Is Subscription-Based Loyalty the New Customer Retention Strategy?

Posted on April 25, 2024 by Anjali Pillai

There are many types of loyalty programs out there; one that is currently gaining popularity is the subscription-based loyalty program. According to the Subscription Economy Index (SEI) from Zuora, subscription-based businesses have experienced a growth of over 350% in the last couple of years, indicating the growing trend of subscription-based loyalty programs.

But why would a customer pay to be a part of the loyalty program, especially when there are so many out there for free?

The answer to this question boils down to the value customers receive through this subscription which goes beyond mere discounts and freebies while helping businesses lay the foundation for a reliable revenue source.

In this blog, we’ll delve into the potential of subscription-based loyalty programs, exploring how they not only retain customers but also deepen their engagement and foster lasting relationships with the brands.

What is a subscription loyalty program?

Subscription-based loyalty programs or paid loyalty programs are an extension of free loyalty programs where the customer pays an upfront fee, either a one-time or a recurring fee (monthly or annual) to be part of a loyalty program. Instead of earning points or discounts with each purchase, subscribers receive ongoing perks. Customers pledge their commitment to the brand by paying this fee in exchange for exclusive benefits and rewards.

Subscribers of these programs enjoy ongoing perks that extend beyond mere discounts, such as complimentary products or services, early access to new releases or events, personalized recommendations, and enhanced customer support. Essentially, subscribers pay for a membership that grants them continuous value and a sense of belonging to an exclusive community.

Advantages of subscription loyalty over free loyalty

They offer a reliable revenue stream for businesses
Loyalty created through subscription extends beyond transactional relationships with customers. It converts the financial commitment of the customers into an emotional commitment
Unlike in traditional loyalty programs, the customers are highly and continuously engaged with the brand
The result of all the above leads to fostering long-term relationships with the customers
Executing paid loyalty programs leads to better data collection by providing valuable data about customers’ purchasing habits, preferences, and behavior, which can inform marketing and product strategies. This data can be later used to personalize customer experiences.

Why subscription-based loyalty is the best customer retention strategy

By cultivating a sense of exclusivity and belonging among subscribers, subscription-based loyalty stands out as the premier customer retention strategy. Here’s exactly how subscription programs make this happen:

1. Reduced Churn Rate: By providing ongoing value and benefits through a subscription model, businesses can significantly reduce churn rates. According to findings by McKinsey, a significant 59% of customers enrolled in paid programs showed a higher inclination towards choosing the brand over its competitors. Additionally, they were observed to be 43% more inclined to make weekly purchases from the same brand.

2. High Engagement: Subscription-based loyalty programs promote high levels of customer engagement. Unlike traditional loyalty programs where engagement often decreases after rewards are redeemed, subscribers remain actively involved due to the ongoing benefits and exclusive experiences they receive. This sustained engagement leads to increased interactions with the brand, reinforcing loyalty and driving repeat purchases.

3. High Customer Lifetime Value: The continuous nature of subscription-based loyalty programs contributes to higher customer lifetime value. Subscribers tend to make more frequent purchases over an extended period, leading to increased revenue and profitability. Additionally, the predictable revenue streams generated by subscription fees allow businesses to better forecast and optimize their resources for long-term growth.

4. Enhances Brand Loyalty: Subscription-based loyalty programs foster deeper connections between customers and the brand. By offering personalized experiences, exclusive rewards, and ongoing value, businesses can strengthen brand loyalty and affinity. Subscribers feel valued and appreciated, developing a stronger emotional attachment to the brand that transcends transactional interactions.

5. Emotional Connection: Subscription-based loyalty programs have the potential to create a profound emotional connection with customers. Through personalized communication, tailored offers, and exclusive experiences, businesses can evoke positive emotions and feelings of belonging among subscribers. This emotional connection goes beyond rational decision-making, influencing customer behavior and driving long-term loyalty.

