In recent years, the battle to retain highest-value customers has intensified and driven up the cost to serve. Some companies have responded by quietly paring back or devaluing their loyalty offerings, a solution that only serves to exacerbate the problem by leading consumers to engage less with the brand.
On the other hand, some winning companies are shifting the loyalty paradigm itself by bolstering their offerings and charging customers an access fee to help fund more-expensive premium benefits. Where true product differentiation among competitors is scant, subscription-based benefits can incentivize members to stick with a brand. Brands struggling to compete in a highly fragmented or undifferentiated market should consider paid loyalty as a means of acquiring consumers and creating an economic loyalty loop, where the paid features make it unfavorable to switch brands.
Paid loyalty can suit several business needs, but the program must be designed with care to ensure value for both the brand and the paying customer.
Based on consumer surveys and research into existing programs, we suggest there are three primary factors on which paid loyalty programs must deliver:. Paid programs typically offer enticing benefits, but the sign-up fee can be a psychological barrier for some customers.
In our consumer research on paid loyalty, we found that consumers expect to receive at least a percent return on their subscription fee in the form of new offerings. Hard-value benefits like discounts and free products may hook consumers into the program, but they are not enough to retain them. To excite consumers long-term and avoid losing them at renewal, brands must use the membership fees to invest in exclusive offerings with more emotional resonance, such as access to personalized experiences or members-only content.
Our research shows that brand affinity and experiential benefits are more important factors in driving subscriber retention than the hard-value benefits that led them to sign up Exhibit 3. Transactional perks like free shipping—long the hallmark of Amazon Prime and other paid programs—are becoming table-stakes offerings, no longer sufficient to grow membership and create enduring loyalty.
The benefits that truly resonate with consumers will differ by vertical, brand, and customer segment. As a result, a robust consumer-insights program that includes surveys, focus groups, and interviews is essential to identifying what will unlock experience-led loyalty. With paid programs, it is critical to win the subscriber early and continuously, offering benefits that can be used immediately upon sign-up and frequently thereafter.
Customers are constantly engaging with the brand on Twitter in hopes of receiving some type of witty reply. One of their best customer engagement campaigns was their interaction with year-old high school student, Carter Wilkerson, who tweeted the restaurant asking for a year of free chicken nuggets. The NuggsforCarter campaign captured the attention of millions of users, creating a ton of brand awareness for Wendys.
Even Ellen Degeneres took notice and invited Carter to be on her show. They were simple campaigns involving some social media posts or a few emails, but they all left a big impact on their customers. These are all strategies that you can adopt today for your own small business to start increasing your customer engagement rates and build sustainable loyalty.
Commerce Tips. Use a points program to make earning points just as fun as redeeming them The goal of any rewards program is to retain customers and build sustainable customer loyalty. A VIP program is a fantastic tool that helps you build a brand that engages valuable repeat purchasers which make up the backbone of your revenue source.
Find out the 5 reasons tiers are able to engage your customers so effectively. Patrick Trochaniak. The best brands are building emotional relationships with their customers. Find out which emotions you need to be appealing to and how to build them into your own brand experience. Kirsten Burkard. The link has been copied!
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