How Well-Structured Premium Loyalty Programs Deliver Significant ROI
Premium Loyalty Programs At a Glance
Who Needs Them
What They Are
Launching a well-designed, well-executed premium loyalty program provides benefits to both a retailer and its customers. It’s also an excellent way to build value from your loyal customers.
Why Retailers Should Care
94%
of premium loyalty members shop with that retailer at least once a month
69%
of current premium loyalty members plan to join additional programs
Paying members can be worth several times more than nonpaying members, even setting aside revenue from membership fees themselves.
of members are more likely to spend more on the brand
62%
Why Premium Loyalty Programs Are Critically Important
Right Now
Shopper loyalty took a tremendous hit during COVID-19. Retailers struggled to engage customers, and the in-store experience lost visibility as shoppers moved online. People started ordering things online they had previously purchased only face-to-face simply because of store closings and safety concerns. Many customers were forced to switch brands due to product shortages, while financial pressures caused other shoppers to find less expensive product alternatives.
Retailers quickly learned that what they perceived as loyalty was partly physical convenience for shoppers living close to brick-and-mortar locations. Together, these factors essentially leveled the playing field for all types of retailers.
75%
of consumers tried a new shopping habit during COVID-19.
Different retailers/
stores/websites
Different brands
In addition, people are now comfortable purchasing a wider array of products online:
Furniture
Pet supplies
Long-tail effects from the pandemic will make premium loyalty programs more important than ever for retailers so they can:
Groceries
Reclaim “lost” customers through loyalty rewards while also adding new ones.
Differentiate by providing the most loyal customers with unique experiences that improve their lives or provide more value.
Leverage subscription revenue sources to power more compelling loyalty benefits.
Drive sales with a stronger customer experience across online and in-store properties.
Compete on more than convenience — shipping speed, price, availability, benefits.
Similar to the way you work with subscription programs, retailers can put premium loyalty program revenue back into the platform to subsidize an evolving array of great benefits. More incentives, larger discounts and enhanced services all create new opportunities to increase your membership base and make customers eager to join your program while increasing retention, engagement and AOV over time.
Premium loyalty programs provide a strong lever to delight existing customers, captivate new shoppers, increase awareness of your brand and grow your program’s benefits.
31%
of consumers say they have yet to join a premium loyalty program because the retailers they shop with don’t offer them.
Structure Your Program For Maximum ROI
Customers expect and desire different things than they did just a year ago. That means you need a deep understanding of your consumer to develop a premium loyalty program that performs well in today’s environment.
The Right Structure Strikes a Balance Between
Benefits
70%
of consumers are willing to join a program if their favorite retailer offers them and the benefits are valuable to them.
The benefits of your premium loyalty program need to resonate with your target customer audience. A laundry list of traditional rewards may have little perceived value if they don’t align with your subscriber’s needs and desires.
The timing of rewards
Building value from your MEMBER base
27%
of shoppers say personalized offers would motivate them to join a premium loyalty program.
47%
of retailers say they don’t currently provide members with personalized offers.
66%
of consumers said free shipping would motivate them to sign up for a premium loyalty program.
13%
of retailers that don’t provide free shipping today say they’d like to in the future.
Only
Select The Right Partner For Your Premium Loyalty Program
Resources such as Gartner and Forrester are good places to begin narrowing down the field of premium loyalty program providers if you're a member of those services. Look for a vendor with specialized experience in premium loyalty programs who can use the right technology to help you acquire members, handle recurring billing and optimize your program over time.
While some retailers launch their programs in-house, it can be challenging:
27%
of retailers who work with a premium loyalty program vendor say they have
updated their programs within the last month.
37%
of retailers say “competing priorities” were the biggest barrier to entry in launching their loyalty programs.
19%
Almost 1 in 4 say they lacked the internal resources to build and manage their programs. 19% say they suffered from a lack of IT support.
Moving forward, these in-house programs might lack the necessary data and IT support to make program updates. Competing priorities might also move the programs further down on organizations’ to-do lists.
Remember that you’ll be entrusting an important component of your brand’s image and reputation to your premium loyalty program partner. Everyone needs to share the same goals and expectations around both the ROI you want to achieve and the customer experience you want to deliver.
Premium loyalty members pay for the value your program provides them. Your program’s ROI will depend heavily on your provider’s ability to create the right program, execute on that program and optimize its performance over time.
Data analysis
Billing
management
Marketing & creative services
Compliance (data privacy, PCI, etc.)
Customer service
resources
Also, consider these backend components.
8%
Compared to only of those who manage their loyalty programs in-house.
Metrics To Gauge Your Premium Loyalty Program’s Performance
Lifetime value of program subscribers
Measuring your program enables you to understand how closely your benefits align with customers’ expectations and how well you’re delivering your desired customer experience. KPIs to consider:
The right KPIs will help you tweak your messaging strategy to convert more customers into your program. Targeted metrics can uncover opportunities to enhance and expand your program. In addition, you can get valuable insight into your program’s health and overall success with soft data like:
Some of these data points — tracks, clicks, joins — are easy to put your finger on, but others are best gathered through customer feedback and surveys to ensure you have the most relevant information available for your unique program.
Continuous Improvement = Long-term Program Success
Premium loyalty programs aren’t a set-it-and-forget-it type of tool, and ongoing innovation is key to keeping subscribers engaged.
