How Membership Programs Inspire Brand Loyalty
Unless you’ve been living under a rock for the last decade, you’ve probably heard of Amazon Prime. Initially started in 2005 as an annual membership, Prime provides access to free shipping, discounted products, and a whole host of other perks that Amazon offers. As of April of this year, Amazon Prime reportedly had 200 million members.
Amazon recognized early on that they could make recurring revenue by offering high margin perks to their members. They also recognized that being a member would make their customers more likely to turn to Amazon when they needed to make a purchase, in effect solidifying brand loyalty.
Amazon is way ahead of the curve, but other D2C eCommerce brands are also starting to jump on the bandwagon. Take Restoration Hardware as another example. In 2016, RH switched away from the standard promotional model (think: Memorial Day sales, Labor Day sales, BFCM sales…) to a membership model.
For $150 a year, members get 25% off everything in their store, all year round. Analysts at the time were skeptical of the switch, but the membership program has been a wild success. As of May 2021, they had over 434,000 members who drive 95% of RH’s revenue.
Though the D2C eCommerce space has been slow to adopt these types of membership models, paid loyalty programs are finally starting to see their day in the sun. And for good reason! According to McKinsey, “members of paid loyalty programs are 60 percent more likely to spend more on the brand after subscribing”. Paid loyalty programs also “drive higher purchase frequency, basket size, and brand affinity”, meaning that paying members drive substantially more revenue, even exclusive of the membership fee they pay.
Over the last couple of years, Conjured has worked with several brands experimenting with recurring revenue models such as “subscribe-and-save” and “box-of-the-month clubs” via our app, Conjured Subscriptions. But the mechanic we were most intrigued by were the annual membership programs. By powering programs such as Shinesty’s Hot Tub Club and The Sill’s Plant Parent Club, we’ve seen first-hand how a targeted membership can provide ongoing recurring revenue for stores whose products don’t lend themselves well to a traditional “subscribe-and-save” replenishment model.
While paid loyalty programs aren’t right for every business, we wanted to make this type of membership model more achievable for the average Shopify brand. With the launch of our new app, Conjured Memberships, we aim to provide brands of all sizes the ability to start cultivating their most loyal customers. If you’re wondering if a membership program would be a good fit for your store, contact us - we’d love to help!