Examples of successful Subscription based loyalty programs

Amazon Prime

With over 200 million members all over the globe, Amazon Prime is renowned for its comprehensive suite of benefits. It follows a membership model offering its members free and fast shipping, access to Prime Video, Prime Music, Prime Reading, and exclusive deals on Amazon Prime Day. The program’s value proposition lies in its ability to provide convenience, entertainment, and cost-saving benefits bundled into one subscription, enhancing the overall customer experience. Amazon Prime employs a robust retention strategy by continually adding new features and benefits to keep subscribers engaged and satisfied, creating a sticky ecosystem that encourages long-term commitment and loyalty.

Emirates Skywards+

Emirates Skywards+ follows a VIP subscription model for their airline loyalty program and offers premium benefits to frequent flyers, including priority check-in, lounge access, extra baggage allowance, and bonus miles on flights. The program targets frequent travelers seeking personalized experiences and enhanced comfort during their journeys. By providing exclusive perks and privileges, Emirates Skywards+ aims to cultivate a sense of exclusivity and reward among its members, fostering strong loyalty and encouraging repeat business.

Swiggy One

Swiggy One is a subscription-based loyalty program offered by the food delivery platform Swiggy, popular in India. Subscribers enjoy benefits such as free delivery, exclusive discounts, no surge pricing during busy periods, and priority service. Swiggy One members also get exclusive benefits on Swiggy’s subsidiary grocery delivery platform Instamart. The instant grocery retail is a competitive space in India and the subscription model has helped Swiggy stand out among their competitors by offering irresistible value to its members.

Challenges in Subscription-Based Loyalty Programs

Initial Investment: Launching a subscription-based loyalty program requires significant upfront investment in technology, infrastructure, and marketing efforts to attract and retain subscribers. This can be a barrier for businesses, especially smaller ones, that may not have the resources to commit to such initiatives.

Retention: Maintaining subscriber engagement and preventing churn are ongoing challenges for subscription-based loyalty programs. It’s essential to continuously innovate and refresh the program’s offerings to keep customers interested and loyal over the long term.

Creating a Value Proposition: The value proposition you create is everything that will get businesses new customers and help retain existing ones. Hence it is very important to have a unique value proposition that sets the program apart from the competition and adds more value and meaning to the customer’s life.

Operational Complexity: Managing a subscription-based loyalty program involves handling a range of operational tasks, such as tracking subscriptions, delivering rewards, and providing customer support. Ensuring smooth operations and a seamless customer experience requires careful planning and execution.

How Capillary Can Help You Create The Right Subscription Loyalty Program

Capillary offers a comprehensive suite of solutions to assist brands in creating tailored subscription-based loyalty programs across various industries, including Fashion Retail, Fuel Retail, Supermarkets, and E-Commerce. With Capillary’s advanced technology, brands can seamlessly manage subscription programs across channels, continuously engage their customers, and refine their programs to match customer expectations.

With Capillary’s expertise, brands can confidently create best-in-class subscription-based loyalty programs that not only attract new subscribers but also cultivate lasting customer relationships.

Get in touch with our experts now.

Forecasting Loyalty Outcomes: How to Predict Customer Behavior

Posted on April 13, 2024 by Trevor Antley

Forecasting key loyalty outcomes is essential for businesses to retain customers and enhance engagement. By learning to predict customer behavior, companies can gain a competitive edge by understanding and predicting loyalty-signifying behaviors.

This approach enables businesses to tailor their services and marketing efforts more effectively, ensuring customers remain engaged and loyal. The process involves analyzing historical data, identifying patterns, and using these insights to predict future behavior. By doing so, companies can create more personalized experiences, improve customer satisfaction, and drive growth.

Free Whitepaper from Capillary Technologies

Loyalty Analytics: Introduction to KPIs & Metrics

Drive loyalty program success with key loyalty KPIs and tracking the metrics that matter.

Download Now

Why Forecasting Loyalty Outcomes is Essential

The importance of forecasting loyalty outcomes cannot be overstated. Customers often gravitate towards brands that recognize and reward their loyalty in a market crowded with options. This recognition can come in various forms, from personalized discounts to exclusive access to new products.

Achieving this level of personalization requires a deep understanding of what drives loyalty among your customer base.

