What are you a member of? A gym? A club? A cult? Endless amounts of loyalty schemes? If it’s the latter are you really a member though? Do you actively take part in anything or are you just passively handing over your card when at the checkout?
We think that the future of loyalty is not about passivity. We don’t believe you can buy loyalty via points schemes and generic vouchers. But we do think you might be able to sell it to customers. Hence the rise in retail membership schemes – a lot of the benefits of a loyalty programme but tied up in a package that’s valuable enough for customers to pay a fee to be part of.
Who’s managed to do it then? Take a look at 9 leading examples of memberships in retail and why they work:
1. Rapha Cycle Club
Rapha is a cycling club for those with like riding and racing with bikes. Which is a lot of people based on the global community that Rapha has built up over the years. The brand operates a series of Rapha Cycle Club stores which combine retail and a café to create a space for its members, and general cycling fans, to hang out. They’re also the starting point for the brand’s organised cycle rides.
While it’s not a requirement of entry, membership to the Cycle Club costs £135 for 12 months. Like a motorcycle club, members have to choose a chapter to belong to. This is usually the one nearest to them, but those without a local chapter can join Rapha International to receive the same benefits. These include the ability to hire high-end bikes, priority access to events, weekly club rides, access to the dedicated app, complimentary coffee and a whole lot more.
Community is a key driver for membership. While you can just visit the spaces, you get the most out of them, and the other people who frequent them, by being a member. If you’re a fan of cycling the huge list of benefits is definitely worth the fee. The Cycle Clubs are also nice spaces. They’re places you’d want to spend time, staffed by experts who can chat to and help fans with all their cycling needs.
2. Restoration Hardware
Restoration Hardware has done amazing work in revamping its whole brand experience in recent years and its membership scheme is an extension of that. Customers pay $100 a year for benefits that include 25% off everything in-store, 20% off sale items, access to the concierge and complimentary interior design consultations.
What we like is that the membership feels like a must-sign-up-to for anyone planning to redecorate their home. That’s a project that’s likely to span over weeks and months so the year-long benefits are a good fit, plus if you’re buying a lot of new items why not save on them? The design services also seem worth having access to. It’s that sense that you’re getting the whole package by being a member.
As a result, it’s not difficult for the benefits to outweigh the membership fee, which is an easy sell. And one that hopefully Restoration Hardware can keep selling to them year-on-year as they continue to update their home.
3. Walgreens Plus
Earlier this year Walgreens began piloting a new membership programme idea called Walgreens Plus. Limited to 17 stores across Florida, customers pay a $20 annual fee to join the scheme. In return they get 20% off pretty much everything in-store, including sales, up to 60% off prescriptions and free same-day prescription delivery.
Given that a regular prescription is a major driver of drugstore visits a lot of the benefits make sense. It seems likely that Walgreens is banking on the generous regular 20% discount encouraging customers to choose it over other options and to pick up more items on their visits. The company is continuing to run its existing points-based loyalty scheme, Balance Rewards, at the same time, but the membership already seems more compelling.
Rather than chipping away building up points, customers get instant benefits via Walgreens Plus. Yes, they’ve paid for it, but it’s a pretty small buy-in for big returns compared to spending $20 and accruing some points. If the pilot proves successful (and we will be watching with interest) the features of Walgreens Plus will be rolled out across the wider store network.
4. The Bike Shed
Here’s another place that we love. The Bike Shed is all about celebrating motorcycle culture in a super cool, welcoming space that combines retail, food and drinks, hairdressing services, events and more. Although we’re focusing on memberships here, it’s important to note that being part of the club is not a prerequisite for visiting. Anyone can go down to The Bike Shed and have a poke around – and we encourage you to do so.
As to the membership though, this is pitched at the proper motorcycle fan. The benefits include discounts of up to 20% in the store and restaurant and free entry to shows, as well as the ability to buy a drink without food. Mostly though the membership is sold through this idea of being part of the community. The Bike Shed says this drives better service from staff, a nicer atmosphere, and positions members as having a stake in the business and its success. It’s an approach that clearly works and demonstrates the value that members see in having this type of tailored hangout space for meeting like-minded people.
Ok this one is in the fitness and health sector, rather than retail per se, but we still think it’s a great example of an effective membership programme. ClassPass isn’t the only company linking health with social elements via hospitality, retail and leisure, but it is one of the leaders.
Its fitness membership doesn’t tie members to a specific gym or location. Instead it lets customers access thousands of different classes taking place in studios across the world. You can search for classes and locations that are near you and then book what works for you. It means you don’t have to stick to one routine but can take part in a variety of classes. You can try new classes without any pressure. And if you’re travelling you don’t have to skip your workout routine.
We’d love to see more retail membership/loyalty schemes that have this kind of blanket benefit across all locations. ClassPass also puts a lot of emphasis on its community with members able to chat to each other and read classes reviews via the app. The benefits exist outside of the classes and studios and this is something retail could really tap into.
