Category: Emotional Connection

How a paid customer loyalty program generates value by changing customer behaviors

How a paid customer loyalty program generates value by changing customer behaviors

Grace Alexander

MarTech Blogger | June 6, 2022


They are the solid bedrock of your customer base, the ones keeping your revenue strong. These are your most loyal customers and the biggest spenders among your whole audience.

Rather than treating this elite group exactly the same as the rest of your customer base, you can deliver a premium experience that benefits consumers and company alike. This is where a paid loyalty program comes in, creating a cycle of positive interactions and increasing customer lifetime value.

The time is right for the kinds of more in-depth loyalty programs that come with paid subscriptions. McKinsey reported that the standard “earn and burn” point model is losing some of its appeal for customers. Despite this fact, 24% of companies still have basic rewards programs and 24% don’t have any loyalty scheme at all.

When a paid loyalty reward program makes sense

Almost any kind of company can put a subscription model in place, and this kind of effort almost always delivers results. Adding a paid option to a customer loyalty program is a way to “double dip.” You’re combining the reliable revenue of a subscription service to the engagement and positive brand experience of a rewards program.

There are two kinds of scenarios when this pairing is especially valuable, as described in a separate McKinsey study:

  • Funding premium rewards: When brands such as fitness clothing company Lululemon need ways to subsidize more involved and expensive perks for their most loyal customers, they can balance the books with a paid subscription program.
  • To create an ecosystem around customers: Subscription-based loyalty schemes are useful for businesses, such as pharmacies, that create long-lasting relationships with customers who always come back to the closest store with the most convenient hours. Since these buyers are committed to returning, they may be willing to contribute to more intensive paid rewards programs.

Once customers commit to entering such a paid program, they may engage more deeply with the brands than if there had been no fee. McKinsey’s researchers describe the effect as an “economic loyalty loop” where the shoppers now have a financial stake in staying with their chosen company.

But when does a paid loyalty program not make sense?

Of course, there are some cases when a standard loyalty program is perfectly acceptable as the only option. The McKinsey study suggested that brands should use paid loyalty to deliver new rewards they couldn’t deliver otherwise, and to stop high-value customers from leaving. If neither of those are relevant points, sticking with free loyalty for the time being could be a fine decision.

What kinds of companies can use a paid loyalty program platform?

As the difference between a clothing brand and a pharmacy chain demonstrates, there are no limits regarding which kinds of brands can create closer relationships with their customers through paid subscriptions and loyalty reward programs.

This effect can be felt across industries, including:

  • Hospitality and travel: Companies can offer positive experiences to their most loyal and committed customers, such as special deals, offers and bundles that fit their specific needs and history. Interacting with all-in-one travel companies through mobile apps is a way for customers to provide a rich stream of useful data that can shape future offers.
  • Entertainment: While standard perks such as discounts can be a factor in entertainment, the true value of a loyalty program may come from exclusive experiences. Consider premium video subscription services, where content is only available to paying customers. If they want to follow a show they have made an emotional connection with, people will have to keep paying.
  • Retail and food service: When selling premium experiences to customers at stores or restaurants, or even storefront banks and similar businesses, it can pay to go beyond a standard loyalty point system, especially for paying subscribers. These individuals are paying to get the best brand experience, so they should have constant ways to interact with the brand, potentially through mobile apps.

Building stronger emotional connections with a paid loyalty program

Connecting with paying loyalty customers through frequent contact and exclusive offers can give your brand a valuable type of bond: an emotional connection.

An Mblm study revealed which companies have an “intimate” emotional connection with their customers, and many of these major brands connect with their customers via subscription programs. Apple’s offerings such as Apple Music make it a part of users’ lifestyles, while the Disney+ subscription streaming service has put Disney directly into the homes of paying customers. Costco, running exclusively on paid membership, is also a strong performer in the loyalty space.

What do these top performers get for forging these connections? Mblm noted that its top 500 brands by intimacy outperformed the S&P 500 and Fortune 500 in both profit and stock prices, and virtually tied them in revenue.

Paid loyalty can provide a new revenue stream

When thinking about the endpoint of paid loyalty programs, it’s natural to wonder just how much businesses can earn from these offerings. To see the ultimate example of this phenomenon, you can look to one of the world’s biggest companies: Amazon.

