The Rise Of Premium Loyalty

Despite the troves of data and technological innovations available to modern retailers, loyalty and rewards programs have remained a particularly tough nut to crack. However intuitive it might seem, though, could charging consumers actually be the key?

That’s the strategy of a growing number of merchants, Retail Dive reported. Whether companies have begun to charge monthly or yearly fees in exchange for access to members-only deals or early entry to limited sales events, more and more brands are seeing moderate returns by sticking to one ironclad principle: If consumers have to shell out for rewards, they better actually get something of value in return.

“These programs are designed to get loyal customers into these stores more often, and they often work,” Matt Schulz, senior industry analyst at CreditCards.com, told Retail Dive. “Plus, if people are loyal customers of a store, they’ll be willing to pay for these types of programs — as long as they feel like they’re getting value. That’s the whole key: offering them something of value, something that is unique to your store and that targets the customers’ wants or needs.”

If fee-based loyalty programs prove to be the savior for a market that’s struggled for years, merchants will only have themselves to blame. Andrew Graft, vice president of corporate marketing at Access Development, explained that this new crop of subscription loyalty platforms is nothing more than updates on the Amazon Prime model of doing business — hook customers with an early fee, then capitalize on the business done during subsequent transactions.

“There’s also a lot of ‘monkey see, monkey do,’” Graft told Retail Dive. “You’re seeing the Amazons of the world come out with [premium loyalty] offers that have been so successful that smart businesses want to copy what they do. Imitation is the sincerest form of flattery.”