Joining Loyalty Programs: Is Free Better Than Fee-Based?
News What’s in it for you? Here are some guidelines for joining a free versus fee-based loyalty program.
Whether fee or free, loyalty programs are a definite win-win for both the consumer and the business. As a program member you earn added value in return for your patronage. As a program sponsor, the business gets to keep you as a customer and earns a greater share of your spending in exchange for reduced marketing expenditures, more in-depth customer knowledge and improved sales.
Worth the cost?
This ultimately creates a deeper and more meaningful customer experience. The symbiotic relationship is often lacking in other marketing techniques and explains why the growth of the loyalty phenomenon has been on an upward trajectory since the early 1980’s, and why traditional media spend is declining. How do you know what program is right for you, and if it is worth paying a fee to join a program?
Simply put, fee-based programs should provide benefits that simply can’t be delivered in a free loyalty program. So therefore, if you are asked to pay a fee to join a customer rewards program, make sure you’re getting more “bang for the buck” than you can get from a free program offered by a competitor. Fee-based programs are prevalent in many industries including car rental companies, credit card providers, and retailers; a good example the new and innovative AMC Stubs program.
In most cases, like that of AMC Stubs, the incremental benefits and value of the fee-based option are clearly communicated and delivered as promised. AMC Stubs members earn greater than 10 percent back on spend at the box office, concessions, online and at restaurants—non-fee programs typically pay 1 percent back on spend.
We offer the following guidelines for those who are evaluating whether or not to join a free or fee-based loyalty program:
It’s free and easy to join. If it’s free, easy to join,easy to earn rewards, and includes special offers and benefits that you’ll use, then why wouldn’t you join? If you like the products or services offered by the business then it’s worth becoming a member to earn the extra benefits.
The fee should be worth the squeeze. Fee-based programs are typically designed to reward “best customers” (i.e. those who spend more than the average consumer or who also spend with a competitor and could spend more if they were loyal to one business). It goes without saying that fee-based programs are best for those who will earn rewards that outweigh the cost of the program. Benefits of fee-based programs include special access and privileges (access to a special customer service 800# or Member Only events), or unique levels of service and convenience (first class security lines or upgrades).
It’s okay to be picky. If you join six different programs in the same category, the rate at which you will earn rewards in any one program will be slow and likely disappointing. Decide what program fits your needs the best,then stick to that particular brand. You’ll be better rewarded as your reward currency accumulates faster. This guideline is especially critical in a fee-based program scenario.
Stay informed. Regardless of whether the program is free or feebased, be sure to carefully read and review the terms and conditions of the program. Pay special attention to the privacy policies. The reality is, most rewards programs take extreme measures to protect the information they have collected,and the vast majority refuse to sell any information to a 3rd party. The risk is extremely low, while the benefits can be substantial.