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Things eCommerce Brands Must Know Before Building Paid Loyalty Programs

  • Posted on December 29, 2023 by Robert
  • Reading time about 6 minutes
paid loyalty programs

We all know the importance of loyalty programs in every business irrespective of the industry to retain and engage customers for a long time. Many brands use free loyalty programs but in McKinsey Survey 2020, it was found that paid loyalty programs spend 60% more with a brand than non-members while that figure was only 30% for free loyalty program members.

Though paid loyalty programs are not quite common because of the obvious reason- it’s tough to get customers signed up for a paid loyalty program and more difficult to offer value that makes them signed up. In this blog, we will figure out everything you need to know about building a paid program before you invest in a good eCommerce Loyalty Program Provider.

Pros and Cons of Using Paid Loyalty Programs

As the name says, paid loyalty programs are programs where customers must pay a minimal amount to become a part of the program and enjoy exclusive loyalty perks. This can help save some of your marketing & loyalty market costs & act as another revenue stream for the business. Let’s check out some of the top benefits & weaknesses of using paid loyalty programs for eCommerce brands and customers.

For eCommerce Brands

· Advantages

– Revenue Stream

Membership fees of the program can be a reliable source of income that adds to the overall revenue apart from direct product sales.

– More Engagement

Customers are more likely to stay engaged with the brand to make the most of their initial program investment cost during sign-up.

– Better Insights

As paid loyalty program members tend to spend more, you get a better quality of customer insights, which helps in personalizing marketing efforts better.

– Stand Out from the Market

Your paid loyalty program helps build stronger emotional bonds with customers, which further creates more referrals and advocates.

– Members consider the brand as a premium

A strong membership-based loyalty program can help transform customer’s perception of your brand, boosting profit margins.

· Weaknesses

– Difficult to get Customers Signed Up

It can be harder to make customers join a paid program than a free one because of the cost. Leading to a lower number of sign-ups.

– Complicated Pricing

Coming up with the right membership price & exclusive benefits can be tough as the program needs to be profitable without hampering the business budget.

– Keep Adding Value

Making customers stay for a long time & sign up for your paid program can be difficult if you don’t keep adding more value.

– Paid Program Implementation Cost is High

You need significant resources to build and maintain a paid loyalty program as you need to manage memberships and continually innovate loyalty perks.

– Customers are more likely to become Disappointed

A good paid loyalty program can do wonders to build up your brand image and exclusivity, but a bad one can bring more damage than a free loyalty program.

For Customers


– Exclusive Loyalty Perks

The best thing about the paid loyalty program is that it offers access to exclusive loyalty rewards and benefits like special discounts, early access to products, etc.

– More Convenience

Paid loyalty programs can enhance the shopping experience with faster shipping, priority customer service, product recommendations & more.

– Better Potential for Savings

Paid loyalty program members will get more discounts on all purchases as compared to non-members, leading to higher savings.

– Personalized Interactions

Members enjoy special benefits & personalized interactions like exclusive birthday/anniversary offers, tailored discounts, & access to limited-edition products.


– Membership fees for the Paid Program

Customers tend to sign up for free programs more than paid programs as they are not clear about the value & benefits they will get after paying membership fees.

– Customers may not use the program often

Though benefits may be compelling, customers may not be using it often, especially the ones who make fewer purchases.

– Lower Program Value with Time

Customers may lose interest in loyalty programs over time if they fail to offer more and more value over time.

Is Paid Loyalty Program Right for Your Business?

After going through the pros and cons of using paid loyalty programs, we will figure out if this program type is a good choice for your business or not.

Steps to see if your business needs a paid loyalty program before taking the help of a reliable loyalty program software

– Know your Customers

Paid loyalty programs tend to be successful for those brands who already have a loyal customer base that buys relatively.

– Review Your Product Offerings

These programs are most suitable for brands offering products or commodities with high purchase frequency. Amazon is one brand with paid loyalty programs, which is very successful.

– Know Your Place in the Market

Paid loyalty programs can be a bad choice if you are a small player in the competitive market as bigger rivals are better positioned to offer more benefits.

– Find Out if you have Enough Resources

Knowing whether you have enough resources or not is important before setting up the paid loyalty program as you need to offer bigger and better benefits.

– Know Financial Goals

Ensure that you are aware of the financial goals & revenue patterns before running a paid loyalty program. This program can bring revenue even during quiet periods.

– Gather Customer Feedback

Whether you run surveys or questionnaires, ensure that you connect with customers through social media to see whether your customers would consider paying for better loyalty benefits.

Closing Statement

After going through the blog, it is quite clear that choosing the right type of loyalty program is essential to make it a success in the long run. Ensure that you check out the pros and cons of building paid loyalty programs before building one. Whether you are looking for free, paid, or a combination of both, make sure that you know what your customers want from the loyalty program.

If you own a startup or medium-scale eCommerce business and are struggling to implement the right SaaS loyalty solution, Novus can help! Whether it’s about program set-up, optimizing, or analyzing a program without the huge investment of time and money, we have got every need covered. Novus is an all-in-one loyalty management software that enables brands to build dedicated loyalty solutions that meet specific business needs. Book a demo today to create a robust eCommerce loyalty program for a maximum customer retention rate.

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