True value proposition remains key to making paid loyalty programs successful

Market trends are showing that consumers are becoming significantly more receptive to paid loyalty programs. This shift is primarily due to 2 reasons:

  1. There’s an element of disillusion from consumers who are perceiving less and less value from loyalty programs in general, especially free programs, and
  2. Businesses have the potential to deliver much more value via a paid program vs a free one.

The caveat is the programs must give demonstrable value back to the members in order to justify the fee.

Let’s take a look at some examples of companies that are doing it right.

 

Amazon Prime

Yearly fee: US$119

This is one of the world’s best paid loyalty programs. For a start, Prime members receive free same day and overnight shipping. For a regular shopper, this can easily save hundreds of dollars per annum, especially if you are buying bulky items.

There are other benefits of course, such as free book and movie content, but let’s face it, the hero is the free delivery. It’s so successful because Amazon have addressed and rectified the single biggest consumer pain point – shipping costs.

 

Lululemon

Yearly fee: US$128

This up-market retailer, has recently announced the results of a loyalty program trial across a small cohort of its customer base, which identified that their customers could pay even more for its yearly fee.

Like Amazon Prime, the program will offer free expedited shipping, but also curated experiences. It’s unclear at this stage what the curated experiences are going to be, but it’s certainly the right approach from a loyalty program differentiation point of view.

Each program fee also includes a pair of pants or shorts (which almost covers the fee in itself), as well as a chance to attend events, workout classes and more.

 

Accor Plus

Yearly fee: AUD$395

Moving up into this paid tier will give the member up to a 50% discount at every single restaurant at 1,100 Accor properties across 18 countries. For anyone who’s ever dined at a hotel restaurant in at least a 4-star property, a saving from a single dinner could make a reasonable dent in clawing back that yearly fee.

Members will also receive a complimentary night and other benefits such as a 15% discount on drinks anywhere in Asia and 20% off at Europcar. For a semi frequent traveller, this tier provides a lot of value.

 

NRMA Blue

Yearly fee: AUD$60

This is a member benefits play, where any customer who takes out a roadside assist package will be enrolled into NRMA Blue for free. Customers can still join however, with the hero proposition being 5c off / litre at Caltex. This easily pays for itself and more, where based on 70 litres a week for 52 weeks a year, the member can save three times the annual fee.

On top of that, they also get access to a bunch of discounted offers across entertainment, travel, driving and insurance.

 

flybuys max

Yearly fee: AUD$99 (or $10 per month)

I recently wrote a blog article about this proposition. The hero here is the 5% discount on fresh produce which includes meats, fruit and veggies.

Whilst the program hasn’t yet launched to the mass market, conservatively the yearly saving could be around double the outlay.

The message from consumers here is loud and clear. Perception of value is no longer enough. Companies must deliver true value, otherwise they run the risk of seeing significant disengagement from their existing bases and ultimately, having their customers engage with competitors who can get it right.

Need a loyalty program designed or optimised based on market trends and best practice, to drive deeper member engagement? Get in touch.

 

Max Savransky is Loyalty Director of Loyalty & Reward Co, a leading loyalty consulting firm based in Sydney. He has 10 years’ experience within the loyalty industry including roles at Mastercard Loyalty (Pinpoint), Silverneedle (Next & Sage Hotels) and Pureprofile. As Loyalty & CRM Manager at HOYTS, he launched the highly successful partnership with Qantas Frequent Flyer, including a world-first Qantas Points in-store redemption proposition. He is an active cryptocurrency trader.

Max regularly contributes to www.blockchainloyalty.io, a global resource centre for everything blockchain loyalty.

Let’s connect!

LinkedIn: https://www.linkedin.com/in/maxsavransky/

Twitter: @maxsavransky

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