In recent years we have seen many brands rethink their retail strategies by using premium loyalty programs.
As loyalty program benefits become more experiential-based to attract additional customers and build emotional connections, many brands are considering these fee-based membership programs.
Fee-based loyalty programs are popping up left and right. Yet as an industry, we have not agreed on the proper term.
We hear paid loyalty, subscription loyalty, membership loyalty, and I’m sure others. None of these are wrong, but working for a company that powers more of these programs than anyone else, we felt we needed a better term to encompass them all.
The term we use is premium loyalty.
Here’s why we think this term fits better than all the others.
Let’s Start with The Definition of Premium Loyalty
What is a premium loyalty program?
A member of a premium loyalty program pays an annual fee to receive enhanced benefits that are available 24/7/365. It’s the opposite of a traditional points loyalty program.
At its core, it’s about placing the customer at the center of everything you do. Your best customers want exclusivity, so it’s about giving them the best of your brand.
That’s why so many retailers are thinking about premium loyalty programs as a part of their overall marketing strategies.
This is important as we think about the term and the different definitions.
Why Not Just Call It Paid Loyalty?
Many loyalty programs today are too focused on the company and not on the customer. And focusing on the paid aspect is again focusing on what the retailer is getting.
You can add a cost to a traditional points program and call it a paid loyalty program, but it won’t be a premium loyalty program.
After all, why would a customer pay just to be part of a loyalty program?
They have to get something valuable in return. That’s why enhanced benefits are very important here. That should be the focus. I don’t think the term “paid loyalty” does proper justice to this critical aspect of a premium loyalty program.
What makes customers willing to pay for a loyalty program?
Why Not Subscription Loyalty?
Ah yes, we’re inching closer here. Subscriptions are taking over everywhere and with good reason.
The design of a subscription program provides real value to its customers, so we’re already more aligned here than with paid loyalty.
Although a best practice is to have your premium loyalty program be a subscription, this paints the picture of a renewing monthly membership.
Clarus operates many programs with recurring monthly memberships, but many times annual programs make more sense. This flexibility is very important when you’re attempting to create the right program for your audience.
Why Premium Loyalty Makes the Most Sense
The word premium sparks thoughts and emotions centered around the best of the best.
Therefore, a premium loyalty program provides premium benefits, which is to say, the very best and most attractive ones. Much better than a traditional, free program.
Premium suggests words like superior and exceptional. A premium loyalty program shines a spotlight on the customer and not the brand. And members receive a premium experience.
The name also makes sense for this type of program because it comes at a premium to the user. This allows your best customers to self-select for this elevated experience.
Premium loyalty keeps the emphasis on loyalty and doesn’t compete with it.
A member of this type of program displays superior commitment to a brand. In turn, that brand honors a member’s ongoing loyalty with an exceptional experience filled with instant and relevant benefits.
These programs create deeper emotional relationships between customers and retailers. As a result, members engage a lot more.
Premium Loyalty is Gaining Momentum
Due to the success of various premium loyalty programs, and the momentum in the industry supporting them, even more retailers will implement premium tiers in 2019.
In the past year we saw that many brands are rethinking their retail strategies by using premium loyalty programs. Wayfair, Boxed, Lululemon Athletica, Bob’s Stores, and CVS come to mind.
Meeting and exceeding consumer expectations and desires is a common theme among all of these.
Premium takes the definitions of paid and subscription loyalty and weaves in the overarching theme of instant benefits that are accessible 24/7/365. And along with those come the deep emotional connections that members have with brands.
Brian Carl
Brian is our VP of Marketing and leads the overall direction of our B2B Marketing and Marketing Operations Teams. When he’s not chasing his three kids around at home, he enjoys reading as much as he can about marketing, technology and leadership or playing video games when they finally all fall asleep.