Premium loyalty is on the rise.
With more than 150 million global members, Prime is now, arguably, the best loyalty program of all time.
Other leading retailers have jumped on board with premium loyalty as well over the years.
Consider these premium loyalty programs: CVS, GameStop, Wayfair, Barnes & Noble, Restoration Hardware, lululemon, Cinemark, and Overstock.
But when Walmart launched Walmart+ on Sept. 15, that cemented this trend and shined a light on subscription-based premium loyalty.
Walmart+ gained almost immediate traction with millions of consumers.
This demonstrated to smaller retailers the popularity of premium loyalty programs that offer true value to consumers.
It Didn’t Take Long for Walmart+ to Catch On
After Walmart+ launched, it didn’t take long for the company to see positive results.
And the numbers after the first two weeks of the Walmart+ launch were nothing less than astonishing.
More than 20,000 U.S. adults were surveyed less than two weeks after the launch and here are the praiseworthy numbers:
- 11% of Americans already subscribed to Walmart+
- 35% are excited about the unlimited free delivery service
- 45% of Walmart+ members are also members of Prime
For 11% of Americans to be members of Walmart+ less than two weeks after the program launch is simply amazing and bodes well for the program’s future.
The interesting thing about Walmart+ and Prime is they are two incredibly popular premium loyalty programs that serve two different audiences.
“Walmart+ offers different benefits and a different product assortment, and while their audience overlaps with Amazon, it’s not the same audience,” she explained. “In other words, the value proposition is differentiated and the target audience is too. Just because they’re both retailers doesn’t mean there isn’t room for consumer choice.”
So, what if you’re not Walmart or Amazon?
Can a Premium Loyalty Program Appeal to My Audience?
The answer is yes.
A premium loyalty program can apply to any retailer’s audience. If the program identifies customer pain points and provides instant and valuable benefits, it will be successful.
Three reasons why premium loyalty is so appealing now revolve around three megatrends that impact every industry:
1. Customers are empowered and have more choices.
Consumers have never had more control and power than they do now.
When they can compare prices in a matter of seconds, and then order online, they hold all the cards.
Increased competition makes it more challenging to differentiate in the marketplace.
Differentiation is what sets brands apart and that’s where premium loyalty enters the picture.
Premium loyalty programs offer unique and instant benefits that attract consumers, positively impact their spending, and retain them.
2. Customers want and expect things to be instant.
The “instant” component of premium loyalty benefits is crucial because consumers want things now.
Consumers yearn for instant gratification.
Tailoring your loyalty programs and benefits around instant gratification can lead to better customer acquisition and higher retention rates.
Brands realize consumers have an abundance of choices. Brands need to do as much as they can to truly understand their customers’ expectations and desires.
When brands understand their customers, they can offer compelling benefits in a loyalty program that creates instant gratification.
Earning and retaining customer loyalty is crucial to a brand’s success.
Premium loyalty doesn’t ask consumers to wait for a reward, like in most points-based programs.
Premium loyalty provides instant discounts and these are the benefits your customers enjoy the most.
3. Customers are comfortable with subscriptions.
Subscription is not a new concept.
Just mention Netflix and you’ll see how many members it has.
Throw in the music industry and almost any household disposable item and you get the picture about how pervasive our subscription reality is.
Consumers are comfortable with subscriptions and will be comfortable paying an annual membership fee to your premium loyalty program if you offer value and attractive benefits.
You Don’t Have to Be Walmart or Amazon to Have a Successful Premium Loyalty Program
While premium loyalty continues its ascent in the marketplace, most notably with the recent Walmart+ launch, retailers should remember this:
You don’t have to be Walmart or Amazon to have a successful premium loyalty program.
Premium loyalty programs can spark increased spending and frequency for any retailer.
Consider these eye-opening numbers from our 2020 premium loyalty data study:
- Seventy percent of consumers would pay to join a premium loyalty program 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.
- Nearly 90% of respondents would recommend a retailer to family or friends if the retailer’s premium loyalty program offers valuable benefits.
- Sixty-nine percent of premium loyalty members plan to join additional premium programs in 2020.
- Seventy-four percent of millennials plan to join additional premium programs in 2020.
McKinsey recently released a survey on loyalty programs and found that members of premium loyalty programs are 60% more likely to spend more on the brand after subscribing, compared to free loyalty programs only increasing that likelihood by 30%.
Also, the survey shows that premium loyalty programs drive higher purchase frequency, basket size, and brand affinity compared with free loyalty programs.
And our retail partners have seen an uptick in customers joining their premium loyalty programs since the pandemic began.
It’s time for retail to catch up to the premium loyalty train because it’s becoming non-negotiable now that Walmart, the world’s largest retailer by revenue, and Amazon, the world’s largest online marketplace, are onboard.
Make a “Premium” Difference In Your Customers’ Lives
The pandemic has made the challenge of earning customer loyalty harder and more challenging.
Sixty-seven percent of consumers agree their loyalty is more difficult for a retailer to maintain than ever before
Walmart wanted to better compete with Amazon in the loyalty space and it’s off to a great start with Walmart+.
But these programs aren’t just for the biggest retailers.
A premium loyalty program can help any retail brand increase member spend, engagement, and advocacy.
See how one apparel retailer was able to increase purchase frequency and annual spend with a premium loyalty program.
Remember, 88% of consumers would likely choose a retailer whose premium loyalty program they belong to over a competitor that is offering a lower price.
If you’re interested in a premium loyalty program or tier for your brand, feel free to reach out to us here.