Why Should You Consider a Subscription Based Loyalty Program for Your Business?
You know that your business needs a way to stand out from competitors. You also know how important it is to continually improve customer satisfaction and build loyal brand advocates while also growing your top and bottom line.
A customer loyalty program (if done right) is an amazing tool to help you do just that:
- By giving your members an exclusive access to a world of benefits, you create a unique selling point (USP), meaning a convincing reason for your customers to continually choose with you!
- By holistically collecting 360° customer data (members are usually happy to opt-in to this if they feel the value they get in return is worth it!), you fill your gold mine of insights to drive customer behavior in a data-driven manner and grow your business precisely as you need.
- By continually appreciating your customers (through loyalty benefits and rewards) and systematically incentivizing the behavior you seek from them, you create a win-win situation with satisfied customers and holistic business success.
When it comes to a Subscription Based Loyalty Program, there are 3 additional performance drivers:
- Stickiness: by paying a fee, members voluntarily commit to you and as a result are more likely to continually choose your over your competition, so that the fee pays off for them.
- New revenue streams: when done right, the fee itself delivers a new, valuable stream of revenue for you that adds to the additional revenue you drive from the paying premium members.
- Emotional loyalty: you successfully foster emotional loyalty with your Subscription Based Loyalty Program by making your paying members feel like true VIPs.
The most well-known example of a company who nailed this type of loyalty program is of course: Amazon. With its hugely successful subscription loyalty model “Prime”, Amazon set new standards in the loyalty world.
And this standard is also available for you with a Loyalty Platform that powers this type of loyalty program. Want to find out how? Continue reading below 👇🏽
How to Create Subscription Based Loyalty Programs With Loyalty Prime
A consistently successful Subscription Based Loyalty Program needs to be powered by a top-notch tech stack. With the right high-quality Loyalty Subscription Management Software, you can quickly set-up your desired Fee Based Loyalty Program and manage it effectively.
But which features do you need to look out for in a Loyalty Subscription Management Software? And what should you consider with regards to the software provider? At Loyalty Prime, we have got you covered on all bases! Find out why below – and contact us for a live demo to get an even better feel!
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Everything You’ll Need in a Loyalty Platform to Power Successful Subscription Based Loyalty Programs
We at Loyalty Prime are experienced loyalty experts and have helped countless clients achieve measurable results with their loyalty programs. With our Loyalty Subscription Engine ‘Prime Cloud’ at your side, you pave a direct path to your loyalty marketing success!
A first overview of Prime Cloud’s holistic Subscription Based Loyalty Program features are listed below – and if you are interested to learn more, simply book a free demo with one of our loyalty experts!
|LOYALTY PLATFORM FEATURE||HOW PRIME CLOUD HAS GOT YOU COVERED|
|1. Loyalty Platform Set-up
|2. Subscription Model Configuration
|3. Loyalty Subscription Management Software (Subscription Loyalty Engine):
|4. Loyalty Reward Types
|5. Loyalty Marketing & Promotion Engine
|6. Customer Behavior Tracking & Incentivizing
|7. Loyalty Member Account Management
|8. Customer Service Functionality
|9. Reporting & Data Analysis Functionality
|10. Accounting Functionality
|11. Loyalty Platform Integrations
|12. Loyalty Platform User Interface
|13. Loyalty Platform Rights & Roles Management
|14. Top-Notch Technological Quality
|15. White-label Loyalty Frontends
Why Global Brands Choose Loyalty Prime as Their Subscription Loyalty Management Software for Subscription Based Loyalty Programs
Our rich feature-set and top-notch, enterprise-grade technological quality are definitely 2 of the important reasons why premium brands across the globe choose Prime Cloud as their Loyalty Subscription Management Software!
But there are many more good reasons:
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How Do Subscription Based Loyalty Programs Work in Detail?
Now that we’ve reviewed what Loyalty Subscription Management Software features you should look out for and how Loyalty Prime can deliver everything you need, let’s go into more detail on how a Subscription Based Loyalty Program works.
Fee Based Loyalty Programs have risen popular lately – both because of their financial benefits and the widely known success of Amazon Prime, as well as the popularity of subscription based business models like Birchbox and Dollar Shave Club.
One important element to mention is that there is a difference between Fee/Subscription Based Loyalty Programs and “pure” subscription based business models:
- With a Subscription Based Loyalty Program, members pay a fee to unlock a set of benefits. The benefits could be free or expedited shipping, unlimited access to movies, upgrades, exclusive discounts or access to special products and services.
- With a subscription based business model, subscribers receive certain products or services on a set schedule (typically monthly) and pay as they go for the products they receive. A subscription model alone is not necessarily a loyalty program per say, but they are often combined with exciting loyalty program tools and features. For example, subscribers can be rewarded for their “tenure”, meaning they receive specific reward-sets based on how long they maintain their subscription. Or customers earn points for their subscription purchases as well as other desired behavior such as referrals, which can then be redeemed for rewards. The sky is truly the limit here!
