My entire professional career has been focused on writing.
After nearly 20 years at two daily newspapers, seven years at B2B publication Multichannel Merchant, and five years at Loyalty360 I saw a lot happen in the loyalty space before joining Clarus Commerce.
At Multichannel Merchant, I interviewed a plethora of catalog brands and told their respective stories. At Loyalty360, the main thrust of my job was interviewing brands from the unique perspective of customer loyalty. I interviewed brands of all kinds about how they use customer loyalty as a strategic point of differentiation.
Although I had interviewed several vendors during my time at Loyalty360 and Multichannel Merchant, I never worked for one.
Until I started at Clarus on April 2, 2018.
Here is what I’ve seen change in loyalty over the years.
Retailers are Moving Away from Traditional Loyalty Programs
Many of the brands I wrote about used some type of a traditional loyalty program.
Simplicity and ease of use was a big theme for most brands with traditional programs, as was knowing and understanding their customers.
Some brands executed against these two points better than others and it usually showed in their results.
I covered several webinars where retailers spoke about some aspect of customer loyalty, customer experience, and the technology used to achieve their strategic goals.
I also wrote about many brands who either implemented new loyalty programs or revamped old ones.
Many traditional loyalty programs I wrote about in the past were relaunched through various digital innovations to the customer experience. Some brands redesigned their websites and added layers of multi-rewards.
As loyalty programs became more sophisticated, customer experience became the critical point of differentiation. More companies are leveraging customer insights from loyalty programs to steer retention and sales strategies.
Brands want to have a meaningful dialogue with customers and provide additional value that helps establish an emotional connection between the customer and brand. And many brands have started to realize that the traditional one-size-fits-all loyalty programs can’t accomplish that.
That’s why I’ve seen so many retailers start to shift their thinking when it comes to loyalty.
Retailers are Looking at Loyalty Through A Different Lens
As retailers realized that loyalty was becoming more difficult than ever, premium loyalty started coming into the light.
Amazon’s incredibly successful Prime program has paved the way for premium loyalty to gain national prominence. Prime has changed customer expectations and dynamics because it meets and exceeds them.
Outside of Prime’s global success, I saw many other brands achieve success with premium loyalty. Less than a month before I started at Clarus, I wrote about a loyalty study that noted premium loyalty as a growth area.
What’s more, the study said that paid loyalty programs and tiers are associated with higher member spend, higher advocacy, and longer-term brand loyalty.
It also noted a willingness to pay for enhanced benefits is significantly higher among Gen Z and Millennials, as well as households with children and early technology adopters.
During my five years at Loyalty360, I talked to a plethora of brands, some of whom had premium loyalty programs such as: GameStop, Restoration Hardware, AMC Theatres, and Overstock.com.
Clarus looks at loyalty through this lens as well.
Premium loyalty programs target your best customers and make them exponentially more valuable. Your best customers pay a fee (monthly or annual) and they receive 24/7 benefits and services that traditional loyalty programs can’t touch.
Throughout my loyalty career, premium programs have been gaining momentum in the industry.
A Different Loyalty Perspective
It has been exciting to work on the vendor side for a company that specializes in premium loyalty programs.
In the time I have been at Clarus, we have seen premium loyalty programs launched at Boxed, Lululemon, Wayfair, Bob’s Stores, CVS, and AMC Theatres, to name a few.
In the world of professional sports, we saw the Oakland A’s launch a new and innovative membership program this year in lieu of a traditional season-ticket offering.
Also this season, the New York Mets launched a new Netflix-style subscription program that allows Mets fans standing-room-only access to nearly every regular season home game.
It was interesting to see this marketplace progression of premium loyalty while I was at Loyalty360 and then become a part of its ongoing trajectory at Clarus.
A New Loyalty Pricing Model
Much like loyalty programs themselves have been rethought, so too should the pricing models attached to many of these offerings.
The traditional loyalty program pricing model typically follows a formula where a retailer pays a loyalty vendor up to seven figures for a loyalty program. That is usually for the platform itself while additional consulting and customization can cost even more later.
The retailer hopes to see a positive ROI after a 12-to-18-month period.
If the loyalty vendor generates one customer or one million, they still get paid and make their money off the program build.
The Clarus pricing model is different.
Rather than paying a huge upfront cost to build a traditional loyalty program, brands need to think of it as more of a partnership. The Clarus model is interesting because rather than charge to build and manage the program, it simply takes a portion of the membership fees paid by consumers.
In other words, if a loyalty program costs members 10 dollars a month to be a part of, the brand takes a portion and Clarus takes a portion. It’s very transparent and ultimately risk-free for the brand. It’s on Clarus to really make sure the program is a success. And in the end, the retail brand enjoys more engagement with its best customers.
I had never seen this type of model before, but it makes a lot of sense.
What Does the Future of Loyalty Hold?
Loyalty is more challenging now than ever.
It’s developed through a series of moments and it must be seen through the lens of the customer. From what I’ve seen over my career, I think that more retailers will focus on differentiation, especially when it comes to loyalty programs.
For a brand to attain true and sustainable loyalty, it must be a two-way street. And I think premium loyalty programs are going to play an even bigger role in that.
If brands can identify their best customers and really offer them the best experience possible, more people are going to sign up for these programs.
At the end of the day, when you listen to your customers and put their needs first, you will always find long-term success.