Rewards programs should be free…right?

In Customer Experience, Featured on App, Loyalty & CRM, Marketing and Sales by Kevin Kelly1 Comment

 

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Not necessarily according to a new study.

And as I thought about it, I am a (highly addicted) member of a paid rewards program, maybe the best one, Amazon Prime. In this sense, I pay to be a loyal customer to Amazon in exchange for super reliable two day shipping, delightful perks, and incredible customer service.

It's a new way of approaching loyalty and rewards programs and I have to agree with this new research—it works.

The new study surveyed online shoppers about rewards programs:

"The report notes that 49% of online consumers have already signed up for an online retailer rewards program, including 10% who have joined a fee-based program. It also notes that 64% of online consumers overall say they would not pay to join a program.

Of the 51% who have not signed up for a rewards program, 22% say they would be willing to pay for one, comScore says. The study lists the following reasons consumers cite regarding why they would agree to pay for an online retailer rewards program, with the percentage of consumers citing each reason:

● Free two-day shipping, 26%

● An ability to share membership, for a single fee, with up to four people, 10%

● Unlimited streaming of online movies and TV shows, 9%

● Special pricing on same-day shipping, 8%

● Special pricing on one-day shipping, 8%

● Instant access to Kindle e-books, 4%

● Other, 1%"

This research justifies Amazon's approach to ecommerce and provides interesting prospects for e-retailers looking to create rewards programs. If the perks are good enough, consider charging customers for a fantastic rewards program.

Find out how to craft effective rewards program at this year's US 2013 Customer Festival this October where top marketers and c-levels will be discussing tangible strategies.

 

[photo – flickr simpleillustrations]

Comments

  1. Howard Schneider

    There are many situations where a paid program makes sense for consumers and marketers alike. When hard value is delivered, as in Amazon Prime, a fee often makes sense. Fes can also be used to establish program value and defray the costs of program benefits for less valuable customers; the fee can be waived for best customers. This was the initial model for two very successful programs, Hertz #1 Club Gold and, back in the day, Blockbuster Rewards. Amazon Prime is the latest example of a program where a fee actually is a win/win.

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