Premium loyalty beats price for repeat business

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Premium loyalty programs are critical for companies struggling to show their customers why they should return time and again — even when they’re not always the most inexpensive option. Brands who rethink loyalty and take time to understand their customers and provide them with value beyond products tend to outperform competitors.

Here are three tips on making the most out of a new customer loyalty program:

Differentiate yourself from other brands. A traditional loyalty program looks roughly the same at any company, and doesn’t do much to differentiate from the competition. By offering an even mix of traditional, transactional benefits and enticing experiential benefits that tie directly back to the brand, you’ll stand out from other companies that may offer similar products at comparable prices.

Provide a clear value proposition. Lululemon’s program is successful in part because customers can clearly see the value of their membership. The leggings they choose when they enroll in the program cost almost exactly the amount of the membership itself — so if someone plans to buy just one pair of leggings a year, the membership has already paid for itself.

Work to strengthen customer relationships and build new ones. Offering a more diverse array of perks helps appeal to a wider target audience. For example, Lululemon saw an uptick in male members, one of their target markets for the past few years, as a result of the membership program. In addition to emphasizing the technical benefits of the brand’s men’s athletic gear in marketing, Lululemon also emphasizes men’s wellness through mindfulness exercises and classes, identifying and solving for a pain point in their growing target demographic.

If you aren’t currently keeping up with Lululemon’s business strategy, its most recent fiscal results should be enough to pique your interest. The Vancouver-based athletics brand celebrated a 22% revenue increase in the second quarter of 2019 thanks in part to a pilot premium loyalty program rolled out last year.

Lululemon CEO Calvin McDonald announced the loyalty program will expand to Chicago this year, its fourth test market. Given the program’s success, it’s safe to assume it will only continue to expand to new cities across the U.S. and Canada, offering customers unique perks to foster strong loyalty.

Perhaps most important, creating a successful program requires a deep knowledge of your consumers and what they want. Lululemon knows its customers care about fitness and health, and aligned program benefits to match these interests. Once you understand what makes your customers tick, you’ll be one step closer to building a program that works for you and for your members.

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