Will Brands Turn to Paid Loyalty Programs in 2019?

With the shift away from flat and broad, points-only loyalty programs fully underway, most marketers know that it is critical to evolve their customer loyalty program. New structures, experiences, discounts and promotions leveraging modern technology to cater to the individual not only help attract new consumers, but also ensure the retention of brand loyalists.

What we haven’t heard a ton about, outside of Amazon’s Prime Membership program, are the successes (or failures) experienced after launching a paid loyalty program. While this tactic isn’t new or groundbreaking, up until recently a majority of companies have shied away from putting a price on loyalty. Asking for an investment up front in exchange for benefits that competitors may offer for free is an intimidating prospect.

Lately, however, a variety of industries including restaurants, theaters chains, retailers and pharmacies have retooled or relaunched programs completely in an effort to deepen consumer relationships through their rewards channel. Let’s take a look at a few major brands that launched paid loyalty programs.

CVS Health (CarePass)

CVS Health recently made a move to own the future of retail pharmacy. The giant announced the launch of CarePass, a new membership reward program that promises additional benefits to paying members. Here is a quick recap of what members receive for $5/per month or $48 upfront for a year commitment.

Member Benefits

• Delivery within one-to-two days on most prescriptions and purchases. This service includes qualifying prescription drugs and eligible purchases made on the company’s website.
• 20 percent discount on eligible CVS Health brand products purchased either in the company’s stores or online including over-the-counter medications, vitamins and supplements, plus other personal-care items
• $10 promotional reward each month, which can be applied to many items available in CVS Health stores or on CVS.com
• 24/7 access to a pharmacist helpline allowing members to speak live with a pharmacist who can answer questions about their medications and point them to other healthcare resources and services that could help them

AMC (Stubs Premier)

One of the country’s leading movie theater chains, AMC, is no stranger to paid loyalty. The brand has continued to evolve its membership tiers over past the year, recently adding Stubs Premier A-list, which allows movie-goers to view three movies a week for $20/per month. Customers that choose to join a tier below are considered a Stubs Premier member and pay a $15 annual membership fee.

Member Benefits

• Express service with specially marked shorter lines at the box office and concession stand
• Free size upgrades on popcorn and soda
• Free refill on large popcorn
• Up to $5 off movie tickets on Tuesdays
• A birthday gift (free large popcorn and soda)
• No online ticket fees
• 100 reward points for every $1 spent

Lululemon

Still in beta-testing phase, Lululemon launched a paid loyalty program, charging its members $128 per year. We don’t know much about Lulu’s offerings just yet, but Calvin McDonald, CEO and director for Lululemon, told analysts “the company hopes the program will net new customers while taking relationships with instructors, community teams and ambassadors to the next level.”

Member Benefits

• Either a pair of pants or shorts designed exclusively for the program
• Access to classes and curated events
• Personal development
• Free expedited shipping on ecommerce orders

I look forward to seeing if and how these brands use their paid programs to surprise and delight customers, and how these programs perform in the year ahead. We’ve repeatedly seen that the success or failure of loyalty programs hinges on the data gathered and how it is deployed to augment the customer experience. I believe that’s where these battles will truly be won or lost. Will putting a premium on loyalty prove to attract new and engaged customers that feel valued enough to spend more with your brand? Only time will tell.