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How the Subscription Model has Paved the Way for Premium Loyalty

The subscription model is booming.

For some companies, their entire business model relies on subscription. And for many legacy companies, subscription has proved very impactful as well.

Industries like cable, grocery, music, radio, and even newspapers have felt this impact of subscription services in positive ways.

Loyalty isn’t in its own bubble, either.

In the subscription economy, retailers need to rethink their loyalty programs as well. And that’s where premium loyalty comes in.

Learn more about premium loyalty here.


Brands That Set the Stage for Premium Loyalty

The premier example of a premium loyalty program that draws influence from a subscription model is Amazon Prime, which eclipsed 100 million members in April 2018.

What began as something to address the pain point of shipping fees, Prime has mixed in an amazing array of benefits over the years that keeps consumers coming back and spending more.

A company like Netflix has had a significant impact on cable TV customers as the latter group plans various strategies around cutting the cord.

Last year Netflix officials reported 1.96 million new subscribers in the first quarter alone.

Netflix changes as its audience changes. It wants to provide access to the best content in the most efficient way possible.

Sling, Hulu, and YouTube are other streaming subscription services that have lured many consumers away from traditional cable television.

Spotify and SiriusXM show how consumers will pay for ad-free radio.

Blue Apron and Hello Fresh are subscription meal options for consumers.

Sports fans aren’t left out in the cold, either.

Many Major League baseball teams have created subscription models such as the Oakland A’s, New York Mets, New York Yankees, St. Louis Cardinals, and Minnesota Twins.

For example, the A’s Access Pass membership program offers fans four options around how many games they want to attend: 10, 24, half season, or full season.

And this same model has been applied to loyalty programs.


How the Subscription Model is Changing Loyalty

Premium loyalty is a powerful tool in today’s loyalty industry.

Its loyalty message isn’t about charging customers. It’s about providing value through compelling benefits so attractive that customers are willing to pay for them.

Customers who invest in a premium loyalty program, such as Prime or Lululemon, receive the absolute best the brand has to offer. In turn, this creates a highly engaged customer who spends more and buys more frequently.

Premium loyalty members feel like they are part of an exclusive club.

Loyalty is all about value and when customers see that value in your premium loyalty program, they will become energized brand advocates.

Consider Prime. More than 100 million members have raised their hands to sign up for this hugely successful program because they receive transactional benefits like fast, free shipping and experiential benefits like Prime Video.


Retailers Are Gaining a Competitive Edge with Premium Loyalty

Loyalty marketers always seek a competitive edge. The premium loyalty model inherently provides market separation.

Last year we spoke with Robbie Kellman Baxter, a customer loyalty expert who created the popular business term, “Membership Economy”. Kellman Baxter talked about the soaring trajectory of the premium loyalty model.

“Subscription services are also appealing to consumers, who appreciate the value being packaged differently, for example, access to rides without the responsibility of ownership of a car,” she explained. “This is a great opportunity for companies to rethink their loyalty programs to ask more and to give more.”

Consumers are more than willing to be loyal. This is a great opportunity for companies to rethink their loyalty programs, to ask more about their customers’ needs and desires, and offer more value to them.


Premium Loyalty can Beat Subscription Fatigue

Premium loyalty, like any subscription model, is about the relationship.

Despite some media speculation about subscription fatigue, the key takeaway is that consumers are happy to stay in membership programs if the value is there.

According to the 2019 Premium Loyalty Study, 87% of consumers who are satisfied with the special benefits offered by a retailer’s paid loyalty program will likely choose that retailer over a competitor that is offering a lower price.

The subscription economy is booming and people are more than willing to pay for value. Know who your best customers are. Rethink loyalty and develop a new way to bring the best value to your best customers.

After all, don’t you want your most loyal customers to stick around?

Tom Caporaso

Tom, our CEO, oversees the strategic direction of the company with over 20 years of experience in the loyalty and subscription space. When he's not leading in the office, he can be found coaching his kids in sports or watching his beloved New York Yankees or Pittsburgh Steelers.

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ebbo™ is an all-in-one loyalty company. With our data driven strategy, full-service approach, and the unwavering support of the people behind the platform, our dedicated team will work with you to understand your loyalty goals, innovate solutions and help you build customer engagement on repeat.

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