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Are membership clubs really that effective?

in Member Rewards

As companies compete for a share of today's consumers' wallets, they need to come up with increasingly more unique ways to appeal to their target audiences. No matter what product or service a business sells, it's likely that there will be a competitor vying for attention in the same space. Because of this, enterprises must pull away from the pack by showing potential customers how the experience they offer is superior, and one way they can accomplish this is through offering membership value added benefits.

Can a membership club truly drive acquisitions, retention and stronger bottom lines? Done right, the answer is a resounding "yes." Hanover Research noted that in a study by loyalty program research Xavier Drèze, it was discovered that if membership clubs adhere to an attractive hierarchy, they can produce results. Drèze found that when businesses created a membership program with an "elite tier" that was very small or selective, 80 percent of those in that group felt "special." It was also important that this top level was implemented alongside lower ones to help the most loyal members who had achieved elite status feel good about their accomplishment.

Meanwhile, Drèze found that when there was also a medium-sized lower level of membership (for example, "silver" status), the customers in these less prestigious tiers actually wanted a goal to work toward (such as "gold" membership). If a business bases its membership program around accruing points for purchases and engaging in other positive interactions with the organizations, they may see revenues and retention improve as consumers attempt to level up. In this way, membership programs work to reward top spenders while also motivating other customers to make more purchases.

Membership in practice
Marketing Week noted that one business that has effectively used membership clubs to boost engagement is Hotel Chocolat. Through its Tasting Club, the business offers members the chance to sample chocolates, as well as receive special offers not available to other customers. These elite individuals also get the chance to give more regular feedback to the company, allowing them to play an active role in improving their experience and build a stronger relationship with the chocolatier. 

"Loyalty-based membership schemes allow a much deeper level of engagement and let a brand get closer to its customers," said Jonathan Harman, managing director of loyalty agency Carlson Marketing, the source reported.

Customers want to be rewarded for their loyalty. By offering exclusive deals, premium discounts and unique opportunities, businesses can craft membership programs that are truly compelling. And giving these initiatives a more personalized touch will ensure that the benefits of membership ring loud and clear.