While this model won’t work for everyone, it could be a tactical strategy for many. The largest categories currently in the space are food and beauty, but creative marketers can see how a supplemental subscription model can benefit their brand.
To make these strategies work, customers need:
– an understanding of the value from your brand
– an ongoing realized value from your brand
– a desire or need for more convenience or willingness to pay a premium for friction-free experiences.
To make these strategies work, brands need:
– frequently (repeatedly purchased) products and/or services
– complicated purchases where an added subscription service removes friction
– premium priced items where a discount or added service provide true value for customers
Undoubtedly, there is plenty of room for leadership in this area. Some examples or considerations for launching a paid tier or subscription plan:
Grocery: When the same items are purchased weekly or monthly, a brand could offer free pick up or delivery, or even have items pre-packaged for a premium fee
Beauty: One of the biggest players in the subscription model, beauty still has room to grow. As lotions, makeup and facewashes all have predictable, limited life, subscription boxes of preferred items makes sense
Hotels: IHG’s loyalty program is $200 annually for perks such as an automatic room upgrade, free weekend night stay, welcome gift and more. Many luxury hotels are following this example in order to invest more in its highest value customers who desire preferential treatment
Retail: Some retail brands already offer subscription services, such as Nordstrom’s Trunk Club But they could also explore a paid loyalty tier for the right customer set. Lululemon, which has always had a strong cult following, is doing precisely this with their paid program in which members receive a free pair of pants, as well as popular workout experiences
In terms of paid programs, Aimia has seen much value from members who “pay to play.” Members in a paid program spend on average 5 times more than members in a non-paid program and also make 3 times the number of trips over a non-paid member.
We’re very interested in how paid loyalty and subscriptions will continue to develop. It’s certainly not a silver bullet, but if the value proposition is right, the experience is frictionless, and the program is relevant, it could certainly be a significant source of incremental revenue for brands to continue to invest in their highest value customers.