Through predictive analytics and customer segmentation, businesses can gain the insights needed to forecast loyalty outcomes accurately. This allows for developing targeted strategies that resonate with different customer segments, fostering a sense of loyalty and encouraging long-term engagement.

Understand & Forecast Customer Behavior

To forecast key loyalty outcomes effectively, it’s crucial to start by understanding customer behavior. This involves collecting and analyzing loyalty data about how customers interact with your brand across various touchpoints. By leveraging loyalty analytics, businesses can identify patterns and trends that indicate loyalty, such as repeat purchases, engagement with loyalty programs, and positive feedback.

Consistent engagement across multiple channels
Participation in loyalty programs
Positive feedback and high customer satisfaction scores

Once customer behaviors are identified, businesses can tailor their strategies to reinforce these positive behaviors and address any areas of concern that might deter loyalty. This proactive approach ensures that the brand remains responsive to customer needs and preferences, enhancing loyalty.

Segment Your Audience

Effective loyalty outcome forecasting also relies on accurately segmenting your audience. Customer segmentation allows businesses to group customers based on similar behaviors, preferences, or demographics. This targeted approach ensures that marketing efforts and loyalty programs are more relevant and appealing to each segment, increasing the likelihood of engagement and loyalty.

Demographic segmentation: age, gender, location
Behavioral segmentation: purchase history, engagement level
Psychographic segmentation: interests, values

By understanding each segment’s unique characteristics and preferences, businesses can tailor their loyalty strategies to meet different customer groups’ specific needs and expectations. This personalized approach enhances customer satisfaction and fosters a deeper sense of loyalty.

Predictive Analytics to Forecast Key Outcomes

Predictive analytics is a powerful tool for forecasting loyalty outcomes. By analyzing data and identifying patterns, businesses can predict future customer behavior with a high degree of accuracy. This insight enables companies to anticipate customer needs, personalize their marketing efforts, and optimize loyalty programs to maximize engagement and retention.

To effectively leverage predictive analytics, businesses should focus on:

Analyzing historical data to identify patterns of loyalty and disengagement
Developing predictive models to forecast future customer behavior
Continuously refining these models based on new dataand insights

This data-driven approach allows businesses to anticipate customer expectations and tailor their strategies to encourage loyalty and long-term engagement.

Personalized User Experiences (UX)

You can foster customer loyalty by creating hyper-personalized customer experiences. Personalization goes beyond simply addressing customers by name in communications. Hyper-personalization, powered by new AI-driven technology, involves tailoring every interaction based on the customer’s preferences, behaviors, and past interactions with the brand. This level of personalization makes customers feel valued and understood, significantly enhancing their loyalty to the brand.

To create truly personalized experiences, businesses should:

Utilize customer data to understand individual preferences and behaviors
Tailor marketing messages and offers to match these preferences
Ensure that every customer interaction is consistent and personalized across all touchpoints

This commitment to personalization demonstrates to customers that the brand values their business and is invested in their satisfaction, leading to increased loyalty and engagement.

Free Guide to Forecasting Loyalty Outcomes

Forecasting loyalty outcomes and their practical applications is an ongoing journey that requires continuous learning. To further aid in this journey, we are thrilled to introduce our latest whitepaper, “Loyalty Analytics: Introduction to KPIs & Metrics.” This comprehensive guide is designed to deepen your understanding of loyalty analytics, offering a closer look at the key performance indicators and metrics that matter most.

Free Whitepaper from Capillary Technologies

Loyalty Analytics: Introduction to KPIs & Metrics

Drive loyalty program success with key loyalty KPIs and tracking the metrics that matter.

Download Now

In this whitepaper, we delve into the specifics of measuring and analyzing loyalty, providing actionable insights and strategies to enhance your loyalty programs. Whether you’re just starting to focus on loyalty outcomes or looking to refine your existing efforts, this whitepaper is an essential tool, guiding you toward more informed decisions and strategies.

Experts at Forecasting Key Loyalty Outcomes

By embracing the insights and strategies outlined in this blog and the whitepaper, businesses can look forward to predicting loyalty outcomes and actively shaping them. Here’s to building a future where customer loyalty is not just hoped for but strategically nurtured for sustainable growth!

