Walmart’s last run at a premium loyalty program was ShippingPass that it shut down in 2017. At the time, Walmart labeled free two-day shipping as table stakes.
So, why is Walmart taking another look at launching a premium loyalty program?
Why is Walmart launching Walmart+?
Have you walked around a Whole Foods lately? You’ll find Prime messaging in every direction.
Amazon leaped into the grocery category when it bought Whole Foods Market for $13.7 billion in 2017.
Between Whole Foods, Amazon Go, and Prime Pantry, we know grocery is one of Amazon’s biggest targets.
This should worry Walmart.
Amazon Prime members are fiercely loyal (Prime members spend more than twice as much as non-Prime members) and if those customers begin shifting their grocery shopping over to Amazon, that will become a disaster for Walmart.
Walmart makes up nearly 57% of its revenue from grocery and company officials believe a premium loyalty program will ensure members keep buying groceries there.
Will Customers Join Walmart+ if They’re Already Prime Members?
Walmart executives have said they are looking to create something different enough from Amazon Prime, which is smart, because Amazon Prime has a 97% renewal rate and getting customers to change will be a tall order.
Assuming Walmart creates the right benefit mix, we think many customers will join both.
Customers, now more than ever, are comfortable paying for loyalty programs that save them time and money or provide unique experiences with the brands they love.
In our Premium Loyalty Data Study we found that nearly two-thirds (65%) of those who belong to a premium loyalty program plan to join additional premium loyalty programs in the next 12 months.
This is similar to the launch of Disney+.
A Netflix membership costs $156 per year for the standard plan and Disney+ is $84 per year.
For most customers, this didn’t become a “this or that” conversation. It became a question: Is Disney+ worth me joining as well?
And for many people, the answer is yes.
What Has Walmart Done Right?
While we don’t know exactly what Walmart is creating, there is enough information out there already and it appears that company officials are designing it exactly like a successful premium loyalty program.
Creating something unique to them and their product, they said they will be adding to the program over time and they are testing different price points.
Here are some key points of Walmart+:
Walmart is creating something unique around its products.
While Walmart officials know this needs to be uniquely different from Amazon Prime, they’re creating the program their customers in mind first.
This is why grocery is the first benefit.
Every good loyalty program starts and ends with the customers. It’s up to the company officials to give customers an enhanced experience that offers the best of their brand.
While we don’t even know the benefits mix, we do know they are planning on adding to the program over time.
Walmart discussed benefits around their pharmacy, gas, and more. Company officials are also considering launching Walmart+ with a feature that allows customers to use text messaging to place orders.
At this point, what the new benefits are aren’t as important as the fact that Walmart already plans to add to the program.
A successful loyalty program can’t be set it and forget it.
Walmart is planning on testing multiple price points.
Walmart+ is expected to launch as a rebrand of Walmart’s existing Delivery Unlimited service, which charges customers $98 a year for unlimited, same-day delivery of fresh groceries from one of the 1,600-plus Walmart stores in the U.S. where the program is available.
Premium loyalty program pricing is an art. You need to balance your customers’ expectations, program benefits, and the price to create a model that users want to join and remain.
What’s Next for Walmart?
That’s the big question, right?
There’s not enough information to make a guess at this point, but we do know Walmart is looking at this from a lot of the right angles.
Will their tech work? Will their associates understand it? Can they market it right?
When it’s all said and done, though, loyalty programs are only as good as their execution and promotion.
How do you think Walmart can compete with Amazon Prime with this new program?
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.