The Key Features of a Subscription Based Loyalty Program Are:
- Subscription Fee: fees may be monthly, quarterly or annual. Fees are often set up for auto-renewal to avoid the friction of requesting payment when it is time to renew.
- Exclusive Benefits: In return for the subscription fee, members receive access to an exclusive world of benefits. This can include products, services or pricing that are not available to other customers.
- Amazon Prime offers free and expedited shipping alongside an extensive music and video on demand streaming service for example.
- AMC Theatres’ A List and Premiere levels offer upgrades on food and beverage, priority service lanes, and waived online ticketing fees.
How Do You Start Building a Subscription Based Loyalty Program?
There are a few questions you need to ask to help you align your core product/service and brand personality with a Subscription Based Loyalty Program:
Question #1 What benefits can I offer that customers will pay extra for?
Can you provide some extra level of benefits that customers can’t resist? Consider things like exclusive access to new merchandise, expedited shipping, or priority services – but also consider ongoing discounts and special offers. Pay particular attention to things that you already have or do that could be valuable to members, such as providing recipes as a benefit for subscribing to a food delivery service.
Whatever your mix of benefits, find things that make your paid program too good to pass up!
Question #2 Will a Subscription Based Loyalty Program fit with my brand and my customers’ expectations?
A Subscription Based Program is especially useful if you’d like to distinguish particular benefits for a certain type of customers. These benefits should always align with your brand values and customer expectations.
If we take Amazon as a concrete example, their paid benefits with Amazon Prime directly align with their brand and customer expectations in that customers who sign up get faster shipping and reduced prices on products they’d likely already purchase anyways. As a result, it also increases customer satisfaction, customer tenure, and purchase frequency.
Question #3 Is my product a frequent purchase?
Subscription Based Loyalty Programs are easier to sell for products and services that are purchased on a regular basis. Frequent purchases make it easier for the customer to say “Yes!” because they have more opportunities more often to enjoy the benefits of your program.
Question #4 How should I set my fees?
To commit to paying a fee, a customer must believe they are getting their money’s worth. Customers will do the math, and so must you!
On the financial side, you should look not just at the fee revenue you collect, but also at the extra revenue you get from customers staying with you longer and purchasing more.
Again, do customer research to see how people react to paying a fee, and strongly consider doing a limited-time or limited-audience test to gauge response. Also consider whether to waive fees for certain customers, either on an exception basis or for certain segments you wish to focus on.
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How Do Businesses Benefit from Subscription Based Loyalty Programs?
When a customer makes an investment by paying a fee, they are choosing to commit to you, which in turn gives you the perfect opportunity to build on that relationship. Here are a few ways a Subscription Based Loyalty Program benefit you and your business:
Adds a New Revenue Stream
Fees for a Subscription Based Loyalty Program are a new revenue stream over and above direct product/service revenue. These fees can be substantial if a program is designed well. Over time, this is a large factor for driving consistent business success
If a customer has paid you a fee or has committed to a subscription, their purchases with you are somewhat on autopilot. This makes them less likely to shop around, because they want to get their money’s worth and will likely give you a bigger share of their wallet. Of course, they could cancel their membership, but that is an extra “inconvenient” step, giving Subscription Based Loyalty Programs “stickiness”.
Emotional Loyalty: That Insider Feeling
When executed well, Fee Based Loyalty Programs make your customer feel like an insider, which is an important form of emotional loyalty. They can also instill habits: a company with a Subscription Based Loyalty Program can easily become the default shopping destination so that members do not even consider shopping elsewhere.
You can reinforce this emotional connection with communications that acknowledge and thank the member, and by continually enhancing the perceived value of the Paid Loyalty Program benefits. This could include:
- Regularly reminding your members about the wonderful benefits and great savings they have earned since joining.
- Reminding them about how many amazing benefits they are going to receive when staying subscribed.
- Sparking extra excitement via regular “thank you” campaigns and surprise & delight elements.
- Reinforcing a member’s tenure by including “Member Since” on communications.
- Allowing members to unlock special rewards depending on the length of their tenure as a paying loyalty member.
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Who Is a Subscription Based Loyalty Program Best Suited For?
Subscription Based Loyalty Programs work best for companies that:
- Can offer something of high perceived value beyond their basic products and services.
- Are able to deliver extra benefits to paying members without disrupting the experience for non-paying customers.
- Have products/services that are purchased on a relatively frequent basis.
Successful Subscription Based Loyalty Program Examples
Here are two examples of strong Fee Based Loyalty Programs from the US: Costco and Amazon Prime.
A Subscription Based Loyalty Program is Costco’s entire business model! In fact, customers must have a membership to even shop with Costco.
How it works:
- Four Membership levels:
- Gold Star, $60 per year
- Gold Star Executive, $120 per year
- Business, $60 per year
- Business Executive, $120 per year
- Warehouse access: all members get access to Costco’s warehouses, which carry an enormous array of products at great prices.
- Annual reward: executive members get an annual reward equal to 2% of their purchases.
- Services: members get access to a range of services including automobile discounts, insurance, dental plans, identity protection and more.