The Prime program is a tier of loyalty rewards for the most committed Amazon shoppers, but it’s also more than that. It fits into those buyers’ lifestyles, especially through the connection with exclusive entertainment offerings via services such as Prime Video. People who want to watch a new streaming TV show they’ve heard their friends talking about may have to become Prime subscribers to do so.

So, what is the financial result of having this deep a connection, with such clear rewards for members in the form of discounts and exclusive content? The company makes an annual rate of $119 for each subscriber, $12.99 a month or $8.99 a month for Prime Video alone. Multiply that by the company’s declared subscriber base of 200 million people and you can see the financial power of customer loyalty.

Why is Perx the perfect technology to power customer loyalty?

Upgrading to a paid loyalty program based on high-quality gifts and premium, exclusive experiences is a big moment for a company. If customers aren’t thrilled by the offerings, they may decide against subscribing.

Your business needs the ultimate lifestyle marketing platform to power its subscription plan: You need Perx. Using data from customer interactions to power experiences that truly delight and engage shoppers, and keep them coming back for more, you can power a top-quality loyalty reward program with Perx.

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Global businesses have driven over 5 billion customer-brand interactions on Perx.

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The Right Customer Engagement Trick? Treat Them Right!

The right customer engagement trick? Treat them right!

Despite the fact that the campaign was launched a decade ago, it continues to haunt me.

Sundeep Keramalu
Director, Marketing Content | November 01, 2021

Was Coke crazy to put random people names on its ‘#ShareACoke’ campaign? Yes. No. No. Yes. Yes, when one considers the campaign’s general desperation. No, when you consider how it made people feel. And no, when you consider the campaign’s stated purpose. And yes, when you consider how Coke was catapulting addiction to new heights.

While Coke’s amazing taste is refreshing, we must keep in mind that even the great ice age reached a point where it was no longer cool.

Share A Coke was no doubt a sweet campaign. That is, having your name appear on a billion-dollar brand. How frequently do you see that? What bothers me is that Coca-Cola is a well-known brand. It has its own name. It has taken decades and hundreds of millions of dollars to get to this point. And suddenly, it was willing to gamble with its identity by putting random, unknown names on its bottles to boost sales for one summer in Australia? It is self-evident that Coke has the absolute right to do anything it wants with its bottles. But, if you know that your product is not exactly health-beneficial and has addictive elements, you want to enable your customer to be disabled from being addicted — not the other way around.

Brands cannot capitalize on the unconditional condition unless they are willing to allow their customers to explore the condition of conditionality.

The goal of any brand is to make the customer fall in love with it unconditionally. Unfortunately, brands cannot capitalize on the unconditional condition unless they are willing to allow their customers to explore the condition of conditionality.

Simply put, to receive anything, you must first offer something. While Coke’s amazing taste is refreshing, we must keep in mind that even the great ice age reached a point where it was no longer cool.

The ethical question remains whether a brand can go as far as to entice consumers to purchase a product simply because it bears their name.

To keep consumers’ hearts warm for the brand, even a “cool” brand must step up and do something genuinely cool that also ends up being a warm gesture for the brand. Coke’s “nice” gesture was to put people’s names on its bottles. Of course, Coke, like any other marketing campaign, had its own agenda. Putting random people’s names on its bottles would be akin to a jilted Bollywood lover in one of those 90s movies engraving the name of the lady in his blood — since she does not feel the same way about him or, worse, has no idea who he is to begin with! Coca-Cola did not want a one-sided relationship. During the summer of 2011, it sought to increase sales in Australia.

Influential personalities and multimillion-dollar deceptive marketing messages are damaging to one’s willpower when it comes to resisting unhealthy and harmful lifestyle choices.

As much as people enjoyed seeing their or their loved ones’ names on Coke bottles, the question we must ask is if it was the proper experience. True, the ethical question remains whether a brand can go as far as to entice consumers to purchase a product simply because it bears their name. However, when a brand is aware that its product is bad enough to be a good pesticide, I believe it should refrain from influencing people in this way — from persuading them to share something this bad.

As it is, influential personalities and multimillion-dollar deceptive marketing messages are damaging to one’s willpower when it comes to resisting unhealthy and harmful lifestyle choices. In any event, when compared to Kendall Jenner’s ‘Live for Now’ Pepsi fiasco, Coke’s ‘Share a Coke’ campaign was more thoughtful and positive.

