Discover the power of a premium loyalty programme! I'm excited to share how offering exclusive benefits, personalised experiences, and VIP treatment can boost customer retention and revenue. I'll walk you through successful examples, implementation tips, and future trends to create a loyalty programme that sets your brand apart.
Imagine if one of your favourite brands asked you to join a loyalty and reward programme, where, for 'small' monthly fee, you get access to all kinds of premium benefits.
Would you be tempted to join? For many customers the answer is yes.
Welcome to the era of premium loyalty programmes AKA paid loyalty programmes - a powerful tool for building a loyal customer base that engages with your brand and advocates for it.
If 80% of a company’s future revenue will come from just 20% of existing customers, then premium loyalty is not just a great idea, it’s a necessity.
Over the course of this article, I will discuss:
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the main features of a premium loyalty programme;
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the advantages that it provides for both your customers and your business;
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how you can implement one to sustainably boost profits for your brand; and
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challenges and trends to keep an eye out for.
Contents:
Discover more about paid loyalty programmes in our Types of Loyalty Programme Guide
Key Takeaways
- Premium loyalty programmes offer exclusive benefits tailored to customers, providing a VIP experience for those able and willing to pay a membership fee or annual subscription.
- Businesses benefit from premium loyalty through increased revenue, improved profitability, and valuable customer insights.
- Examples of best practice premium loyalty programmes includes Amazon Prime, JD Gyms’ Premium Plus and Sephora’s Beauty Insider.
- If you plan to implement a premium loyalty programme, then study your business goals, understand your customers, design a strong programme, select the right technology, and monitor and optimise performance.
- Challenges include communicating the value of paid membership; balancing costs and benefits; and maintaining exclusivity.
- The future of premium loyalty lies in personalisation, customisation, experiential benefits, and subscription-based models.
- Partnering with a provider such as Propello Cloud helps you design, launch and continuously optimise a premium loyalty programme that makes you stand out from the crowd.
What are Premium Loyalty Programmes?
Premium loyalty differs from traditional loyalty programmes in that the rewards that are offered are not just cheap incentives but are truly deserving of the ‘premium’ tag.
These programmes offer exclusive benefits, personalised experiences, and a VIP experience for a fee or a subscription. Members of premium loyalty schemes might receive special perks, like free shipping, priority customer service, and early access to new products.
That all sounds great, but how do these programmes actually work?
How Premium Loyalty Programmes Work
Let’s take a peek behind the curtains and demystify how premium perks really drive customer loyalty.
Programme Models
First up, let’s talk paid membership models.
Basic Fee-based and subscription programme
Some programmes require customers to pay a flat monthly subscription to access exclusive rewards. This might sound like a tough sell, but hear me out. When they pay a fee to join, customers are more likely to engage and take advantage of all the benefits, especially if they are valuable enough.
It's like having a gym membership—you're more motivated to actually go when you're paying for it!
Tiered programme
Tiered programmes can offer different levels of paid membership rather than a flat monthly fee. These work in a similar way to 'earned' tiers where customers climb the tiers based on what customers spend with you. For example, the tiers below could warrant different monthly fees.
- Diamond or elite tier.
- Platinum or premium tier.
- Gold or high tier.
- Silver or intermediate tier.
- Base or entry-level tier.
As customers pay more for higher membership tiers, they unlock even more perks along the way.
Reward Structures
Next up, we’ve got reward structures.
Instant rewards and bonus perks
Instant rewards are available 24/7 and create a sense of immediate value and gratification for customers, encouraging them to engage with the programme and your brand.
For example, members might receive a free gift or bonus points just for signing up, or they may get access to special sales or discounts that aren't available to non-members.
Experiential rewards and exclusive experiences
Members might also have the opportunity to attend VIP events, meet celebrities or influencers, or participate in unique activities related to the brand. These are the kinds of moments that create lifelong memories and turn customers into true brand advocates.
Omnichannel Integration
Finally, let’s explore the importance of omnichannel integration in premium rewards programmes.
Seamless experience across online and offline channels
Premium loyalty programmes should provide a seamless experience across all channels – online, in-store, mobile, you name it. No matter where they choose to engage with the brand, members should be able to easily earn and redeem rewards. It's all about making things convenient and consistent.
