Millennials Willing to Pay Loyalty Fees

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More than three quarters of millennials are willing to pay to join fee-based loyalty programs.

Generating Loyalty for Brands and Retailers in an Omnichannel World
Generating Loyalty for Brands and Retailers in an Omnichannel World

The knock on millennials has always been that they're entitled and unwilling to pay their dues. However, a new survey shows that they are willing to pay a fee to join customer loyalty programs.

A recent LoyaltyOne survey of 1,005 consumers shows that shoppers 18 to 35 years old score significantly higher than any other age group with regards to being open-minded about investing in a loyalty program membership.

Sixty-two percent of respondents say they'd consider joining a fee-based rewards program if their favorite retailer offered one. In fact, 75% of 18- to 24-year-olds and 77% of 25- to 34-year-olds say they'd do so. 

Relevance boasts a similar sentiment, as 65% say it's worth joining if the rewards are relevant to their needs. Seventy-nine percent of 18- to 24-year-olds and 76% of 25- to 34-year-olds say the same.

The "you get what you pay for" mentality seems to play a role in respondents' answers. Almost half (47%) say the rewards in fee-based programs are better than those of free programs, with 61% of 18- to 24-year-olds and 54% of 25- to 34-year-olds concurring.

“Brands have historically hesitated to explore new loyalty strategies because traditional programs were still novel in most spaces,” says LoyaltyOne Consulting Associate Partner Lance Du Chateau. “However this hasn't been true for years. The perception that only a small minority of shoppers will ‘pay to play' is also a dated viewpoint. Forty-two percent of consumers surveyed have already paid to join a program.”

Other findings from the research include:

  • Of the respondents already enrolled in fee-based loyalty programs, 69% say they were enticed by free shipping and 67% say they were allured by special discounts.
  • Women (67%) are slightly stronger than men (64%) in the belief that rewards are worth paying for.
  • When asked to rank which benefits category is most appealing, respondents ranked grocery and mass merchandise (35%) as the highest category, followed by credit cards (26%), specialty retail (13%), travel (18%), and restaurants (9%).
  • Thirty-two percent of 18- to 24-year-olds and 34% of 25- to 34-year-olds say they've never been offered membership in a fee-based program, compared to 25% of the general population. 

“The traditional spend-earn-redeem reward program doesn't make sense for all companies and customers, and fee-based value propositions increasingly are a topic of conversation,” Du Chateau said. “More marketers should explore this approach.”

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