Contact Capillary today for help forecasting loyalty outcomes or other loyalty technology or services!

The Loyalty blog-Landscape in the USA: Top Solutions Providers and Capillary Technologies’ SaaS Disruption

Posted on April 10, 2024 by AIRA Writes

The loyalty program market in the USA is highly competitive, with numerous providers offering advanced solutions to help businesses engage and retain their customers. This landscape is constantly evolving, with new technologies and strategies emerging to meet the ever-changing needs of consumers. In this blog, we’ll explore several leading loyalty solutions providers in the USA and discuss how Capillary Technologies is emerging as a leader by disrupting the traditional agency-led model through its SaaS platform.

Leading Loyalty Solutions Providers in the USA

Capillary Technologies Capillary Technologies is making waves in the loyalty market with its comprehensive SaaS platform that offers AI-driven insights, omnichannel engagement, and real-time analytics. Capillary’s focus on innovation and technology has positioned it as a key player in the loyalty space.
Kobie Marketing Kobie Marketing is known for its strategic approach to loyalty, offering customized solutions that integrate advanced analytics and personalized customer experiences. Their expertise in creating multi-faceted loyalty programs has made them a popular choice among large enterprises.
Bond Brand Loyalty Bond Brand Loyalty combines loyalty strategy, customer experience, and advanced analytics to create effective loyalty programs. Their focus on driving emotional engagement and building lasting customer relationships sets them apart in the market.
Brierley+Partners Brierley+Partners offers a comprehensive suite of loyalty solutions, including strategy, technology, and program management. Their expertise in data-driven insights and customer engagement helps brands create impactful loyalty programs.
Clarus Commerce Clarus Commerce specializes in premium loyalty programs, offering subscription-based models that provide immediate and ongoing benefits to members. Their focus on creating high-value experiences helps brands increase customer retention and lifetime value.
Aimia Aimia provides end-to-end loyalty solutions, from strategy and design to execution and management. Their global experience and expertise in customer data analytics enable them to deliver effective loyalty programs that drive customer engagement.
Excentus (a PDI company) Excentus focuses on fuel-based loyalty programs, offering solutions that integrate with retail and convenience store operations. Their technology helps businesses drive traffic and increase customer loyalty through fuel discounts and rewards.

Trends in the USA Loyalty Landscape

Personalization and Data Analytics Personalization continues to be a critical factor in loyalty programs. Brands are leveraging data analytics to deliver tailored experiences and offers to their customers. By understanding customer behavior and preferences, companies can create more relevant and engaging loyalty programs.

Omnichannel Engagement Customers expect seamless experiences across all touchpoints, whether online or offline. Omnichannel engagement strategies are essential for providing a consistent and cohesive customer journey, ensuring that loyalty programs are accessible and effective across multiple channels.

Mobile-First Approaches With the rise of mobile commerce, loyalty programs are increasingly being designed with a mobile-first approach. Mobile apps offer convenience and accessibility, allowing customers to engage with loyalty programs on the go. Features such as mobile payments, push notifications, and in-app rewards enhance the overall customer experience.

Sustainability and Ethical Practices Consumers are becoming more conscious of sustainability and ethical practices. Loyalty programs that incorporate eco-friendly rewards or highlight a brand’s commitment to social responsibility resonate well with modern consumers and can drive deeper engagement.

Capillary Technologies: Disrupting the Loyalty Market with SaaS

Capillary Technologies is emerging as a leader in the loyalty space by disrupting the traditional agency-led model through its SaaS platform. Here’s how Capillary is making a difference:

SaaS-Based Flexibility and Scalability Capillary’s SaaS platform offers unmatched flexibility and scalability, allowing businesses to easily customize and expand their loyalty programs. This cloud-based approach eliminates the need for extensive infrastructure and reduces implementation time, making it accessible for businesses of all sizes.

AI-Driven Insights Capillary leverages artificial intelligence to provide deep insights into customer behavior and preferences. These AI-driven analytics enable businesses to create highly personalized and targeted loyalty programs that drive engagement and retention.

