Premium loyalty programs charge a fee for access to membership or a program tier. These can be one-time fees (REI — $30 once for a lifetime) or monthly/annual fees (Amazon Prime, Walmart +). In recent weeks, we’ve seen several new premium loyalty programs or tiers announced:
- Sweetgreen announced a two-tiered program in April with a free program and Sweetpass+, where for $10 monthly, members received $3 daily off their orders, waived delivery fees after 4 p.m., and more.
- Urban Outfitters announced UO UP — a new tier of its UO Rewards program that gives members an extra 15% off their full-price purchases at Urban Outfitters, Anthropologie, and Free People. Priced at $98 annually, it also includes free shipping and free returns.
- Barnes & Noble launched a new loyalty program in April with two tiers as well — a revamped Premium Membership that maintains the 10% discount it always has offered on in-store purchases and adds a 10% discount on purchases on bn.com. For $39.99 annually, members also get free drink upgrades in B&N Cafes, a free tote bag once a year, and free standard shipping. For the first time, it is also offering a free loyalty tier. For both programs, members receive a stamp for every $10 spent and a $5 reward for every ten stamps.
So why are brands launching paid programs? Premium programs can show value to members much faster than traditional programs — consumers see benefits quickly vs. waiting for points to accumulate (e.g., Amazon Prime members get free shipping immediately). And in the current economy, brands are looking for more revenue opportunities while consumers are continually seeking financial relief. Forrester’s data also shows an uptick in consumer interest in premium programs. According to 2022 Forrester data, 68% of US online adults belonged to a premium loyalty program, up from 42% in 2021. Paid programs are compelling to shoppers who regularly buy from a particular brand: 36% say the subscription services save them money in the long run, and 23% say they save time. Before you start changing your program to charge membership fees, consider these three core tenets of any loyalty program strategy:
- What outcomes are you trying to achieve with a loyalty program?
- Which customers are you targeting?
- What is the value exchange you will offer (between the brand and the consumer)?
If you would like to discuss this topic or anything else related to consumer loyalty, schedule an inquiry or guidance session with me.