Consumers Embrace Fee Based Rewards Programs
Amazon Prime charges its members $99 per year in one lump sum. This works out to $8.25 per month for members who count their pennies.
What do Prime Members Receive?
The biggest perk is Prime’s famous two-day free shipping service which applies to most products. But Prime members also receive access to hundreds of thousands of free movies, television programs, books, deals and curated sales. There are also bundled extra programs for moms and college students that wrap in with a Prime membership.
Why is Prime So Popular?
Prime delivers on all the perks shoppers today want most – free shipping, fast delivery, discounted products and more free time to do other things. And Amazon also gets what it wants – the average Prime shopper spends more than twice what the non-Prime Amazon shopper spends per year ($1,500 versus $625, to be exact). [Consumer Intelligence Research Partners, 2015]
Indigo makes up half of Chapters, the most successful and profitable bookstore chain in Canada. Chapters and Indigo merged in 2001 and the chain has just kept gathering strength since then. Indigo/Chapters actually has two rewards programs: iRewards and Plum Rewards.
Plum Rewards Versus iRewards
Plum Rewards is free and points-based – a more traditional rewards program complete with special birthday rewards. iRewards carries an annual fee of just $35 per year ($2.92 per month) and includes discounts on books and everything else the chain carries both in-store and online.
Why Does This Two-Tiered Program Work?
By giving customers the option of two different rewards programs with two different sets of benefits, Indigo leaves the final choice in its customers’ own hand – a perk in its own right and one today’s customers want and expect. iRewards also includes curated shopping lists, another expected perk for today’s online customers in particular. Ultimately, this system works because Plum attracts shoppers who spend less than $750 per year and iRewards attracts shoppers who spend $750+.
Fee Based Loyalty Program Infograph