Retailers turn to fee-based loyalty programs in bid to keep customers
The article is behind the G&M's paywall but essentially it says that with the proliferation of loyalty programs, retailers want to lock customers to their program. Paradoxically they've found that people who pay to join a program spend more than those who don't pay, perhaps because once you've paid to join you're going to try to maximize the value from that fee by buying more stuff. Also the retailers claim that it costs them money to offer the added perks like free, expedited shipping.It’s the latest twist to rewards programs: the consumer pays.
From giant grocer Loblaw Cos. Ltd. to premium yoga fashion chain Lululemon Athletica Inc. and home-goods e-commerce specialist Wayfair Inc., retailers increasingly are charging customers a fee – from about $35 to $128 a year – to sign up for loyalty programs. In exchange, consumers get perks such as free shipping and access to exclusive products or events.
For retailers, it’s more than just about generating revenue from memberships. Companies feel the pressure in a digital world to entice shoppers who can easily switch loyalties after checking their mobile devices for a better deal elsewhere...