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Tuesday, 29 April 2014

Shopper Loyalty Part 2: Membership Matters

I am the world's worst golfer. After years of trying to play, the basic problem still haunts me: I stand too close to the ball after I have hit it. My golf bag sits forlornly in the corner, simpering, like a long-lost lover: "you never take me out any more!" she murmurs.

It's true. Despite being surrounded by plethora of Surrey's finest municipal and private golf courses, I haven't been a regular visitor to a golf club since I gave up my membership at Dunham Forest, almost fifteen years ago. 

Having stretched to find the money to buy the shares and fees, I was determined to drive every last penny of value from the investment. Membership made the difference.And it wasn't just the golf, the club had an active social side. I bought in. And on a shots per round basis, on the course and in the bar, I did pretty well. 

It's why Costco customers are so loyal. As David Mamos wrote in "Money Morning" last year: "Costco's "members only" set-up charges annual fees ranging from $55.00 to $110.00. Its loyal membership acts as a built-in cushion that allows Costco to deliver roast chickens for under $5.00 and offer super deals that are occasionally sold at a loss"

Costco plan their store locations around affluent consumers - they aren't everywhere - and once you've paid up, every visit helps you off set the initial outlay. You know you paid in, you want pay-back. And you can feel the value every time you shop. Financial investment precedes emotional connection. Getting members is one thing, keeping them something else. The discipline of paid for annual memberships means Costco must keep delivering, keep impressing or else people stop renewing. 

Tesco Clubcard by contrast is ubiquitous, democratic and free. 
Submit your details and your previously pointless existence is transformed. Simple and easy. Yet on another level it is deeply irritating: you must give up personal data. You were in the store shopping already, why not give you the value right there and then? It's odd: trading information for a sense of exclusivity is fine, but doing so to access value, available to all, feels somewhat different and not necessarily conducive to building a lasting emotional connection. 

Which is why Amazon Prime, combining the specialness of Costco with the ubiquity of Tesco, can change everything. Early Prime adopters talk like evangelists: "Have you got Prime?"  Like a naughty, thrilling secret: this question marks out the cognoscenti from the rabble. 

The more products and services wrapped in, the more access to value recovery exist and the smarter you feel about your choices. And, you don't have to stand in line behind other cardholders feeling very ordinary. Shopped in privacy, Prime membership can always feel special no matter who else has it. 

When it comes to loyalty it seems paid-up membership is the prerequisite for a meaningful relationship, but just the beginning. After this, the club has to deliver. Anything less is simply playing around.

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