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Is Freemium Loyalty Program with Premium Benefits The Next Big Trend in Loyalty?

  • Posted on July 16, 2023 by Robert
  • Reading time about 5 minutes
Freemium Loyalty Program

Loyalty programs are becoming the most important part of every business that not only focuses on building a better relationship with existing customers but also helps to boost ROI. One question that might pop up in your mind is whether to make your loyalty program free or paid. Antavo’s Global Customer Loyalty Report 2023 says that many businesses feel the need for their loyalty programs paid instead of using a free model with the motive to generate more revenue.

However, don’t you think it will scare away your potential customers? The solution is using the freemium model by making it accessible for everyone while providing access to premium benefits. Let’s find out in this blog how Freemium Loyalty Program can help you win customers ‘hearts in your business.

Understanding Freemium Model of Loyalty Programs

The freemium model can be defined as the combination of both words- free and premium, which means adding an extra charge for premium features in an otherwise free program. Some of the biggest brands that are using the freemium model are-

· Canva- Users can access the app for free but get access to premium templates after paying for a premium membership

· Spotify- This digital music service app is free to access but needs premium membership for benefits like unlimited skips for tracks, ads removal, etc.

Talking about the LinkedIn program, all features that matter for networking are available for free but going for a premium membership can offer a great boost. The premium members are 2.6x more likely to get hired on LinkedIn helping them discover over 20 million open jobs with access to resources for enhanced search.

Increasing Demand for Freemium Loyalty Programs

When it comes to loyalty programs, the freemium model is often used where programs are free to join and can only justify a price tag if the rewards provided are good enough. The freemium loyalty program is free and members get access to basic functionalities such as points earning and tiers upgrade.

Those users who need to access a better reward experience can opt to pay monthly or annual membership fees to make the most out of the programs. Most of the customer point system works on a freemium model approach i.e. they have both free and premium elements which means, customers get loyalty offerings for free like earning points just for being active on the program.

The reasons Behind the Increase in Popularity of Freemium Model Loyalty Programs are-

– Many brands plan to turn their loyalty program into revenue-generating tool, and having a freemium program acts as a great way instead of using a full-fledged premium model.

– Another great thing about freemium programs is that they are more inclusive, as they help to cater to both high spenders (who look forward to special privileges and exclusive treatments) and brand advocates (customers who frequently engage with the brand but don’t spend much)

– Considering the cost of living crisis, many customers opt to go for free loyalty programs and have plans to upgrade only when the situation is better.

Tips to Build a Successful Freemium Loyalty Program

Listed below are the ways that drive customers to go for freemium models as they offer premium elements as well-

– Ever-Enhancing Value Offerings

To introduce the freemium model, it is not enough to just offer great rewards. Your brand must ensure to keep the experience fresh and relevant by constantly adding benefits along with earning opportunities.

– Opt for Exclusiveness & Convenience

Program members that pay for premium membership have higher expectations. Rather than offering more of what free members already have such as higher discounts, birthday gifts, etc. brands can offer rewards and benefits that are exclusive to only a premium member base.

– Offer Personalization

Customers expect better and more personalized offerings if they are becoming a part of the subscription program. For premium members, brands can send a separate newsletter with more effort and personalization considering the production value behind it, and offer tailored product recommendations.

– Suitable for a Larger Ecosystem

Another selling point for a freemium program is to encourage members to use paid membership providing access to partner rewards, and members are also allowed to use their points across a coalition or umbrella ecosystem.

– Special Focus on Members’ Emotions

Brands must work on building emotional bonds as they can help to build a true, long-lasting relationship with customers. For instance, premium members can earn points in more ways such as through athletic endeavors or bringing back used products for recycling, & more.

Switching from Freemium Model To Premium Subscriptions in a Different Way

Brands must keep in mind the premium element that they plan to include in their freemium loyalty program doesn’t have to cost real-world money for members. You can easily set up a program where members have the option to pay for premium subscriptions through earned program points. This subscription-as-a-reward model helps not only to encourage higher earnings as well as increase paid membership members, leading to higher AOV purchases as well as better ROI results.

For example, when your customer registers for your loyalty program for free and starts earning points through normal engagement or moving to the next tier, they can save points and wait until they can redeem them on a yearly subscription for the premium membership.

Final Takeaways

Undoubtedly, the freemium-based model is being used by several brands when it comes to the development of loyalty programs & wider adoption is expected in coming years. Many successful brands belonging to different industry verticals have demonstrated that this type of loyalty gaining a huge success.

Are you also planning to gain a competitive advantage by building an engaging freemium loyalty program for small businesses? Novus Loyalty can help in bringing your ideas to life by creating a loyalty program of your choice aligned with the latest technologies.

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