When you are a brand that is bad for the body and bad for the mind, you cannot give people any more reasons to buy it than they need. There is a very thin line to walk. This means that you should not compel your customers to adopt your brand. Rather than that, develop incentives for people to adore your brand. There is a significant difference, but the line is really thin. I am not being a snob and slamming the idea of sharing a Coke with a close friend. It is just that you would not want to share anything harmful to your health with someone you care about. That contradicts the point of the campaign’s purported goodness.

Brands that make essentially harmful products to one’s health have additional avenues for customer engagement. Coke tricked its customers into purchasing more Coke. And, mind you, this was done in the name of “treating” its customers. Did not expect this from you, Coke!

Even for a beauty brand that wants to reward its customers, it cannot be skin-deep in its approach to rewarding them.

As much as we would like to believe that the #ShareACoke campaign was an engaging sales-increasing, brand-building, emotionally-engaging campaign, the reality is that it was not as engaging as it could have been. So, the deal was that Coke gave a platform for people to share a virtual Coke with pals or, if they were lucky, find a bottle of Coke with their or their friend’s name on it.

All of this, you see, is still quite transactional. In the end, it is just a name on a bottle! That is all there is to it. When the campaign ended, the transaction concluded. When you invest millions of dollars in advertising a campaign, you spend far more to market and nurture the campaign so that people remember it.

While beauty is in the eye of the beholder, the beauty of a reward is in the embrace of a participant.

Rewards cannot be superficial. Let me give you a perspective. Beauty is considered superficial, right? But even for a global cosmetics brand that wants to reward its customers, it cannot be skin-deep in its approach.

How did a global cosmetics giant under Louis Vuitton increase its in-store sales with the Perx Platform? They did not go around handing out random rewards or sample cosmetics to the passing crowd. Instead, they incentivized regular in-mall footfall to visit their stores

It was a simple and straightforward approach. With smartphones being the single common denominator across shoppers in developed countries, QR-coded posters were placed throughout a highly popular mall. Customers were rewarded every time they scanned the QR code. However, to receive the reward, they had to enter the store — the point of sale.

The dynamic campaigns connected offline footfall, incentivizing them to walk into the store, where purchases were built and launched using the Perx platform. In addition, Perx’s advanced gamification and engagement mechanics transformed the whole experience into a gamified and instantly gratifying one.

Before launch, the brand researched customer footfall and buying patterns before designing the experience around them. They wanted to reward them for their intention to buy something from the brand. Even if they did not intend to do so, the dynamic mobile engagements influenced them to engage with the brand. In other words, I am attempting to convey that, in light of the example, the reward offered should not be based merely on the customer’s pleasure; rather, it should be based on the customer’s intent.

It is true. Beauty is in the eye of the beholder. Therefore, Coke’s #ShareACoke campaign might have made the day for some of its customers. But at the end of the day, we must remember, while beauty is in the eye of the beholder, the beauty of a reward is in the embrace of a participant.

A disconnect or a pause between you, the brand, and your customer will cause them to seek another brand that meets their requirements.

While each beginning and each campaign should have a conclusion, the reality is that engaging customers is a continuous process. Brands are required to engage in a never-ending cycle of evolution, progress, and improvisation. A disconnect or a pause between you, the brand, and your customer will cause them to seek another brand that meets their requirements. This is why brands must focus on engaging their customers in ways that transcend beyond transactional interactions — something that keeps the connection going for a long, long, long time — how about forever!

Treat the relationship with your customer as though it were a long and happy marriage and not a one-night stand.

Treat the relationship with your customer as though it were a long and happy marriage and not a one-night stand.

Given that you have read this far, we are here to assist you if you are looking for a superpower to build that long-lasting, deeply-engaging relationship with your customers. Now keep in mind that we do not help you treat your customers just for the heck of it. Instead, we assist you in treating them genuinely and sensibly – you know, for the right reasons!

We work on making sure your customers do not just remain customers, instead we turn them into level-headed superfans.

It all boils down to giving you the satisfaction of knowing that you as a brand did not trick your customers and that you treated them appropriately. And understanding that will help prevent your conscience from being haunted.

Here is to a #CleanConscience!

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Global businesses have driven over 5 billion customer-brand interactions on Perx.

Ready to join them?