Paid membership loyalty programmes are clearly a popular trend right now, but they should be considered as one specific tactic in the wider loyalty strategy. Is a programme like this the right approach for your brand? Consider these points:
- Is your current loyalty strategy focused on customer acquisition or customer retention?
Having a clear focus for your overall strategic objectives can help you better evaluate the balance between free and paid programmes. Traditionally, free programmes have been used to drive acquisition and paid programmes used to target retention, but every brand is unique.
- Is your customer base (and existing loyalty programme if you have one) clearly segmented?
Paid membership programmes are often very helpful at re-engaging with higher tier customers who may not currently transact enough to retain their previous status level, but who enjoyed the prestige and benefits of the tier, and are willing to pay a fee to recapture those benefits.
- Do your loyalty programme benefits lend themselves to be bundled and delivered as a unique offering to customers?
If you have an existing for-free programme, a paid membership programme tactic must be complementary to that programme without devaluing and demotivating the behaviour of existing loyalty programme customers.
- How well do you know your customers and their preferences?
Customer demographics matter. Younger customers are showing a willingness to pay for loyalty programme and benefits that deliver the kind of experience they want.
A paid programme can be a formidable loyalty device in its own right or sit alongside a free programme. Either way, it needs careful calibration to achieve your engagement objectives.
Written by Peter Gerstle, Head of Travel Products
