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The Prime Effect: What does a perfect loyalty programme look like?

By Sasha Fedorenko January 22, 2019 - 1:10 pm

Jeff Bezos, chief executive officer of Amazon puts “good value” as the central benefit of the marketplace’s Prime, a free two-day delivery loyalty programme. As he said: “We want Prime to be such a good value, you’d be irresponsible not to be a member.” Retailers are moving away from traditional points-based loyalty schemes, as customers opt to subscriptions, something Amazon has been offering since 2005. Evidently, shoppers who commit funds to a delivery subscription with a company are far more likely to purchase with that company while the subscription is still active-creating ‘the prime effect.’

Asos recently cancelled their A-List loyalty programme to “work on even better ways to reward loyal customers.” When the marketplace closed their scheme, they offered shoppers a £10 voucher to all A-list members and recommended that customers use the coupon to purchase 12-month of Premier Delivery, next day delivery service for £9.99 per annum. As a result, the number of Asos Premier loyal shoppers saw a growth of 53% to 1.3m in 2018.

While subscription-based schemes present a gateway to customer loyalty and offer shoppers value for money, many retailers must be offering them? The picture appears quite different in the retail world. Some 15% of retailers including New Look, Oasis, Amazon, ASOS and Selfridges offer a subscription and 27% offer a loyalty scheme, suggest new survey by YouGov. More than 2,000 UK adults were surveyed to understand shoppers’ attitude towards loyalty programmes.

Amongst those that do offer subscription schemes, next day delivery and free returns are core to the subscription offering. The Prime Effect has set a new standard for loyalty and subscription schemes combined. The value for money, speed and delivery is a perfect package for the modern-day, time-poor consumer.

Despite the prime effect setting a new standard for loyalty and subscription schemes combined, what ingredients do retailers need to encourage their customers to exchange their loyalty for benefits?

Almost a two-thirds (67%) say that points equal money to spend in-store would be their “top incentive” to sign-up to a loyalty programme. Surprisingly, only 11% would choose VIP events such as masterclasses and celebrity signings as part of their loyalty scheme.

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