Rising costs are creating a new type of customer. They’re savvy, they’re hungry for value, and they’re willing to pay for it. The combination is redefining customer loyalty programs. Companies are capitalizing on subscription-based loyalty models that offer direct value to customers. In exchange, subscription programs are creating predictable, recurring revenue as customer behavior shifts and a new level of restaurant and convenience store customer loyalty is earned.
Streaming services did it for movies. HelloFresh did it for meal kits.
Now subscription-based loyalty programs, such as Punchh Subscriptions, are helping drive revenue for brands, increasing brand awareness, and offering customers added value. Discover how to do all three successfully with this subscription loyalty guide and new eBook: Subscription Loyalty Playbook: How To Win Customers & Revenue.
Subscription Loyalty Program FAQ
If you like the sound of “predictable recurring revenue,” you’re not alone. You’re also not alone if you’re wondering how to build a profitable program for your restaurant or C-store. It’s a frequently asked question for brands looking to develop a subscription loyalty program.
- How much should a paid loyalty program cost customers?
- How do brands increase customer retention with a subscription-based loyalty program?
- What’s the best way to create and predict loyalty subscription streams?
These are all important questions, but first, every brand needs to identify the value behind a loyalty subscription program. Customer value is the core of any successful subscription-based program.
- Start by determining your customer experience goals.
- Next, consider how your brand will proactively show value in a paid program.
- Finally, let Punchh Subscriptions bring your revenue-generating loyalty program to life.
What Is a Subscription-Based Loyalty Program?
Subscription-based loyalty programs (also known as premium loyalty programs) unlock customer rewards for a recurring fee. There’s no need to hit a certain status or point value to access brand discounts. Loyalty subscriptions make discounts accessible to all customers willing to pay for the added value.
It’s a customer rewards model that’s on the upswing as subscription services become ingrained in daily life. The average consumer spends $3,276 per year on subscription-based services according to an annual report.
Subscription success is not a passing trend either. The value of subscription-based business models keeps rising. Consumers spent $28 billion on paid loyalty programs in 2020. That’s a 40% increase from the year before.
The growth and potential benefits are clear, but getting brand buy-in means understanding what customers are buying access to and why.
The Psychology Behind Subscription Loyalty Programs
The big question is, “Why do subscription loyalty programs work?”
It seems counterintuitive when restaurant rewards programs have been free for years.
To fully see the benefits, you’ll need to understand how this customer loyalty model attracts and engages restaurant and C-store customers. Traditional rewards programs are free. Customers earn rewards as they engage or buy products. Research shows that customers active in a free rewards program are 30% more likely to spend with that brand.
That figure doubles to 60% for customers who subscribe to a membership loyalty program. The subscription-based model removes the wait time and the work of collecting points. It’s instant access for a price. Brands create a new revenue channel, and the fee becomes an incentive for customers to keep engaging since they’ve already spent money on a membership.
Brand Benefits of a Subscription Loyalty Program
Brand retention and participation naturally increase when loyal customers have a vested interest in a brand loyalty program. Even better, subscriptions capture predictable revenue.
Punchh Subscriptions can drive revenue by activating a a range of subscription program formats for restaurants and convenience stores that offers customers exclusive deals designed to fit your brand’s goals.
Punchh Subscriptions set brands up for success with clear benefits:
- Generating recurring payments with exclusive access to a product or service
- Driving customer frequency
- Boosting customer loyalty with an additional level of membership
- Growing channel sales
- Brands can direct sales traffic through their offer selection. For example, they can provide free delivery to boost digital sales.
- Increasing lifetime value
- Subscriptions increase lifetime value by increasing a customer’s frequency and the ability to upsell them during their visits.
Punchh Subscriptions offer brands the opportunity to grow a reliable revenue stream while making sales and costs more predictable.
It’s important to crunch the numbers before getting started. A balanced subscription loyalty program offers a fair membership fee and real benefits with real value.
