While many traditional loyalty programs remained the same in 2018, more retailers rethought their loyalty strategies around the modern consumer. Whether you call it paid loyalty, subscription loyalty, or membership loyalty, a new trend of premium loyalty programs is gaining momentum in the industry. More retailers desire greater differentiation in the marketplace, a competitive edge, and more brand advocates.
Premium loyalty is showing retailers like Lululemon Athletica, CVS, and Wayfair that your best customers are willing to pay for great benefits that are accessible 24/7.
Let’s look back at some premium loyalty milestones from 2018:
Prime Eclipses 100 Million Members
When you look back at some of the premium loyalty milestones reached during 2018, there is one that stands out above all others: Prime eclipsed 100 million members in April.
Prime is the gold standard for how premium loyalty works at its best, and is a shining example of how a loyalty program can become a part of your members’ daily lives.
Since Prime launched in 2005, Amazon officials have kept the program fresh and attractive by adding attractive and relevant benefits over the years. Some of the benefits include unlimited video streaming, limited music streaming, unlimited photo storage, one free e-book per month, free audio books, and free games.
Once you truly listen to and hear your customers, you provide them with attractive benefits. This has been the mantra for Amazon and, more specifically, for the Prime program.
Traditional loyalty programs 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 a premium loyalty program that provides members with incredible benefits, available anytime they desire, is so appealing.
Lululemon Athletica Strides Into Premium Loyalty Arena
Canadian athletic apparel retail Lululemon Athletica recently announced that it’s been testing a premium loyalty program that charges members $128 annually.
Because the results have been so successful, officials for the athleisure brand plan to expand the test into additional markets, possibly at a higher membership price point.
Here’s why we think Lululemon’s premium loyalty test has been so successful:
It offers a mix of transactional and experiential benefits. Successful loyalty programs combine transactional and experiential benefits to create differentiation.
Transactional benefits like free shipping and discounts are still important to consumers and they elicit an emotional response. People feel smart when they get a deal.
Competition is heating up in the athleisure market and Lululemon’s program satisfies that emotional need to shop smartly by offering benefits like free shipping and a pair of pants or shorts.
But, there’s more to it.
The program also awards members curated events and workout classes. Those are the experiences that are more memorable and unique to Lululemon, satisfying an emotional desire for exclusivity. These kinds of experiences become so valuable to customers and often become a part of their daily lives.
Lululemon’s premium loyalty test program offers a clear value proposition.
For $128 annually, members are getting a pair of pants or shorts.
If you click over to the Lululemon website, you can see that many of the pants are around the $100 price point, with some of the more hip looking women’s leggings coming in right at $128. Coincidence? Probably not.
If someone plans to buy one pair of those leggings a year, that membership just paid for itself.
Lululemon’s premium loyalty test shows what its program can do when it’s fully rolled out.
Transactional benefits are still important, but it’s the unique experiential benefits that create differentiation and keep customers emotionally engaged.
Bob’s Stores Adds Premium Tier to Free Loyalty Program
Bob’s Stores implemented a premium loyalty tier to complement its existing free program.
Partnering with Clarus Commerce, Bob’s wanted to deliver higher value benefits and craft a custom program from financial structure, to processing member billing and brand integration, to developing online and in-store experiences.
This is all being done while integrating with Bob’s CRM and not impacting existing member data. The premium tier launched early enough to be fully operational for the holiday season.
Clarus crafted a custom omnichannel loyalty program for Bob’s that includes: Brand integration, product construct, creative design, and acquisition experience online and in-store.
Boxed Enters World of Premium Loyalty
For officials at online and mobile wholesale retailer Boxed, which offers direct delivery of bulk-sized packages via the Boxed app or website, launching a premium loyalty program called Boxed Up was the logical next step because they wanted to design a program with their customers in mind.
- For an annual $49 fee, customers receive:
- Free priority shipping on orders over $20
- 2 percent cash rewards
- Exclusive deals & gifts
- VIP customer service
- Special deals at Boxed Hotels
Boxed Up is all about increased engagement with the company’s best customers.
Boxed officials took their cue from Prime.
Listening to its customers was the vital piece for Boxed as it researched, designed, and launched Boxed Up.
Boxed offers lower than retail prices on bulk items due to exclusive deals it has with brands.
Boxed officials wanted to offer their customers a premium service. They wanted to reward them with perks and promotions for shopping on Boxed.
Premium Loyalty Model Hits The Big Screen
Company officials at Cineplex wanted to find a way to recognize and reward their best and most loyal customers.
They recently piloted a paid tier of its Scene loyalty program that offers more benefits to consumers. The new program, Scene Gold, gives moviegoers access to priority concession lines, once-a-week free upgrades to premium screenings, and no-cost upgrades on popcorn and drinks.
What’s more, the program ($6.99 per month) allows for fewer Scene points needed for movie tickets on Wednesdays and includes 50 percent more points earned on purchases at Cineplex and Scene partners.
Scene Gold will not replace the free version of the Scene program, which has more than nine million members.
In keeping with the movie theme, AMC Theatres refreshed its AMC Stubs Premiere program in 2016, and earlier this year it unveiled a new VIP tier called AMC Stubs A-List.
Through A-List, which launched in late June, members pay $19.95 per month and can enjoy up to three movies per week at every available showtime, at every AMC location, in every format including IMAX at AMC, Dolby Cinema at AMC, RealD 3D, Prime at AMC, and BigD.
