When the economy looks uncertain, nonessential spending goes out the window. People begin to focus more on their necessary monthly bills in order to shore up finances and prepare for the unexpected. In 2020, retail markets suffered as consumer spending took a significant plunge. People stayed inside, were less inclined to buy, and made more conservative purchasing decisions. As with every other industry in the last year, leaders had to innovate, finding new ways to reach their target market and generate sales.
One way companies learned to innovate was by developing membership programs. These programs can be catered to different types of shoppers and are applicable to all businesses. It also creates a unique sense of loyalty and ensures some measure of customer retention. Cafes, gyms, and retail stores alike who develop these programs can take advantage of the consistency of having customers that come back time and time again to patron these businesses.
The Supreme Society, an Australian membership and rewards program, is one such company pioneering this concept by creating an environment of exclusive access at a discounted rate. Through their program, members have access to everyday items at a discounted rate. No matter what industry you are in, this new business model can benefit you. Here are three reasons why more consumers will embrace the membership model, driven by ongoing digital transformation.
Memberships Benefit Both Brands and Consumers
Brands benefit because membership programs bring them consumers already inclined to buy their products, and consumers benefit from discounted rates on the items they want, creating an equal exchange and sense of trust between them.
For brand partners with The Supreme Society, which began as a largely auto-focused group, members are already interested in and willing to make an investment in the products they are offering. The Supreme Society gathered potential customers for those luxury automobile brands, and provided them with access to the products they wanted.
This type of membership access minimizes wasted marketing dollars by focusing efforts on the most amenable audience.
Financially, both buyers and brands benefit. Buyers receive an exclusive, discounted rate on products within the membership program. Brands receive targeted leads and an increase in lifetime customer value.
Builds Customer Retention Into The Business Model
This initial investment in a membership ensures that buyers will take advantage of services offered, because they will want to maximize their ROI. Ultimately, this focuses the buyer’s spending energy on the brands that have partnered with the membership service.
Luxury travel and vacation company Inspired proves this point. Members pay a yearly fee just for access to exclusive travel accommodations in desirable locations. On top of that $600 monthly fee, they pay for each travel experience they take through the program. Because of their initial investment and monthly payment, members are motivated to return to the company each time they travel. This generates consistent revenue for the company because returning customers are already built into the business model.
This strategy will provide the consistency many markets need in order to survive the economic impacts of 2020, whether memberships revolve around travel, apparel, or vehicles. By focusing spending energy, buyers get access to their products at a discounted rate. These brands benefit because their customers return over and over again, driven by both the perks of membership and their initial investment.
Cultivates Community Around Shared Interests
In the last decade, millennial spending habits changed the retail market. They valued experiences over things, and this shifted how brands catered to their interests. Those spending habits are shifting again as Gen Z becomes a major player in the purchasing world. The digital natives of this generation are growing up in a world where influencers showcase luxury items daily and experiences coincide with purchases.
Membership programs are going to bridge the gap between generations because they provide an experience and a product at the same time. Members hold a shared interest in whatever products or services they have subscribed for, and are automatically a part of a group of like-minded individuals. The Supreme Society capitalizes on this community aspect with events, reward programs and giveaways to further meet consumers desires for both exclusive products and experiences.
Membership programs are a unique way to keep consumers coming back for more. As the world reemerges from lockdown, people crave connection, unique experiences, and the feeling that they have access to something exclusive. In the coming years, I am confident we will only see this business model on the rise.