Subscription Loyalty

Subscription Loyalty

In 2024, we’ve been looking much more closely at trends in loyalty promotions and we’ve seen a significant shift in how brands are approaching loyalty programs. Our July 2024 blog offered an overview of the loyalty landscape. This time around we are taking the opportunity to drill down into one of the major trends identified in that piece – the role of subscription programs in building commercial value and customer loyalty.

Subscription Loyalty – what is it?

Subscription-based loyalty programs, also known as premium loyalty programs, have been gaining significant traction in the UK for years. These programs operate on a business model where customers pay a regular fee to receive exclusive benefits, discounts, or services.

Granby and Subscription

Here at Granby, we have worked with our clients on a number of subscription model projects, including those for Accrol – Oceans, Nespresso and Mattel.

Accrol – Oceans

In 2020, Accrol launched Oceans Toilet Rolls and Kitchen Paper as part of their ocean-friendly home essentials line. At that time, during the early days of the pandemic, their consumer proposition emphasised that switching to a more sustainable lifestyle had never been easier. And by starting a convenient, easy-to-manage subscription, customers could contribute to a more sustainable world. Helping ensure future generations can enjoy our planet and its wildlife. This could be achieved by starting a convenient, easy-to-manage product subscription.

Granby played a crucial role as the fulfillment partner, integrating their customer subscription program with Shopify and managing fulfillment during lockdown—a key period for subscription programs across the UK. This initiative marked a significant step change in how brands could approach customer loyalty and sustainability.

Nespresso

We also worked closely with Nespresso on their Rewards program for subscription customers. The Nespresso Subscription gives customers an opportunity to enjoy not only convenient payment options but many access exclusive perks and rewards. To get started, customers simply choose their Nespresso product, specify the frequency of delivery, select a start date, and set your preferred delivery and payment methods. Once configured, they can enjoy, relax, and receive orders at your chosen frequency.

Mattel

The Mattel Rate and Review program was a subscription loyalty program. From February 2019 to June 2023, Granby partnered with Mattel and Bazaar to manage the fulfillment of new and soon-to-be-released toys to registered parents.

This initiative allowed parents subscribing to the program to receive toys in advance. These included major product lines including Barbie, Hot Wheels, Fisher-Price baby toys, Thomas the Tank Engine, Batman, and Spirit Untamed. And they received these before they hit the marketplace.

This initiative added real value not only to the customers’ experiences but also to the future experiences of children; a prime example of where a brand engages with the true experts: children. These young testers, along with their parents, provide invaluable insights by testing toys and baby gear, helping Fisher-Price understand what works and what doesn’t.

On a more commercial level, customers signing up for the program received emails with parenting tips, news about products, and personalised offers to enjoy 10% off their next order.

What was the commitment in terms of a subscription payment from the customer? Where a typical subscription model required regular payment, in this instance the consideration is the provision of detailed customer reviews. These reviews were then used by Mattel and Bazaar for marketing on their websites. This program not only provided valuable feedback for product development but also created a sense of community among participating parents, enhancing brand loyalty. The success of this initiative showed the effectiveness of a subscription model in building closer customer engagement strategies as well as product development.

Subscription Loyalty – what are the benefits?

Powerful Tool

We have seen first-hand how subscription-based loyalty programs a powerful tool for building customer loyalty across a wide range of products and services are. These programs offer numerous benefits to both customers and brand owners, creating a mutually rewarding relationship.

Customer Benefits – Hassle Free

For customers, the convenience of regular, hassle-free deliveries ensures they never run out of their favourite products, enhancing their overall experience. Additionally, the personalised nature of subscription boxes, often curated to match individual preferences, adds a delightful element of surprise and satisfaction.

In the case of Nespresso, Nespresso Plus members receive a complimentary coffee sleeve with each monthly order over 70 capsules. Exclusive offers and rewards, including early access to our latest coffees and 20% off accessories and sweet treats. On top, for subscription members, delivery is always free. Financially, subscribers can also enjoy exclusive discounts and special offers, making their purchases more cost-effective. The sense of belonging to a community, fostered by these programs, also strengthens the emotional connection between the customer and the brand.

