In the ’90s, during the “heyday of the mall as a cultural symbol and a commercial powerhouse,” an adolescent’s identity was often intimately tied to where they spent their time and money in the shopping center. Each region of the mall had a unique subculture where youth could shop and socialize, enjoy the company of like-minded peers, and revel in a flourishing consumer culture. In shopping malls all across America, you could find the local prepsters at Abercrombie, the high school jocks at Nike or Reebok, and the punks and goths at Hot Topic. Local teens hanging out at the mall, decked out in their latest logo-emblazoned purchases, became the ultimate brand ambassadors for retailers: loyal, passionate, and unpaid. In mall culture, retailers profited off the consumer’s desire to be part of the brand while consumers enjoyed the social shopping experience the retailers provided.
Today, the mall is no longer a cultural force in the United States. Malls across America are closing en masse, caused by a confluence of forces, including “economic downturn, the rise of internet commerce, the decline of the suburbs—even just the opening of newer malls, which cannibalize older ones.” The COVID-19 pandemic has only accelerated these trends. However, as almost every retailer pivots to digital, they must grapple with how to foster the next generation of loyal and passionate customers without the aid of mall culture and the ‘real-life’ communities of unpaid brand ambassadors it helped create.
One way in which online retailers are attempting to uplift revenue by creating the next generation of ardent fans in the digital sphere is by establishing retail membership programs. Unlike retail loyalty programs, which are typically free, retail membership programs convert casual customers into loyal and passionate dues-paying “members,” who pay monthly or annual fees in exchange for special perks like free shipping, early access to merchandise, and exclusive sales. Research shows that loyal customers contribute to a 22% increase in cross-sell revenue and a 13–51% increase in up-sell revenue. The highly regarded loyalty program of Sephora, which boasts 17 million members in North America, contributes to 80% of the company’s sales.
The premier retail membership program is Amazon Prime. This hugely popular program charges customers $12.99 a month in exchange for free one-day and two-day shipping on millions of items and includes other benefits. For Amazon, the surge of revenue provided by Prime customers far outweighs the cost of free shipping. A recent poll found that Amazon Prime members spend “an average of 1,400 US dollars on the online shopping platform every year, compared to 600 US dollars spending of non-Prime members.” In addition, the Amazon Prime case study illustrates that, when successful, retail membership programs “boost engagement, increase retention, and encourage brand advocacy.” The rest, of course, is history—through its pioneering retail membership program, Amazon has built a legion of loyal consumers while becoming the “largest and most successful retailer in the western world.”
Amazon is far from the only retailer that has created a paid retail membership program. Sephora, Restoration Hardware, AMC Theaters, and many other top-tier retailers have followed suit to varying degrees of success. So what makes some retail membership programs more successful than others? According to McKinsey, high engagement levels are a hallmark of a successful retail membership program: “good paid programs have a continuous flywheel of interaction that elevates the program’s value” by turning prospects into customers and then ultimately promoters. To keep the flywheel spinning faster and faster, eliminating friction by creating a smooth and easy onboarding process is paramount.
In order to administer a successful program and create targeted marketing campaigns, retailers must obtain the consumer’s personal information like their name, telephone number, email, and home address. However, with every additional piece of information requested, a consumer’s impatience increases, and abandonment rates surge. A study by Annex Cloud shows that 70% of consumers abandon loyalty program sign-ups because the process is too complex and time-consuming. While the rewards offered by the program must entice the customer in the first place, a frictionless onboarding process clinches the deal.
Prove’s Pre-Fill™ offers a powerful new way to onboard customers quickly and painlessly. Unlike traditional onboarding flows where a customer fills out a form with personal information, Prove Pre-fill reverses the course. It uses Phone-Centric Identity™ techniques to auto-populate forms with personal information from verified data sources and then requests customers to simply confirm it. This new flow drastically reduces the number of keystrokes required to fill out a form (a metric that measures customer fatigue) while preventing identity fraud by stopping bad actors from filling out fraudulent information into the forms.
E-commerce has provided consumers with more options than ever before, making it more challenging for retailers to inspire brand loyalty. Paid membership programs, however, are one way retailers have found success by inspiring customers to return time and time again. A key element to a thriving paid membership program is high engagement rates. To achieve sky-high engagement rates, companies should invest in great incentives and a seamless onboarding process powered by Prove Pre-Fill.
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