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Traditional, free loyalty programs are table stakes for many brands. But the emergence of paid loyalty, in which customers pay to access a benefit or to get more services on top of the free offering, has many brands asking if paid loyalty might be right for them.
Paid loyalty brings the potential for ongoing, recurring revenue and an opportunity to engage and gain ongoing business from consumers who are willing to spend money to access more benefits. Successful programs represent a meaningful exchange of value that meets core customer needs like choice, control and convenience with solutions that delight a brand’s best customers. The best-in-class programs demonstrate their value with a clear return for the customer’s investment and adapt as trends and tastes shift.
Different categories of subscriptions will fare better or worse depending on customers’ priorities. In the entertainment category, as customers reach budget limitations, they will trade within categories by dropping one streaming service but picking up another. In the food category, there’s less saturation and therefore more possibility for people to sign up for a QSR’s beverage subscription or even a grocery store’s unlimited delivery service.
Consumers investing in paid loyalty want to get their money’s worth and brands must expect them to “do the math” when deciding whether to sign up. It’s essential that customers easily understand what their money will deliver and how they’ll get that value back. Ideally, there’s an exchange of value where both the brand and customers are equally benefiting from the relationship.
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Brands must continue delivering value through their paid loyalty programs to avoid attrition. Common reasons customers pull the plug include:
