Subscriptions are everywhere you look in society.
For some companies, their entire business model relies on subscription. Industries like cable, grocery, music, radio, and newspapers have leveraged this model and reaped positive results.
But in a subscription economy, retailers need to rethink their loyalty programs.
And that’s where premium loyalty comes in.
Consumers are willing to pay for loyalty program membership in exchange for valuable benefits.
But Amazon Prime has been around since 2005, followed by many other retailers offering premium loyalty programs over the past decade.
And, on September 15th, Walmart launched Walmart+.
Is there enough room for them all? And also a program of your own?
The Growth of Subscriptions and Premium Loyalty Programs
Subscription has been on the rise for the past decade.
Now, you can find a subscription for about any service or product, from content to clothing.
Stitch Fix, Dollar Shave Club, Hello Fresh, Sephora, and Blue Apron are a handful.
Consumers love them because they provide convenience. Brands love them because they provide a stream of revenue.
But while there has been an explosion of subscription programs, many feel similar. And that causes members to cancel.
But you don’t see high member turnover in popular subscription programs.
Netflix, Spotify, and Disney+ do a phenomenal job with customer retention.
Why is that?
In a word: Value.
These programs offer great value. Consumers stay with any program that offers great and consistent value.
And retailers have taken notice.
Consider the growth of premium loyalty programs.
Amazon Prime, CVS CarePass, GameStop PowerUp Rewards, RH Members, and Lululemon.
Premium loyalty programs are becoming more popular.
That’s because they attract your best customers.
They offer compelling and instant benefits that spark higher spend and increased engagement.
Walmart+ has cemented this rising trend of retail premium loyalty.
Our 2020 Premium Loyalty Data Study shows the value consumers find in premium loyalty programs:
Seventy percent of consumers would pay to join a premium loyalty program. That’s if their favorite retailer offered one and the benefits were valuable.
Ninety-four percent of premium loyalty members shop at that retailer at least once a month.
And 90% of consumers would recommend a retailer to family or friends. That’s only if the retailer’s premium loyalty program offers valuable benefits.
The more than 150 million global Prime members each pay $119 per year.
They receive transactional benefits including free fast shipping and exclusive shopping deals.
But they also get streaming content.
So, where does Walmart+ fit in?
Many have said that Walmart+ and Amazon Prime can’t co-exist due to subscription fatigue.
Loyalty experts are confident there is plenty of room for both.
Subscription Fatigue Doesn’t Exist
Why do people cancel subscriptions?
It’s because they are no longer getting the value that they are paying for.
If your program differentiates and offers value, consumers join it and renew.
And while Walmart has launched copycat programs to Prime in the past, this one is different.
Amazon Prime wins out the variety of products available, along with the streaming and other benefits.
But Walmart+ offers different benefits and a different product assortment.
While their audience overlaps with Amazon, it’s not the same audience. This value proposition creates differentiation and a different target audience.
The program carries an annual fee of $98 ($21 less than Prime).
It will include same-day delivery of groceries, gas discounts at 2,000 locations, and access to Scan & Go.
This allows customers contactless checkouts with their phones so they can skip lines).
Consider almost there are 5,000 Walmart stores and most people in the U.S. live within 10 miles of a Walmart.
Walmart has a much larger grocery presence than Amazon, despite the latter’s acquisition of Whole Foods three years ago.
Walmart is focusing on its strengths like its physical footprint and grocery.
This helps offers a valuable premium loyalty program.
Walmart+ is the better choice for its customers.
They’re looking for affordable grocery delivery and more convenient in-store shopping.
Subscription fatigue doesn’t exist.
Consumers will spend money on these programs, and renew them if they offer value to them.
How Does This Impact You (as a retailer)?
Subscription and premium loyalty programs are not a fad.
They are here to stay and will continue to grow.
In this era of unlimited choice, differentiation, value, and member retention are the key attributes for retail loyalty programs.
And premium loyalty programs check all those boxes.
As you consider loyalty, how do you think about it?
What’s unique to you?
Walmart’s grocery and gas components are unique to them.
Lululemon continues to roll out its premium loyalty program.
For $168, members get great value.
Exclusive lululemon membership gear valued over $100 and 20% off on their birthday offer value.
Twelve passes to their choice of the hottest sweat classes or events. Online or in-person, where available add an emotion connection.
Live digital workshops designed and facilitated by Lululemon help navigate all life’s twists and turns.
Meanwhile, members of REI Co-op enjoy a variety of adventures, which are discounted for members.
Are you offering instant benefits that make people feel value whenever they engage?
Our study shows that 60% of consumers say that discounts that can be applied whenever they shop is a perk that motivates them to join premium loyalty programs.
While the program offers transactional benefits, the star attraction is the experiential element.
This allows members to take part in and experience the brand lifestyle, which builds lasting emotional connections.
Experiential benefits have a long-term impact and drive emotional loyalty.
Whether you’re launching a new loyalty program or a subscription-based premium loyalty program, this is the question to consider:
Are you continuing to show enough value to your paying loyalty program members? And if not, what could you be doing better based on their needs?
And 67% of consumers are likely to join a premium loyalty program if they’re already a member of that retailer’s free program.
There’s Room for Walmart+, Amazon Prime, And You
Subscription fatigue is not real if your premium loyalty program offers true value.
Prime and Walmart+ can co-exist and millions might become members of both programs.
There is plenty of room for other retailers to get on board with premium loyalty.
The key is understanding your customers’ pain points and offer programs with value.
Keep these things in mind as you rethink your loyalty offerings:
How can my brand play to its strengths that my unique customers would find valuable?
Is my loyalty program offering that value to my customers whenever they engage?
Does it make their lives better?