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Members Only: Cultivating Loyalty with Experience-Driven Subscriptions

Just a few years ago, there was one key factor driving customer loyalty: price. In fact, 92% of consumers said it was their top reason for continuing to conduct business with a certain brand.

Yet loyalty has evolved over the years. Emotional connection has become increasingly important—today, when asked to define their loyalty to a company, roughly 40% of consumers cite “love” for a brand, rather than the quality or cost of its product.

“With customers in the driver’s seat, how an experience makes them feel has a bigger influence on their brand loyalty than any other factor,” says Forrester Chief Research Officer Carrie Johnson. And for companies, tapping into this passion pays: Customers that have emotional relationships with brands have a 306% higher lifetime value than those who don’t.

While developing emotional connections is challenging, subscription brands have a unique opportunity to cultivate them, given that they, by nature of recurring transactions, have regular interactions with members. So what drives an experience that makes customers feel? Two words: personalization and elevation.

Taking Personalization to New Heights

There are many ways to personalize a subscription membership, and data plays a critical role. By analyzing behaviors like delivery rescheduling or adding new items to an existing subscription, brands can identify customer patterns and tap into opportunities to strengthen the relationship, such as offering discounts to try related items. But this level of personalization is becoming table stakes for subscription brands—in fact, about a third of shoppers today want membership rewards to be more interesting.

Rent the Runway, a clothing rental brand that offers ad hoc rentals as well as a membership program, welcomes this challenge. The brand regularly iterates on its membership program, using data and insights from monthly transactions to adjust pricing and benefits to better meet the needs of its customers. But just recently, the company took its membership even further, teaming up with Tripadvisor to customize customers’ rental experiences in an unprecedented way.

Through the collaboration, RTR customers that book travel packages through Tripadvisor can have their monthly subscription outfit package shipped to one of 300,000 hotels throughout the U.S. “Many of our subscribers change where they are shipping to frequently,” former RTR COO Maureen Sullivan told CNBC about their first foray into a travel partnership with W Hotels in 2019. “I think as Rent the Runway comes to life, we are seeing how dynamic subscription can be.”

The result is an elevated, personalized experience that’s tailored to the preferences of RTR’s globe-trotting target demographic. And, perhaps more importantly, it’s the kind of perk that motivates one-time Rent the Runway users to become members and keep RTR thriving. So far, the company’s commitment to consistently iterating its membership model has proven successful—it just filed for an IPO this summer.

Any Company Can Delight Members

There’s no one-size-fits-all approach to personalizing and elevating a subscription membership, but any company can do it. The key is to ensure membership perks propel the customer relationship forward in a way that’s authentic to the brand. Take Restoration Hardware. It might be surprising to learn that the luxury furniture brand offers a subscription-based membership program. Why should customers dole out $100 a year to be members of a furniture store where they don’t make purchases every month, or even every year? In addition to discounts, members earn early access to sales, special financing options for the Restoration Hardware credit card, and, most notably, complimentary interior design.

While customers no doubt appreciate discounts and VIP access, it’s the interior design that sets Restoration Hardware apart from competitors and introduces a truly unique subscription element. Not only is it a generous perk, but it’s also one that aligns with the brand’s mission to transform and elevate the way millennials buy furniture. For Restoration Hardware, it’s not just about selling couches—it’s about cultivating a feeling of luxury. (It’s why the brand offers seafood and champagne at its retail locations, which it calls galleries.) The membership-based interior design strengthens this feeling, inspiring shoppers to keep “coming for the salmon, and staying for the sofa.

Quarter after quarter, Restoration Hardware continues to see success, reporting record revenues, even as the luxury goods industry struggles in the face of the ongoing pandemic. While sales of its high end furniture certainly contributes to the company’s healthy bottom line, it’s actually RH’s membership that yields consistent, reliable cash flow. In fact, since the 2016 introduction of the membership program the company “hasn’t missed a quarter,” CEO Gary Friedman says.

And it’s not just luxury brands that can deliver unique experiences that elevate a membership beyond the basics. Best Buy, for example, is currently piloting a paid membership program that, in addition to special pricing, offers members unlimited Geek Squad technical support, protection on most product purchases, and free delivery and installation. These added perks strengthen the connection between company and customer—customers feel supported beyond the transaction, which intrinsically motivates them to keep doing business with the brand.

The Future of Membership Is All About Feelings

As subscriptions continue to explode and exceed analysts’ predictions, competition to deliver unique customer experiences will grow, too. And keeping members happy and engaged will take more than discounts and convenience—it’ll come down to making them feel special.