loyalty industry, but they fail to create true brand differentiation.
A free, or traditional, program trains members to wait for discounts/coupons and doesn’t build any kind of true brand loyalty.
Conversely, in a premium loyalty program, members pay a monthly or annual fee in exchange for instant, valuable benefits that can be used 24/7. As a result, premium loyalty members engage more often and form deeper relationships with brands.
For example, last October Wayfair launched a premium loyalty program called MyWay, which has an annual membership fee of $29.99.
MyWay members receive benefits including access to insider sales, 25% discounts on installation and assembly services, free shipping with no minimum, and next-day delivery.
A premium loyalty program allows retailers to create strong brand recognition because of 24/7 benefits that members desire and are willing to pay for to receive an elevated customer experience.
Another great facet of a premium loyalty program is the unique and valuable benefits tailored by your brand for your customers arrive without worries of how to fund them.
Your subscription revenue funds your own premium loyalty program and, if combined with a traditional offering, can offset points liability as well.
When You Want to Reward and Engage Your Best Customers
When any brand launches a loyalty program, it wants members to become highly engaged, to spend more, and to become advocates.
A premium loyalty program targets your best customers and makes them exponentially more valuable.
We all know about the 80/20 rule—80% of a brand’s sales come from 20% of its customers.
These 20% represent a brand’s best and most valuable customers, and they are the ones who will appreciate a better experience than the other 80%.
But what does that have to do with premium loyalty programs?
One of the key benefits of having a premium loyalty program is that it targets and identifies your best customers and makes them better.
That’s where a premium loyalty program that offers expanded and immediate benefits for an annual fee can really shine.
A brand’s best customers behave that way because they have an emotional attachment to the company. Sprinkle in rewards and perks that customers desire, and a premium loyalty program raises those emotional connections to another level.
With a premium loyalty program, a retailer enjoys more engagement, more order frequency, and higher AOV, in addition to collecting valuable data about its best customers.
When You Need Funding for Better Benefits
Enhanced benefits involve higher costs which concerns some brands.
But a premium loyalty program provides an ancillary revenue stream for brands and offsets costly promotions.
It then becomes possible to include awesome benefits and experiences that free programs just can’t touch. This ultimately leads to increased loyalty and engagement.
Members of these programs simply spend more and shop more often with a brand.
According to our 2019 Premium Loyalty study, 41% of Millennials would use their premium loyalty benefits every few days and 24% of non-Millennials would do the same.
A premium loyalty program can be a stand-alone offering or be incorporated as an additional tier to your existing loyalty program.
Premium Loyalty Isn’t One-Size-Fits-All
The goal with any premium loyalty program is to seamlessly differentiate your brand, reward your best customers, and drive a new revenue stream to help you compete in today’s retail environment.
A premium loyalty program can make a major difference in attracting and retaining frequent shoppers, but there is no one-size-fits-all approach.
That’s why we work closely with brands on completing a comprehensive competitive analysis and making recommendations.
Given the enticing benefits available in a premium loyalty program, brands can reward and engage members more frequently. This will help build stronger customer relationships and develop brand advocates.