Omnichannel Integration Capillary’s platform supports seamless integration across multiple channels, including online, in-store, and mobile. This omnichannel capability ensures that customers have a consistent and cohesive experience, regardless of how they interact with the brand.

Real-Time Analytics and Reporting With Capillary’s real-time analytics, businesses can track the performance of their loyalty programs and make data-driven decisions to optimize engagement. This real-time feedback loop allows for continuous improvement and ensures that loyalty programs remain effective and relevant.

Industry-Specific Solutions Capillary Technologies offers tailored solutions for various industries, including retail, travel and hospitality, CPG, BFSI, telco, and healthcare. Their industry-specific expertise ensures that loyalty programs are designed to meet the unique needs and challenges of each sector.

Conclusion

The loyalty landscape in the USA is dynamic and competitive, with several leading providers offering innovative solutions to help businesses engage and retain their customers. Among these, Capillary Technologies stands out for its ability to disrupt the traditional agency-led model through its comprehensive SaaS platform. By leveraging AI-driven insights, omnichannel integration, and real-time analytics, Capillary is helping enterprise brands build stronger, more effective loyalty programs that drive long-term customer engagement and loyalty. If you’re looking for a cutting-edge loyalty solution that can adapt to your business needs and scale with your growth, Capillary Technologies is the ideal choice.

Contact a Loyalty Expert

5 Conglomerate Loyalty Programs Redefining Customer Engagement

Posted on April 8, 2024 by Anjali Pillai

Conglomerate loyalty programs or multi-brand loyalty programs as they are generally called are changing the way enterprises interact with their customers. These programs offer a unified platform that spans multiple brands within a conglomerate, providing customers with a seamless and integrated experience across various product lines and services.

One of the key benefits of conglomerate loyalty programs is the ability to offer customers a wider range of rewards and benefits. By consolidating loyalty efforts across multiple brands, conglomerates can pool resources to provide more enticing incentives, such as exclusive discounts, personalized offers, and access to premium services.

To better understand multi-brand loyalty programs, here are five exemplary conglomerate loyalty programs setting new standards for customer engagement and experience.

1. Kanmo Circle by Kanmo

Since its inception in 2005, Kanmo Group has risen to prominence as a retail juggernaut in Indonesia, captivating the market with its diverse array of lifestyle and fashion brands. With a rich portfolio spanning fashion, sports, and children’s segments, Kanmo has established itself as a go-to destination for trend-savvy Indonesian shoppers.

A Look into Kanmo Group’s Loyalty Program

Kanmo’s loyalty solution, Kanmo Circle, is a customer-centric, tiered loyalty program designed to reward and retain customers and loyalty members.

At the core of their customer-centric strategy lies the ingenious Kanmo Circle, a tiered loyalty program designed to reward and retain patrons. Boasting four distinct tiers, each with its enticing benefits, Kanmo Circle offers everything from enticing cashback rewards to exclusive birthday discounts and even the luxury of personal shopping assistance.

Kanmo Group uses its website as a seamless gateway for both new and existing customers, providing a hassle-free experience for signing up and tracking loyalty status in real time.

With a holistic view of their customers and armed with a wealth of data, Kanmo could create targeted campaigns, run personalized offers, and connect emotionally with their customers.

2. Blue Rewards by Al-Futtaim Group

Al-Futtaim Group is a global conglomerate based in the United Arab Emirates (UAE) with operations spanning across the Middle East, Asia, Africa, and beyond. Established in the 1930s, Al-Futtaim Group has grown significantly and is involved in various sectors including automotive, retail, real estate, finance, engineering, and technology.

A Look into Blue Rewards Loyalty Program

Blue Rewards is an innovative app-based loyalty program that stands out for its simplicity and convenience. Al-Futtaim’s loyalty program combines its diverse range of fashion, sports, lifestyle, and home decor brands under a single digital roof to offer a seamless customer experience (CX) from start to finish. The Al-Futtaim Group’s embracement of new technology has played a pivotal role in the program’s success, including integrating AI-powered hyper-personalization. Blue Rewards has also improved the CX by strategically incorporating gamification elements during key seasons, boosting customer engagement and adding an element of excitement to the loyalty journey.