6. REI Co-op
REI Co-op takes the idea of membership seriously. The company sells outdoor gear and has developed a flourishing community around the great outdoors. Its membership scheme costs just $20 for life, so it’s a real steal.
The benefits include special offers, access to in-store sales, an annual dividend and discounts on REI courses and trips. The less tangible benefits are being part of a group of like-minded individuals – 17 million of them. REI invests nearly 70% of its profits into causes it cares about, and members get to buy into this sense of giving back.
REI sells its membership as a movement. It is about being part of something bigger. The brand is transparent about where its profits go and the causes it supports. It highlights a few members each year on its website to help create a sense that the community is made of real individuals – it’s not a faceless concept. All of it makes the membership worthwhile. If you love the brand ethos and being outdoors, then it’s a no-brainer to sign-up.
7. BLOK London
BLOK is another brand focused on the wellness space, but with a more defined retail element. It has two spaces in London which are targeted at busy city workers. Members can take part in classes in the workout areas, as well as hangout in the café, gallery and retail space.
The approach is rethinking fitness to create spaces that are enjoyable to spend time in, rather than the idea of the gym as a utility space that you rush in and out of. A retail element in spaces like this is a good way to reach a targeted audience, but it also makes the membership feel fuller and more valuable. There’s a lot of scope for retail to not only launch its own memberships, but to partner with other sectors to create valuable schemes.
One of the best-known membership schemes out there, NikePlus is also amazingly free to sign-up to. By being a member, customers can unlock special rewards, advice and experiences from Nike and select partners. There are personalised training plans available and audio-guided runs from athletes and coaches. Members can also get free shipping, priority checkout, courier service and member-only shopping hours in certain stores.
But really NikePlus is about getting to know the customer. It tries to tailor content to your personal interests and goals. The membership also works across all Nike’s other apps such as the Nike Runs Club and Nike app at Retail, so every interaction with the brand is captured.
It’s a great membership concept because there is no reason for customers not to sign-up. It’s free and they get benefits. In the new Nike by Melrose store members can get free rewards like t-shirts, reservation services and curbside pick-up. Nike keeps rolling out ideas like this which are for members only which encourages people to not only sign-up but keep interacting. And then Nike uses this aggregated data to improve its services. Plus, the desire to be a member is likely to peak with the new members-only floor in the forthcoming new NY Nike store. This is how retail can drive loyalty through memberships, not points.
9. Amazon Prime
We have to mention it. It’s the big daddy of retail memberships. In some respects, we could argue that it has made the membership idea more familiar and comfortable for customers – and may make them more open to other memberships.
For those who don’t know, customers pay £79 each year to be part of Amazon Prime, but they get a lot of benefits from across the Amazon ecosystem. This includes unlimited fast free shipping, movie and TV streaming, including excluding Prime-branded content, plus ad-free music streaming, unlimited reading and unlimited photo storage.
A lot of Prime customers they may not use, or even be interested, in all these benefits, but they help to make the overall package seem valuable. There’s a question about whether people would pay the fee just to get the shipping benefits, or whether they need all the other stuff to make them feel the value exchange is enough.
Regardless we think it’s canny of Amazon to have created Prime as a membership – being a member of something makes you more likely to keep going back (especially if you are paying for it). Plus, it’s getting customers to contribute towards the sort of next-day delivery service they want, rather than giving it away completely free.
What’s next in memberships?
Retail is still in the process of flipping its thinking to memberships, but we’re sure the trend is going to keep rolling. Many other industries have seized upon memberships as a way of selling access, rather than products, to consumers from Netflix to Spotify. While retail’s model is different, being mainly about ownership and the sale of stuff, it cannot ignore the shift in consumer habits.
There are also all sorts of different mini-strands of memberships to be explored. In the fashion and grocery spaces, delivery passes are a growing trend. From as little as £10 a year, customers can get unlimited online deliveries from a brand. Some passes have a weekly or monthly payment option, some have other benefits built in as well, some include returns. They’re a good idea for heavy-use or regular customers of the brand as the passes usually offer significant savings over paying for delivery each time.
These aren’t memberships specifically, but it’s not hard to see how these passes could grow into something more encompassing for these brands. They’re getting customers used to the idea of paying a regular fee to get certain benefits or access, which can be built upon in the future.
Another spin on membership is the huge number of online subscription services from food to clothing to beauty, such as Graze, Birchbox, Glossybox and New Wash. Again, customers sign-up, usually on a monthly basis, to regularly receive items. Subscription services often have an element of curation or surprise to them and this is partly what customers are paying for.
If you had to be a member of a retail brand which would you choose? Why? Do you already have a relationship with them? Do they tap into a passion or hobby of yours? Do they have the same values as you? If you’re considering adding a membership to your retail offering, make sure you know why your customers would want to sign-up. Or they won’t.
Should you be building a brand community? Find out why brands are trying this tactic. Find out how we can help you identify and discover the breakout trends in offline and online retail that will put you years ahead of your competition. Get in touch here.