Personalised communication and rewards across touchpoints
Premium rewards programmes use data and insights to personalise communication and rewards for members across various touchpoints. This might include customised product recommendations or special offers based on a customer's preferences and purchase history.
Why Customers Prefer Joining Premium Loyalty Programmes
Alright, let's talk about why customers are spending more money on premium rewards programmes.
- Exclusivity: A premium programme offers customers special perks and experiences that only members can enjoy, creating a sense of exclusivity and belonging.
- Personalisation: Premium loyalty is about personalisation. Programmes tap into customer data and insights to provide personalisation, which improves the customer experience.
- Enhanced benefits: And let's not forget about the enhanced benefits. I’m talking about scoring instant access to free shipping, great customer service, exclusive access to products and events, and so much more.
To sum it all up, premium programmes evoke a certain emotional connection with a brand. It's like having a VIP pass to your favourite brand – and who wouldn't want that?
Benefits of Premium Loyalty Programmes for Businesses
Now, let's talk about why businesses are loving premium loyalty programmes just as much as customers are. I mean, sure, customers get positive experiences and benefits, but what do businesses get in return?
Increased Customer Engagement and Loyalty
First off, premium loyalty programmes make it very easy to engage customers with rewards of genuine value. The more they engage, the better the rewards they earn, and the more loyal they become.
And all that engagement? It leads to some seriously impressive results. Premium loyalty programme members have a higher purchase frequency and an increased order frequency. They're not just buying more often; they're also spending more each time they shop.
Improved Customer Retention and Lifetime Value
Premium loyalty programmes help you attract and retain high-value customers who are more likely to stick around for the long haul. These are the return customers who are willing to part with just a little bit more for the coveted VIP treatment. They're the ones who can truly drive long-term success for your business.
Enhanced Revenue and Profitability
And, yes, there’s more. Premium rewards programmes provide a predictable revenue stream. If people pay you a membership fee or sign up as a subscriber to a programme, you’re locking yourself into a source of revenue that enhances your bottom line.
Valuable Customer Insights
Finally, premium loyalty schemes represent a big source of data on your customers. By segmenting customers by loyalty tier and behaviour, you can understand what they want before they do.
And with all that data comes the ability to personalise experiences and marketing like never before. Use the insights to create a personalised experience for each customer within your programme and in your marketing strategies.
Examples of Successful Premium Loyalty Programmes
Here are some examples of successful premium loyalty programmes to get your creative juices flowing.
Amazon - Prime
Prime membership is the gold standard of premium loyalty programmes. Members get instant access to free shipping, privileges, exclusive deals, streaming services and more. It is like a personal assistant, an entertainment system and a shopping buddy all rolled into one.
And with over 230 million members worldwide, it's clear that customers are loving the VIP treatment. But what makes Amazon Prime so successful? It’s about the value for the money and the convenience.
With an annual subscription, you gain a world of benefits that make life easy and fun.
There’s free two-day shipping; there’s music; there’s streaming of movies and TV shows. And then there’s the addition of Amazon Prime Day, a 48-hour shopping extravaganza of deals and markdowns.
Amazon Prime truly offers rewards for everyone.
JD Gyms - Premium Plus
This programme offers a host of exclusive benefits for fitness enthusiasts. Members get full use of all of the chain’s outlets, free guest passes for friends and family, as well as discounts with high-street brands.
What makes Premium Plus special is the added personalisation: members have access to a proprietary app that tracks workouts and offers tailored workout plans. It's like having a personal trainer in your pocket.
Premium Plus’s success lies in the fact that it does indeed provide something ‘premium’, beyond access to gym equipment. And, as membership numbers continue to grow at locations across the UK, it’s a strategy that evidently works.
Sephora - Beauty Insider
By integrating personalisation, tiers, experiential rewards and endless cross-channel experiences, Sephora's Beauty Insider creates a loyalty experience as alluring to its beauty-obsessed customers as the makeup products it sells.
Offering exclusive perks, tailored advice, and unforgettable experiences has helped Sephora develop a customer base of more than 25 million members, who account for a large chunk of the company’s growth.
Implementing a Premium Loyalty Programme
So you're sold on the idea of premium loyalty programmes and you're ready to take the plunge. But how do you start building your programme? Don't worry, I've got you covered.
