Dive Brief:
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More than half of consumers surveyed in a recent report by LoyaltyOne said they’d be willing to pay a fee to participate in a loyalty program.
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Younger people — 75% of those 18 to 35 and 77% of those 25 to 34 — said they’d consider it. Almost half (47%) of all respondents said paid programs have better rewards, and 61% of those 18 to 24 and 54% of those 25 to 34 said so.
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Of those already in a paid loyalty program, 69% said they value free shipping and 67% said they enjoy the discounts associated with it.
Dive Insight:
Paid loyalty programs like Amazon Prime or even membership-based warehouse retailers like Costco apparently enjoy high marks from consumers, according to this survey. The idea seems simple and obvious — paying up front every year means a customer has already made an investment in the retailer and is more likely to buy from there. Indeed, Amazon Prime members convert 74% of the time on Amazon.com, according to a new study from Millward Brown Digital, compared to 13% for non-prime members.
This bodes well for newcomer Jet, which aims to make all of its profit from its membership fee in order to keep its prices low. And, although this study found that the category most often cited as a reason to pay for a loyalty program was grocery or general merchandise, Sephora recently introduced a membership-fee program that comes with free shipping and other perks.