To streamline the customer journey, Blue Rewards also offers co-branded credit cards and an in-app wallet, allowing customers to make payments effortlessly while enjoying instant cashback rewards. These features simplify the transaction process and incentivize continued patronage, reinforcing the bond between Kanmo and its valued customers.

3. Tata Neu by Tata Group

The Tata Group is India’s largest conglomerate, renowned for its diverse range of products and services that touch the lives of millions of people worldwide. Founded by Jamsetji Tata in 1868, the group’s legacy is deeply rooted in the ethos of trust, integrity, and commitment to societal welfare, holding a special place in the hearts of millions of Indians.

A Look into the Tata Neu Loyalty Program

Tata Neu crafted a game-changing app that has revolutionized the customer experience. The Tata Group’s loyalty platform seamlessly integrates countless offerings, spanning from every day groceries to high-end fashion, travel services, and even pharmaceuticals, all curated from various Tata brands.

The Tata Group designed Tata Neu to prioritize customer convenience and satisfaction. By consolidating a wide array of products and services onto a single platform, Tata ensures that customers can fulfill their diverse needs with ease, whether they’re shopping for essentials or luxury.

The Tata Neu program focuses heavily on points and rewards. Through carefully crafted purchase rules, customers earn ‘Neu Coins,’ equivalent to 5% of their purchase order, deposited directly into their wallet. The automatic redemption of Neu Coins during subsequent purchases adds a layer of seamless convenience, enhancing the overall shopping experience. Free delivery becomes the cherry on top for customer convenience.

Through its omnichannel approach, Tata Neu rewards loyalty and aims to drive footfall in physical stores. Tata encourages customers to explore its brick-and-mortar outlets by integrating online and offline channels, fostering a holistic shopping experience that transcends digital boundaries.

4. The 1 by Central Group

Central Group, headquartered in Bangkok, Thailand, is one of Southeast Asia’s largest and most influential conglomerates. With a mission to enhance the quality of life for customers and communities, Central Group has continually pushed boundaries and set industry standards.

A Look into The 1 (Loyalty Program)

At the heart of Central Group’s customer-centric initiatives lies their loyalty program: The 1. A testament to the company’s unwavering commitment to enhancing customer satisfaction and loyalty, Central Group created The 1 to provide unparalleled benefits and rewards to its members. The 1 program includes features tailored to cater to the diverse preferences and needs of its customers. Through a dedicated mobile app for The 1, Central Group offers a variety of rewards, ranging from gift vouchers to special event invitations and personalized recommendations. Beyond rewarding individual members, The 1 program also supports community initiatives and charitable causes, allowing members to contribute to positive social impact by participating in the loyalty program.

5. Reliance One by Reliance

Reliance Industries Limited (commonly known as Reliance) stands as one of India’s most influential conglomerates, with a significant impact both domestically and globally. Established by Dhirubhai Ambani in 1966, Reliance has grown into a diversified powerhouse with interests in energy, petrochemicals, textiles, retail, telecommunications, and digital services.

A Look into the Reliance One Loyalty Program

The Reliance One loyalty program epitomizes Reliance’s dedication to enhancing the customer experience. Loyalty members enjoy exclusive benefits, including discounts, personalized alerts, points accumulation, and redemption opportunities.

Reliance has a dedicated website for Reliance One, where customers can sign up for the program and receive the Reliance One card. The website also allows members to know their point balances and receive exclusive and customized offers.

From Reliance Fresh and Reliance Trends to Reliance Digital, the Reliance One card can be used across all of partner brands located in 1200+ stores in India. Members earn points and cashback for their purchases, which can be redeemed in the future. The points earned through the Reliance One card never expire, ensuring lasting benefits for members.

Create a World-Class Conglomerate Loyalty Program

Capillary has partnered with several big conglomerates to fuel their loyalty programs and drive business growth. Our AI-powered product suite is setting new standards for multi-brand loyalty programs and revolutionizing the way brands interact with their customers. Interested to know more about us? Get in touch with our experts now!

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