Step#1: Assessing Your Business and Customer Base
Your top spenders and most frequent shoppers are the people you want to target with your premium programme. These customers are already devoted to your brand and are probably the most open to a premium loyalty programme.
But it's not just about the numbers – you also need to understand what your customers expect from a premium loyalty programme. What kind of rewards and benefits would your target audience find most valuable? What sort of experiences would they love to have with your brand?
Do some market research, send out surveys, and connect with customers to get a sense of what they're looking for.
Step#2: Designing Your Premium Loyalty Programme
This is all about striking the right balance between your business goals and your customers' desires.
Start by clearly defining your objectives:
- Is it increased customer retention?
- Higher average order values?
- More frequent purchases?
Whatever your goals are, make sure they're specific, measurable, and aligned with your overall business strategy.
Then, get creative with your rewards and benefits, focusing on what your customers love most about your brand. Consider exclusive access, personalised service, and truly valuable perks.
Finally, decide on your membership structure and fees. Will you have
- a single-tier programme with a flat fee; or
- multiple tiers with increasing benefits and costs?
There's no right or wrong answer – it all depends on your business, your customers, and your goals. Just ensure that the benefits of each tier are crystal clear and that the costs are fair and reasonable.
Step#3: Building and Launching Your Programme
With your programme designed and ready to go, it's time to start building. And that means choosing the right technology and platforms to support your programme.
Will you build or buy - build your own in-house solution or use a third-party loyalty provider? Regardless of what you choose, it's important to make sure that your loyalty programme is seamlessly integrated with your existing systems (like customer service teams) and processes.
And of course, once your programme is built and ready to go, you need to let potential customers know about it!
Create a buzz around your new premium loyalty programme with targeted email campaigns, social media posts, and in-store promotions.
Step#4: Measuring and Optimising Programme Performance
But the work doesn't stop once your programme is launched. You need to continuously improve and evolve your programme over time.
Track KPIs like enrolment rates, redemption rates, average order values, and customer lifetime value to make sure your premium loyalty programme is delivering the results you want.
Use this tracking data to improve your programme. This might mean adding new rewards and benefits, tweaking your membership tiers and fees, or even partnering with other brands to offer exclusive experiences and perks.
Challenges and Considerations of Paid Loyalty Programmes
Here are three of the most common challenges and how to overcome them.
Communicating the Value of Paid Membership
The biggest challenge, perhaps, is getting members to sign up for the paid programme when they can get benefits from a free loyalty programme.
You need to clearly and uniquely demonstrate what your premium programme brings to the table. It needs to be “a no-brainer” for your customer to sign up. Maybe there’s a free trial or an introductory offer to get them to buy-in.
Balancing Costs and Benefits
Your rewards cannot be a fancy label slapped on a mediocre set of benefits: they need to make your customers’ lives better. They could be delivered through great products and experiences. Or they could be delivered through partnerships with other brands.
But of course, amazing benefits and rewards come at a cost. So you need to manage the cost of your programme, from the technology to establishing the membership fees that will appeal to your customers but also sustain your business.
Maintaining Exclusivity and Differentiation
The second challenge is how to keep that feeling of exclusivity and differentiation going over the long term. When you first launch your app, everything is new and exciting – but one of the biggest struggles is how to keep rewards and experiences relevant.
Try to regularly refresh your perks and benefits, partner with new brands, or even completely re-brand your programme. The key is to keep your customers engaged and excited about being part of your exclusive club.
The Future of Premium Loyalty Programmes
And, before we call it a day: what does the future hold for premium loyalty programmes?
Personalisation and Customisation
With all the machine learning tech and AI on the market it’s never been easier to craft loyalty experiences as if they were tailored just for an individual. From personalised product recommendations in real time to custom rewards – the works!
And let's not forget about flexibility: customers want to choose their own loyalty adventure, so you need to offer as varied a spectrum of rewards and experiences as possible.
Experiential and Lifestyle-Oriented Benefits
A combination of experiential and lifestyle benefits helps you earn the mindshare that matters through exclusive vacations and premium dining – rewards that really feel like they’re worth more than just points. Customers will have a memorable experience, and they certainly won’t forget who helped to make it possible.
