The premium loyalty economy is booming. Consumer behavior is also changing. Customers today have a new set of expectations they want rewards, not ownership, personalization, not generalization.
Currently, there is an increase in premium loyalty companies as part of a larger shift from the product economy to the premium loyalty economy. Businesses now need to handle customer loyalty, pricing, and selling very differently. Running a premium company means there is a continuing relationship with the customer.
Now these services are everywhere, with growth coming from wealthier generations who want the same convenience, quality and freedom. Subscribing creates a wider range of choices, which is why customers everywhere are embracing these companies and happily spending more with them as they grow comfortable.
The most famous premium loyalty program, Amazon Prime, has become the gold standard of all loyalty programs, premium and traditional alike. The popular premium program has been growing quickly, but it becomes even more evident when you look at a chart of its growth over the past several years and where it's headed between now and next year, according to the latest eMarketer data.
Marketers should view the Prime program as one of Amazon's secret ingredients to growing sales in the coming decade or longer. The great news is that the global Prime membership base is expected to double over the next decade to 275 million members and reach 80% of U.S. households by 2029.
Free two-day shipping, Prime Video, and Prime Music are clearly and not surprisingly, the most-used benefits among Prime members, both overall and on a week-in, week-out basis. The chart shows how other Prime benefits stack up against the "big three."
On average, Prime members spend $1,400 annually on Amazon shopping compared to just $600 spent by regular Amazon shoppers, according to data from Consumer Intelligence Research Partners. The data show that a single Prime member is worth more than twice as much as a regular retail customer for Amazon.
Starbucks Rewards, a loyalty program launched by company has been one of the most successful implementations of a loyalty and customer retention strategy.
The Starbucks app is the center of the company’s digital ecosystem, bringing together loyalty, mobile payment, and content partnerships, all seamlessly integrated into one convenient application. The successful rewards program gives a number of benefits for app users.
In addition to earning two stars for every dollar spent, rewards members get other benefits like free in-store refills, special member offers/events, and the ability to pay by phone and order ahead. The famous rewards program also offers plenty of customization for users, including a free beverage on the user’s birthday and personalized suggestions based upon past orders.
In return, Starbucks rewards an instant digital relationship with the 14.2 million active U.S. program members. The loyalty program has seen hefty growth, with an 11% growth in users in Q2 2018. And members in certain places actually spend more, representing 39% of the entire chain’s sales.
Russian search giant Yandex has launched a subscription service, Yandex.Plus, that provides subscribers with a high value bundled offering of multiple Yandex services. The Yandex.Plus subscription offers unlimited music streaming, ad-free movies, discounts for taxi and car-sharing rides, as well as other benefits from the Yandex ecosystem.
Yandex.Plus offers the following benefits to subscribers:
1. A full subscription to Yandex.Music, including unlimited downloads to mobile devices and high-quality music streaming.
2. A 10% discount for Yandex.Taxi rides in the Comfort, Comfort+ and Business categories.
3. Free delivery for customers in over 30 locations in Russia spending over 500 roubles ($7.62) on at least one item in their order on Yandex.Market's recently launched marketplace (currently in beta).
4. A 5% discount for any Yandex.Drive ride with an extended car reservation period.
Yandex.Plus is available to subscribers in Russia for 169 roubles ($2.75) per month. Current Yandex.Music subscribers in Russia will automatically become members of Yandex.Plus.
At the heart of the premium loyalty is the idea that customers are happier subscribing to the outcomes they want, when they want them, rather than purchasing a product with the burden of ownership. Ιnstead, the whole business model needs to be rethought from the perspective of the relationship to subscribers, because the shift to the premium loyalty is driven by subscribers, not vendors. Those programs that are most attractive to members can lead to an increase in sales because members spread the word about them and inspire others to join.
According to report on Amazon user behavior from Feedvisor, 85% of Prime members visit Amazon at least once a week. An even more astounding reveal is that nearly a third of Prime members 31% are going to the site daily. While 85% of those Prime members report visiting the site once a week or more, that number drops to 56% for non-Prime members going to Amazon at least once a week.
Of the 85% of Prime members who visit Amazon at least once a week, nearly half make weekly purchases, and 6% make daily purchases. Feedvisor says Prime members, generally, are twice as likely to shop online daily compared to non-Prime members.
Feedvisor’s survey also found the top three driving factors that result in Amazon purchases were lower prices, free shipping and positive product reviews.
44% of the survey respondents said they “Always” check prices on Amazon, while only 25% said they “Always” check prices on different e-commerce sites, and 18% said they “Always” check prices via a Google search.
The study included data about Amazon search habits as well, with 75% of respondents saying they use the Amazon search box (versus Amazon’s “Today’s Deals” or its departments tabs, or performing a Google search for a product and including the Amazon’s URL within the search). 60% of Amazon shoppers scroll beyond the first page of product results, and 54% claim to always read the full product description.
Amazon realized long ago that building the best premium loyalty program in the world would require listening to their customers.
A loyalty and rewards program offers the opportunity to solidify existing relationships, initiate new ones and convert your one-time visitors, buyers and prospects into repeat business and long-term members. In a premium loyalty program, members pay a recurring fee to stay in the program in exchange for valuable benefits that they can use anytime. This means that members can engage with the program 24 hours a day, 365 days a year.
A valuable for a very successful premium loyalty program is mobile wallets and merchant’s wallet. Warply provides a very premium service, WarplyPay, a cloud based native digital payments service, that also tokenize credit and debit card numbers to make payments keeping card data secure. The mobile payment solution enables merchants and retailers to all users to pre-load money to their digital wallet, within any mobile application that uses WarplyPay and make transactions and payments via the app.
Regardless of how the program is set up, it should be simple. If it’s built around points, they should be easy to earn and burn (or hoard). If it has tiers, the thresholds should be clear and easy to understand. The point of the program is a personal relationship with the brand, not with the program itself.
By signing up for the premium loyalty based model, many businesses have already realized the benefits it has brought into their system. Premium loyalty has the power to transform the retail industry by enabling retailers to attain predictability and consumer insight. The premium loyalty is here to stay. Are you?