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Taking the emotional rewards out of loyalty

Loyalty programs developed to reward customer behavior. The idea of a basing rewards on a paid subscription was not invented by Amazon, but many people think Amazon has now 'redefined loyalty.' What they have done is make loyalty a financial relationship. Now we have to evaluate the cost-benefit ratio before we sign up. But more disheartening now, we, the consumers, pay upfront then feel pressured to spend more in order to maximize our reward. That's not customer love. I resent people calling Amazon Prime a loyalty program. 

Loyalty360: The Scoop on Premium Customer Loyalty Programs, 2019-Feb-11 by Duy Nguyen

More retailers are providing membership plans and betting that you’ll pay a fee for the privilege of shopping with them. For example, Amazon charges $119 per year for Amazon Prime and has more than 100 million members who make the e-commerce giant their first stop when they go shopping. In exchange for that loyalty, Prime members get lots of benefits, including same-day and free one-day delivery on millions of items, free streaming movies and music, and discounts on groceries at Whole Foods Market. At least a dozen other chain retailers now offer membership plans, and that’s likely to grow.

“We anticipate more paid loyalty programs will launch in the next few years, including programs at grocery stores and gas stations,” says Scott Robinson, Vice President of Design and Strategy at Bond Brand Loyalty, a marketing and consulting firm.

As more membership plans become available, consumers need to carefully weigh the pros and cons. In addition to the perks these plans offer, the cost of membership and the risk that you’ll turn into a spendthrift could outweigh any benefits.... 

Among the membership plans that may now be vying for your business are Bed Bath & Beyond’s Beyond Plus, which you can join for $29 per year. For that, you get 20 percent off every time you make a purchase online or at the store. You also get free shipping. Others, including Sephora, Newegg.com, Restoration Hardware, and Wayfair, have rolled out or are testing membership programs, charging fees up to $100 per year.

When you sign up, these retailers offer online and in-store discounts, deals on shipping, dedicated customer service, and financing deals with lower interest rates. Depending on the retailer, membership comes with other perks, too, such as access to exclusive events, discounts on furniture-assembly help (Wayfair) or even free fitness classes (Lululemon).

To help figure out whether a membership will be worth the cost, ask yourself these questions.

  • Will the discounts really save you money?

At $15 per year, the PowerUp Pro membership at GameStop, for example, will get you 10 percent off all pre-owned games, so you’d have to buy about six pre-owned games in a year to offset that cost. A $100 membership to Restoration Hardware gets you 25 percent off any full-priced item, an amount you could likely offset with just one piece of furniture....

  • Will a membership cause you to spend more than you should?

Amazon Prime customers spend an average of $1,400 per year on the site, compared with just $600 spent on Amazon by non-Prime members, according to CIRP....

    • Will you use the extra perks?

    • Do you know how the retailer might use your data?

    • Is it simple to end a membership?

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