Subscription-Based Models and Recurring Revenue
Lastly, subscription business models are having their moment. Instead of a one-and-done membership fee, companies are exploring monthly or annual subscriptions, tiered pricing, and even "freemium" options.
And the really savvy ones? They’re bundling loyalty with subscription services, too, in the form of curated products (Hello Fresh’s meal-kit boxes is a great example of this) or behind-the-scenes content.
Boost Retention and Revenue with a Premium Loyalty Programme
I hope by now that you understand the power of a well-designed premium loyalty programme. Developing a premium programme that offers special benefits and adds real value turns your customers into loyal brand advocates for years to come.
So what are you waiting for? Grab customer loyalty by the horns. Just drop us a line on the contact page. Myself or a member of my team will contact you.
We will develop a premium programme that is customised for your needs and goals and allows your brand to shine.
FAQs
Q1. What defines a premium loyalty programme?
Premium loyalty programmes demand a membership fee, offering exclusive benefits and superior customer service that go far beyond what's available in traditional free loyalty schemes. These programmes cater to customers who seek more value and enhanced experiences from their brand interactions.
Q2. How does a premium loyalty programme differ from free programmes?
Unlike free loyalty programmes, premium loyalty programmes involve a membership fee, rewarding members with exclusive benefits, instant rewards, and personalised experiences. This approach significantly boosts customer engagement and distinguishes premium programmes from their cost-free counterparts.
Q3. What benefits do customers expect from premium loyalty memberships?
Members of premium loyalty programmes anticipate significant value for their membership fee, including premium perks like VIP access, instant rewards, and personalised experiences. These expectations are met through carefully curated benefits that elevate the customer's interaction with the brand.
Q4. Can premium loyalty programmes improve customer retention?
Yes, premium loyalty programmes are a strategic approach to enhancing customer retention. By offering personalised experiences and premium perks, they cultivate deeper brand loyalty through exclusivity and memorable experiences. This makes them an effective tool for long-term customer engagement and growth.
Q5. What role does customer service play in premium loyalty programmes?
Exceptional customer service in premium loyalty programmes ensures members receive timely and personalised support, significantly enhancing their overall satisfaction. This level of care fosters deeper brand loyalty, making the membership fee feel like a worthy investment for the exclusive benefits received.
Q6. Are there different tiers within premium loyalty programmes?
Premium loyalty programmes incorporate tiered structures to reward members for increased spending and engagement, offering more substantial rewards at higher tiers. Providing the promise of better rewards encourages ongoing patronage and interaction, reinforcing the member's commitment to the brand and its values.
Q7. What types of rewards are common in premium loyalty programmes?
Rewards in premium loyalty programmes go beyond the typical, offering instant perks, experiential rewards, and exclusive event access, among other valuable benefits. These carefully curated benefits aim to provide memorable experiences, thus greatly enhancing the overall value and appeal of the membership.
Q8. How do premium loyalty programmes contribute to a brand’s growth?
Premium loyalty programmes play a crucial role in driving brand growth by building a dedicated customer base. Through exclusive benefits and enhanced engagement opportunities, they promote repeat business and positive word-of-mouth, significantly increasing the brand's market presence and customer lifetime value.
Q9. What is the typical cost structure of a premium loyalty programme?
The cost structure of premium loyalty programmes is centred around a recurring membership fee. This fee supports the exclusive perks and premium experiences offered to members. This is what sets these programmes apart from free loyalty schemes and justifies the investment in a paid programme.
Q10. How can businesses measure the success of their premium loyalty programme?
Businesses can measure the success of their premium loyalty programme through increased customer retention rates, higher average spending among members, and improved customer satisfaction and brand loyalty metrics. All these metrics directly indicate the programme's positive impact on the brand's growth.
Author Bio, Written By:
Mark Camp | CEO & Founder at PropelloCloud.com | LinkedIn
Mark is the Founder and CEO of Propello Cloud, an innovative SaaS platform for loyalty and customer engagement. With over 20 years of marketing experience, he is passionate about helping brands boost retention and acquisition with scalable loyalty solutions.
Mark is an expert in loyalty and engagement strategy, having worked with major enterprise clients across industries to drive growth through rewards programmes. He leads Propello Cloud's mission to deliver versatile platforms that help organisations attract, engage and retain customers.
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