AMC Stubs A-List members also enjoy all the benefits of AMC Stubs Premiere. AMC Stubs A-List rewards guests with the very best of AMC, including IMAX, Dolby Cinema, and RealD 3D up to three times per week for one sustainable price.
In early November, AMC Stubs A-List eclipsed more than 500,000 enrolled members while the overall AMC Stubs program has surpassed 17 million-member households.
Wayfair Does It “My Way”
In October Wayfair launched a premium loyalty program called MyWay, which carries with it an annual membership fee of $29.99. MyWay members receive benefits including access to insider sales, 25 percent discounts on installation and assembly services, free shipping with no minimum, and next-day delivery.
The new program’s benefits can be applied to purchases at its Joss & Main, AllModern, and Birch Lane banners. MyWay is also available at Wayfair.ca with benefits specifically tailored to Canadian customers.
Premium loyalty programs identify your best customers and offer unique and compelling benefits and experiences. As a result, your best and most loyal customers become exponentially more valuable and create an ancillary stream.
CVS Launches Paid Loyalty Program
Due to Amazon’s amazing success with its Prime program, it has prompted others to consider the power of premium loyalty.
CVS is an example of a big brand that has taken a cue from the Prime program.
CVS Health recently announced plans to launch a pilot membership program that provides delivery perks, discounts, and $10 monthly to spend in its stores. Titled CarePass, the new membership program will initially be rolled out in about 350 locations in the Boston area.
Program members will pay a $5 monthly fee or $48 for an annual subscription.
Launching a paid loyalty program is a smart move for CVS because it provides an ancillary revenue stream, allows company officials to gain better insights on their best and most loyal customers, elevates customer engagement, creates a culture of instant gratification, and builds deeper and stronger two-way relationships.
Amazon made a move in the pharmacy industry, which could have a major future impact when it bought online pharmacy PillPack for $1 billion.
The next step for Amazon could very well be delivering prescriptions to your door, and maybe even including these types of deliveries in its long list of Prime benefits.
Health care could be a road Amazon could travel down further in the next five years.
To create true loyalty today, brands need to take a more personalized approach that helps build emotional connections.
Offering more experiential benefits is crucial to creating emotional connections with customers. As a result, those customers become a retailer’s Holy Grail: Brand advocates.
Oakland A’s New Loyalty Program a Hit
Developing strong customer loyalty isn’t just a pursuit of retailers. Professional sports teams want to forge deeper relationships with their fans as well.
In late July, the Oakland Athletics announced they will no longer offer traditional season tickets for 2019. Instead, the program will be replaced by a new membership program called A’s Access.
Clarus Commerce talked to Oakland A’s Chief Operating Officer Chris Giles about this unique approach to season tickets.
“We’re seeing baseball at a bit of a crossroads as far as what fans are looking for in their experience,” Giles explained to Clarus. “Traditional fans look for consistency and ownership and the neighborhood of people that sits around them for the same games as close to home plate as possible. We’re now seeing a rapidly growing group of fans that want something completely different. Selling them an old package is unappealing. They want something more flexible and something more social. They liken it to a food tour or bar hopping.”
The first insight was that traditional season tickets cater mostly to the first group.
The second insight was that most franchises force consumers to buy full season packages to get access to best seats. That is feasible in the NFL, but there isn’t a large group of consumers that can go to 81 baseball games a year.
“The first option is to go and find friends they can share the plan with,” Giles added. “Or they can turn into a mini broker and sell them in a secondary market. As an industry, we need to do a much better job of providing exclusive member benefits. We’re undermining the core value proposition as an industry to become a member of the club. We’ve created some things that are proxies for member benefits, such as half off concessions and 25 percent off merchandise. At a very high level, this is an initial pilot to a program we will build out over time.”
It will be interesting to see how the new loyalty program model evolves for the A’s and their loyal fans.
Canadian Grocer Launches Premium Loyalty Program
Meanwhile, Canadian grocer Loblaw’s recently launched a premium loyalty program.
Loblaw Companies, Canada’s food and pharmacy leader, recently announced plans to launch a premium loyalty program called The PC Insiders program. Styled after Prime, Loblaw’s new loyalty program offers an assortment of benefits for $99 per year to attract more consumers to shop exclusively with its massive grocery chain.
Along with free shipping and grocery pickup, PC Insiders members receive 20 per cent back in reward points when they buy baby products and Loblaw store brands like PC Organics and Black Label, as well as online purchases on Joe Fresh clothes and Shoppers luxury beauty products.
Premium Loyalty In 2019
As 2018 comes nears its conclusion, what can we expect from a premium loyalty perspective in 2019?
Many brands launched paid loyalty programs in 2018 or added a premium tier to build better relationships with their best customers. Adding premium benefits that provide elevated experiences is a great way to gain competitive differentiation.
Momentum for premium loyalty is building and 2019 is filled with an abundance of opportunity for retailers to rethink their respective loyalty strategies.
Differentiation is the key to stand out from your competitors. Customers want to find brands that instill emotion in them.
Always make your customers feel special. If you don’t, you risk losing them at any time.
Successful marketers create engaging loyalty programs that are seamlessly aligned with the brand’s character and message. Catering to your most valuable and loyal customers is the best way to earn sustainable brand advocacy.