Premium loyalty programs aren’t new, but they’ve been on the rise for the past few years, and for good reason.
Customer loyalty is harder than ever, and many traditional loyalty programs aren’t differentiated enough.
This is an especially important point as retailers get proactive in 2021.
The global pandemic has pushed consumers online and leveled the playing field for all retailers. This has accelerated the differentiation process for retailers and made customer retention more important than ever.
As a result, brands are seeking ways to stand out from the crowd, retain more loyal customers, and exceed those expectations.
Amazon may have started the trend with Prime in 2005, but we’ve major brands like CVS, Lululemon, and even Walmart jump on board in recent history.
So, if you’re one of those brands that have been thinking about launching a premium loyalty program of your own, you’re not alone.
Our 2021 B2B Loyalty Industry Data Study revealed that 95% of retailers with traditional loyalty programs have discussed launching a premium loyalty program in 2021.
And if you haven’t, here’s why you should consider it.
Customer Loyalty Continues to get Harder
Nearly 70% of consumers agree their loyalty is more difficult for a retailer to maintain than ever before.
According to a McKinsey study, 35% of U.S. consumers have tried a new brand since the pandemic started and 77% have tried new shopping behaviors (new channels, stores, and brands).
This trend, the study adds, “underscores the broader challenge to traditional loyalty models and programs. The shift away from points-only loyalty programs was well underway when the crisis hit.”
Enter premium loyalty.
Premium loyalty programs charge members a fee to join and they are treated to exclusive, instant benefits that elevate engagement with your brand.
This creates emotional connections with your members, and they become trusting advocates for your brand.
Our study also showed that 88% percent of consumers who are satisfied with the special benefits offered by a retailer’s premium loyalty program will likely choose that retailer over a competitor that is offering a lower price.
And consider that in 2019 consumers spent an estimated $25 billion to $30 billion on premium loyalty programs, representing a 25%-50% growth rate from the previous year. Also, 63% of consumers are currently members of at least one premium loyalty program.
Given the current paradigm, it’s clear to see why many retailers have discussed launching a premium loyalty program.
Many retailers, especially now when convenience is imperative for consumers, see that traditional loyalty programs don’t create true loyalty or brand advocacy like premium loyalty programs do.
Premium Loyalty Members Are More Valuable
Premium loyalty members are exponentially more valuable to your brand.
According to our 2021 B2B Industry Data Study, premium loyalty members are four times more valuable to your brand than non-premium members.
Members of premium loyalty programs are 60% more likely to spend more on your brand, while free loyalty programs only increase that likelihood by 30%, the McKinsey study shows.
Amazon’s Prime program is the beacon of all premium loyalty programs. Prime members spend more than twice as much as non-Prime members.
To further illustrate the value of premium loyalty members, they are more likely to shop with you over a lower price elsewhere, more likely to recommend you to family and friends, and more likely to advocate for you.
And 94% of premium loyalty members shop with that retailer at least once a month.
Other Retailers Have Gotten Onboard with Premium Loyalty
Amazon started the premium loyalty ball rolling in 2005 and has reached more than 150 global members in the past 15 years.
During that time, many other retailers have gotten on board with premium loyalty as well, including Restoration Hardware, Wayfair, Barnes & Noble, CVS, Overstock, GameStop, Lululemon, Cinemark, and Walmart.
Walmart launched Walmart+ last September and, within two weeks, 11% of Americans had become members.
Differentiation to gain a competitive edge has been talked about for years, but the pandemic has flipped the paradigm and shown there are no guarantees in the world of customer loyalty.
But premium loyalty programs are designed to make your best customers significantly better and, more importantly, create evangelists to spread your brand message.
Premium Loyalty Allows Your Brand to Be Unique and Stand Out
There’s a reason why most retailers have discussed launching a premium loyalty program this year.
Without any brand differentiation, consumers won’t have any reason to be loyal and will instead be loyal to wherever the discounts and coupons lead them.
Building true loyalty requires brands to offer unique experiences that aren’t available anywhere and add significant value to their lives.
Always make your customers feel special because that is the key to retention and long-term brand loyalty. If you don’t, you risk losing them at any time.
Premium loyalty can help your brand alleviate those risks.
ebbo
ebbo helps brands achieve their customer loyalty goals with full-service, end-to-end solutions and also creates original educational content straight from the experts to help loyalty marketers stay on the cutting edge of customer engagement.