Why it’s successful:
- The Insider Feeling: with attractive pricing only available to members, members always feel they are part of a privileged group with access to the best deals in town.
- Exciting Benefits: each visit to a warehouse has an element of a “treasure hunt”, since Costco keeps its selection fresh with new shipments arriving frequently. The store experience is highly engaging because members can discover new things at great prices. In addition to this is the wide array of additional services for the members. Plus, any experienced Costco shopper knows the excitement of basically getting a whole free meal from food samples. 🙂
- Motivation to Shop More & More Frequently: The membership fee serves as a big motivator for members to give Costco a large share of their wallet to ensure the fee pays for itself with the great savings on shopped products. This is further enhanced by the Executive level’s 2% Reward Benefit. Further promotions are used to drive spend and keep members excited.
How it works:
- Amazon shoppers can purchase a yearly subscription of Amazon Prime in order to have access to select benefits for shipping, streaming, and shopping.
- Shipping benefits include: faster delivery, reduced prices on shipping, and the option to choose the day your order is delivered.
- Streaming benefits include: access to Prime Video, select Amazon Channels (such as HBO and STARZ), Prime Music, and Prime Gaming.
- Shopping benefits include: access to specific discounts, early access to Lightning Deals, access to Amazon Fresh, Prime Wardrobe, Prime Pantry, and much more.
Why it’s successful:
- Meets user expectations: Amazon shoppers not only use Amazon for pricing, but also because expect a seamless shipping experience. With Amazon Prime, that shipping experience becomes even better.
- Improves customer experience: with access to so many types of personal recommendations and receiving items quickly and at no cost, Amazon Prime offers one of the best online shopping experiences in existence. As a result, users feel compelled to shop more frequently.
- Holistic options: Amazon Prime isn’t limited to just one type of shopper – they provide benefits for basically every type of Amazon shopper imaginable. With such a comprehensive approach, nearly all Amazon shoppers can find benefits that are personally relevant for them.
Subscription Based Loyalty Program Best Practices
How can you make sure you develop a well-designed and sustainably successful Subscription Based Loyalty Program? Here are some tips and best practices:
Best Practice #1 Start With a Solid Strategy
Do your homework to understand your customers and consider how they will respond to a Subscription Based Loyalty program. Think creatively about what you could offer that would stand out from your competition, excite your customers, and focus on features that have the highest perceived value for you in relation to their costs. Develop a model and forecasts to understand best case, worst case, and target scenarios. Develop a plan for what you need to do if the results are different from what you expected.
Best Practice #2 Focus on Value to Set Your Fees
Your goal should be to make it super easy for your customers to decide to pay the fee. Put enough valuable features into the offering so a customer says “well of course I should join, I’ll easily get more than I pay for.” To preserve your financials, focus on benefits, rewards, and incentives that have a value to the customer that is higher than your costs.
Best Practice #3 Continuously Enhance Your Offering
Continuously review your features and benefits and expand them over time to keep the program fresh. Make it harder and harder for customers to walk away. Look at which features members use the most: if there is a feature customers aren’t using, remove it and try offering something else. Test and learn by offering new features for a limited time and/or to a limited audience.
Best Practice #4 Use the Right Technology
Another key success factor of your Fee Based Loyalty Program is that you use the right technology to power it. The best-case scenario is to choose a Loyalty Subscription Management Software that:
- Is easy to set up, adapts to your current tech stack, and provides you the data and loyalty marketing tools you need.
- Makes it simple to manage your loyalty program in the most efficient, effective, and data-driven manner.
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Best Practice #5 Overall Loyalty Program Best Practices
We’ve shared some best practices specific to Subscription Based Loyalty Programs, but there are additional best practices to consider for any type of customer loyalty program. If you’d like to dive deeper, take a look below.
Combining Your Paid & Subscription Based Loyalty Program with Other Loyalty Program Types
A Paid Loyalty Program can be highly successful on its own AND also works extremely well in combination with other loyalty program types. Here are a few ways to pair a Subscription Based Loyalty Program with other program types:
- Points Rewards Programs: paying members could earn points faster or have access to exclusive rewards that regular members do not receive. A paid level could also offer extra perks, higher levels of service, or insider access.
- Surprise & Delight: one of the biggest challenges for a Subscription Based Loyalty Program is churn when renewal time comes – an unexpected gift before those milestones increases goodwill and reminds customers of why they want to renew their payment.
- Partnerships and Coalitions: Fee Based Loyalty Programs could include benefits that are provided by partners, such as if a member has reached a certain length of continuous membership at a gym, they receive a $50 gift card from an athletic wear retailer. There are many possibilities to explore when it comes to partnerships!
- Tiered Programs: some programs have base levels of membership but offer higher tiers that can be purchased. The tier available for purchase may be identical to a tier that is earned. For example, some airlines enable you to purchase Gold or Platinum status if you do not qualify by normal criteria, or the purchased tier may differ from the earned tier in order to reserve some benefits for those who have earned it.
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