Your program partner should have the tools and experience to not only help you build your program but to optimize it over time. Once your program is live, it’s important to quickly begin assessing what is and is not working.
Where are your consumer touch points, and are you leveraging each of them in the best possible way?
Are you testing new communication strategies and approaches regularly?
What benefits are customers talking about that you should add?
Which benefits aren’t getting much traction?
How does your membership cost balance against customers’ perceived value?
Your technology partner’s optimization and testing teams should be proactive in helping you find opportunities to improve your program. Routine data reviews will be useful in evaluating where your program could deliver better ROI and drive the metrics that matter to your brand.
Periodic reviews should also address where your KPIs have changed. As the pandemic recovery progresses, your goals may shift toward bringing people in-store. You might want to focus incentives and promotions that lure past customers back.
After the market upheaval caused by the pandemic, incremental adjustments to your program’s benefits and reward timing can help you reconnect with shoppers and speak to their current wants and needs.
Entice customers back into
a brick-and-mortar location
Premium loyalty programs offer retailers a unique way to engage consumers, drive sales, build brand awareness and gain a competitive advantage. Brands can leverage this opportunity to provide shoppers with a program that delivers value and enhances the customer experience, all while forming the foundation for recurring revenue into the future.
Why Retailers Choose Clarus Commerce
Why Retailers Should Care
Members pay a fee to join premium loyalty programs in exchange for enhanced benefits. Popular examples include Amazon Prime, Walmart+ and CVS CarePass.
What They Are
of retailers with a traditional loyalty program have discussed launching a premium program
95%
Retailers seeking to differentiate, retain loyal customers post-pandemic, attract new shoppers, build engagement with VIP customers and drive more revenue are among those benefitting from premium loyalty programs.
Who Needs Them
Digital
Benefits
Once you’ve explored the benefits your target members desire, you should also consider what’s happening in the retail space overall. Remember that your competitors aren’t the only ones setting the tone in the marketplace. Amazon, CVS and Walmart are among the big players driving customer expectations around service levels, speed of fulfillment and other perks, and influencing premium loyalty programs in every corner of retail.
How do you find out what your audience wants most from a premium loyalty program?
Review industry benchmarks around customer preferences and buying behaviors.
Look for trends and themes in surveys you’ve conducted among your customer base.
Examine existing or previous loyalty programs to see what generated activity and what didn’t.
Solicit feedback from customers through email, live chat and customer service inboxes.
Loyalty programs built around racking up points or reaching the bottom-spend tier before members receive benefits are less impactful than they used to be. For customers joining your program, showing them value in real time – as instantly as you can and every time they shop – is an important component in success, driving both renewals and referrals.
62%
of retailers that offer benefits in the first week saw an ROI on their program in the first 6 months, while those offering benefits in the first month only saw 21% ROI.
Instant rewards also make for a more successful program in the long run.
of consumers say that instant discounts are a perk that motivates them to join premium loyalty programs.
60%
Among retailers offering benefits within the first week,
say their program members shop with them
at least once a week.
86%
The timing
of rewards
Structure your benefit cadence to fit customers’ preferences as well as your brand’s goals.
Referrals into your loyalty program
Social media shares
Repeat purchases
Higher order values
New product tryouts
Remember that your premium loyalty program subscribers are your brand’s best customers. Building their lifetime value is central to maximizing your ROI.
By developing a benefit structure that delivers value to your members — and by striking the right balance between rewards, cadence and cost — the halo effect from these top-tier customers can be tremendous.
By developing a benefit structure that delivers value to your members — and by striking the right balance between rewards, cadence and cost — the halo effect from these top-tier customers can be tremendous.
89%
of consumers would recommend a retailer to their family and friends if the premium loyalty program offered valuable benefits.
51%
of retailers offering premium retail programs say members are 4X as valuable as regular customers.
Building value from your MEMBER base
Along with its other disruptions, COVID-19 shook loose many customers’ loyalty to brands. Retailers looking to reclaim their “lost” customers (and add new ones) will need to be proactive with customer acquisition and retention efforts while still increasing revenue. Premium loyalty programs provide a powerful tool to accomplish both goals.
of consumers are likely to buy weekly since joining a premium loyalty program
43%
VIP service option eliminates chat queues and IVR trees
Virtual resources such as instruction, expert-led discussions and product reviews
Early access to sales and other events, both in-store and online
Bundled package discounts for
high-demand products
Free shipping and free return shipping
1
2
3
They’ll talk to their friends and family about your great program and about your brand in general.
They’re more likely to consider you their go-to source for products.
They’ll engage more, with higher open and click-through rates.
1
2
3
Customer communications
Service offerings and options
Ongoing data review, analysis and recommendations
Evolution of benefits and customer engagement strategies
Optimization to utilize data in updating
and enhancing the program over time
Support response times
Engagement scores
Average order value
Purchase frequency
Retention rates
Acquisition metrics
Improve engagement with your brand
Reduce customer service times
Increase average order values
Drive repeat purchases
Test channel-specific messaging
Encourage referrals
Boost acquisition and renewals
What They Are
Who Needs Them
Why Retailers Should Care
Benefits
The timing
of rewards
Building value from your MEMBER base
Technology
platform
talk to a premium loyalty expert
Read on to learn best practices for launching a premium loyalty program that works.
Are there other benefits or services they'd like you to add?
3
What's their perception of your brand?
2
How satisfied are customers with your program?
1