Loyalty Memberships Are The Future Of Shopping

For retailers, loyalty memberships often cost consumers money to purchase, then encourage them to shop more frequently and – frankly – more loyally.
Loyalty Memberships Are The Future Of Shopping

In a time of increased competition, retailers are turning to revamped loyalty programs to retain customers, winning them over with perks and promises of exclusivity.  

The concept is simple and not new: retailers want to retain customers, so they will offer them rewards when they shop at their stores. Loyal shoppers will often pay for the exclusivity, perks, dedicated customer service, upgrades, and even birthday gifts that come with a loyalty membership. Most recently, brands like Lululemon, Sephora, Nordstrom, and Loblaw Co. Ltd. have been testing paid loyalty program memberships.

For retailers, loyalty memberships often cost consumers money to purchase, then encourage them to shop more frequently and – frankly – more loyally, resulting in increased sales.

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It also means something increasingly valuable in our modern world: the ability to gather data. Scanning a membership card at checkout gives retailers information into the customer’s shopping habits, enabling them to target specific needs through things like personalized newsletters and deals.

The difference between today’s refreshed loyalty programs and those of times past is a move away from a one-size-fits-all approach to a focus on personalization. Restoration Hardware’s members, for example, enjoy a complimentary one-on-one consultation with an interior designer.

Lululemon’s pilot loyalty program began in Ontario not long ago and sets members back a relatively pricey $128 per year (considering an all-frills-attached Amazon Prime membership is $79 per year). The program entitles members to a free pair of pants or shorts, access to special events and workout classes, and free expedited shipping. Considering the average yoga class will set you back at least $20, this may make a lot of sense for the yoga-lover.

loyalty programs

Meanwhile, Canadian grocery giant Loblaw Co. charges its shoppers $99 annually (or $9.99 monthly) for its PC Insider subscription, which officially launched for all PC Optimum members in December.

The program is an extension of the brand’s free PC Optimum program and entitles members to free online grocery pickup and delivery (a huge bonus for busy professionals), a delivered box of President’s Choice items, an additional 20 per cent back on select purchases, and an annual $99 credit for PC travel bookings.

South of the border, Target just made headlines on February 5 when it announced it would take its new, revamped loyalty program to more cities. The free program (at least, free for now), called Target Circle, includes personalized perks like rewards on your birthday and 1 per cent back on all Target purchases to redeem later on, to name a few. The rewards are customized based on the shopper’s tastes and behaviors. The refreshing component with this program is it allows shoppers to choose which local nonprofits Target should donate to.

From cosmetics to furniture, companies are now indeed realizing that it pays to have loyalty cards.

loyalty programs

But while they may make financial sense for retailers, some customers may have to approach loyalty cards with a degree of caution.

The excitement of getting something for free can actually make you spend more and buy things you don’t necessarily need. As CBC reports, a recent study by COLLOQUAY Loyalty Census found that Canadians are pretty much addicted to hoarding points in exchange for free things and hold an average of 13.3 loyalty memberships per household. This represents 175 million memberships nationwide – a 35% increase since 2015. Another survey by marketing company Yotpo surveyed 2000 U.S. shoppers over the age of 18 and found that nearly 40% of customers who say they’re “loyal” to a retailer will spend more on an item from their favourite store, even if it’s cheaper somewhere else.

We can definitely expect more retailers to jump on the paid loyalty membership bandwagon this year. What this means for you is that you need to weigh the pros and cons of certain memberships, or you may need a bigger wallet to house all those loyalty cards that could end up collecting dust.

Featured image: Instagram/@alifewellconsumed

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