Customer Benefits of a Subscription Loyalty Program
Don’t leave customers wondering what they paid for. Sign-up fees can be a psychological barrier for some customers, so the value should be clear from the outset.
As a rule, consumers expect to receive at least a 150% return on their subscription fee in the form of new offerings. A deep understanding of your customer and their value drivers is needed.
What keeps your loyal customers coming back? Free delivery? Bogo deals?
McAlister’s Deli found success with the $6.99 Tea Pass. Members could claim one free tea every day for 30 consecutive days using the McAlister’s app. The pass keeps customers engaged and creates predictable revenue by allowing users to renew the Tea Pass each month.
It’s these brand-specific perks that create return customers. Consider these important customer value props when designing your rewards program:
- Value: Do perks increase as customers engage or spend more?
- Exclusivity: Do members receive special swag? Invites to program-only events?
- Convenience: Is the customer journey easy to understand?
- Flexibility: Does the program adapt to meet the customer’s needs?
Create your own successful subscription loyalty guide by incorporating all these customer benefits into your promotions. Punchh Subscriptions is designed to hit all of these value props.
Choosing a variety of customer benefits allows brands to get creative and reach different customer segments. And adding variety expands customer touchpoints.
4 Subscription Loyalty Format Examples
The subscription-based loyalty program that’s right for your restaurant or convenience store varies by brand. Consider your marketing goals or KPIs to help choose the best subscription format. The key to success is keeping the customer journey simple. Here are some top subscription use cases to consider:
1. Free Item
Create a coffee lover’s pass, for example, that provides subscribers one free coffee per day with the purchase of another item. The paid pass is good for 30 days.
Brand Benefits: This model is designed to increase customer frequency while creating an upsell opportunity.
Customer Benefits: The coffee pass price doesn’t change, but the value increases the more a customer visits your restaurant.
2. Amount Discount
Create a VIP delivery pass targeting your mobile customers. Customers pay the membership fee to receive $5 off delivery orders when they spend more than $25. The pass lasts 6 months and limits customers to one delivery discount per day.
Brand Benefits: The discounted amount model helps increase revenue through a specific sales channel. In this example, the brand is focusing on mobile orders. The minimum spend amount creates a recurring, predictable revenue lift.
Customer Benefits: The discount rewards loyal online customers while attracting new customers to try your mobile offering at a discounted rate.
3. Percentage Discount
Create a daily meal pass on your mobile app that gives customers a percentage discount on select entrees each day. The 30-day paid pass offers a rotating discount on select customer favorites.
Brand Benefits: The model drives sales and allows restaurants to feature profitable dishes. Plus, watch your mobile usage and engagement time rise as customers check back to see the rotating discounts.
Customer Benefits: It’s a low-risk, potentially high-value program for subscribers. This program benefits customers who are open to trying new dishes. The program value increases for customers as they access more daily specials.
Increase traffic during your slow season by giving customers choices. Create a summer dinner pass offering two tiers, one for casual customers and one for your regulars. The first paid summer pass takes 20% off of any entree all summer long. High-frequency customers can pay more to receive 40% off any entree.
Brand Benefits: The multitier subscription model offers a broader appeal to customers while increasing your brand’s target audience. It also increases frequency by allowing brands to run A/B tests for future promotions.
Customer Benefits: It’s all about the choice for customers. They can estimate their spend and choose their level of buy-in. It gives customers flexibility and value.
Increase Customer Retention with Subscription Loyalty Programs
The beauty of these subscription formats is their simplicity.
Punchh Subscriptions doesn’t just deliver the tools for straightforward programs. It also provides the backend data to continually improve your subscription and rewards programs. Understanding your data is the trick to increasing customer retention. Let Punchh lead the way with your subscription-based solution and watch your frequency, spend, customer loyalty, and engagement grow. Learn more from our eBook: Subscription Loyalty Playbook: How To Win Customers & Revenue or take a Personalized Demo Today!
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