Customer Benefits – Helping Customers feel Special

Moreover, subscription loyalty programs create a sense of exclusivity. Members often feel like they are part of an elite group, enjoying premium rewards and benefits that are not available to non-subscribers. This sense of belonging can significantly enhance customer loyalty and encourage word-of-mouth referrals.

Several companies have successfully implemented subscription-based models, setting benchmarks for others to follow. Adobe, for instance, transitioned from selling software licenses to a subscription model with Adobe Creative Cloud, offering users continuous access to the latest updates and features. Similarly, Netflix revolutionised the entertainment industry with its subscription model, providing viewers with a vast library of content for a monthly fee.

Customer Benefits – Sense of Community

Subscription loyalty programs excel at fostering a sense of community by offering exclusive perks, personalised content, and interactive platforms where members can share their experiences and feedback. This club mentality and increased engagement not only nurtures a sense of belonging but also strengthens loyalty among members. By creating a space where customers feel valued and heard, brands can build a loyal customer base that is more likely to advocate for the brand and contribute to its long-term success.

Brand Owner benefits – Recurring Revenue and predictable Income Streams

Brand Owner benefits – Enhanced Customer Data

Another key advantage is the enhanced customer data that subscription programs can offer. By tracking customer interactions and preferences over time, something Granby have been doing for a while now, linking in with our own proprietorial systems as well as customer and payment APIs, businesses can gather valuable insights that enable them to tailor communications and offers to individual members. This level of personalisation not only improves customer satisfaction but also increases the likelihood of repeat business.

Brand Owner Benefits – Generating Higher ROI

Investing in a paid loyalty program can help deliver higher ROI by guaranteeing elevated levels of repeat business and brand loyalty through these exclusive benefits and personalised experiences. Research from GroWave shows that members of paid loyalty programs are 60% more likely to increase their spending on a brand after joining, whereas those in free loyalty programs show a 30% increase in spending. This significant difference underscores the value of paid loyalty programs in driving customer engagement and boosting revenue.

Brand Owner benefits – Sustained Engagement

Sustained engagement is another hallmark of subscription loyalty programs. By offering consistent benefits over the subscription period, these programs keep customers engaged and invested in the brand. Whether it’s monthly deliveries of curated products or access to exclusive content, the ongoing value provided helps maintain a strong connection between the customer and the brand.

Potential Disadvantages of Subscription-Based Loyalty Programs

While subscription-based loyalty programs offer numerous benefits, there are a few potential disadvantages to be aware of.

Expectations

Firstly, managing expectations is crucial.

Failing to meet these expectations can make the program inefficient and less attractive.

Overcomplication

Secondly, avoid overcomplication.

Overcomplicating a subscription-based loyalty program can deter customers, making the program less appealing and harder to understand. When the rules and benefits are overly complex, customers may struggle to see the value, resulting in reduced engagement and lower subscription rates. Additionally, managing a complicated loyalty program can be resource-intensive for businesses, leading to higher administrative costs. Keeping the program simple and transparent is key to maintaining customer interest and ensuring its success.

What should we take away from this?

Subscription -based loyalty programs offer a multitude of benefits, from generating higher ROI and fostering a sense of community to building long-term customer loyalty. However, it is essential to manage customer expectations and avoid overcomplicating the program to ensure its success.

Granby, with over 50 years of experience in loyalty and promotional marketing, has worked on hundreds of brands and offers expert solutions to seamlessly integrate subscription programs with payment APIs, customer CRM systems, and eCommerce platforms.

Our multichannel and omnichannel customer service solutions ensure that subscription programs are delivered in the customer’s tone of voice, with the same duty of care that our clients expect. For businesses looking to implement or enhance their subscription-based loyalty programs, speaking to Granby can provide the expertise and support needed to achieve success.

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