Common Revenue Opportunities for Member Clubs, Loyalty Programs and Travel Clubs
Member clubs such as the $9 Fare Club offered by Spirit Airlines or Amazon Prime can be an ingenious way for travel and non-travel brands to diversify their loyalty offerings and drive a different kind of added value than a traditional loyalty program might offer.
There are many circumstances under which consumers are already happy to pay a membership fee for real or perceived value: warehouse store memberships, for example, such as Sam’s Club, BJ’s and Costco. These initiatives offer broad value across many different products and services, with an emphasis on price but also quality, diversity and exclusivity. Brands may have additional programs for more traditional loyalty strategies (points, miles, rewards), but member clubs serve a unique need and opportunity to engage a wider audience (not just those driven to be the most loyal and elite).
We need to look no farther than the uproar over the discontinuation of Costco’s Polish hot dog to see the emotional reactions these member clubs inspire. Although it’s just a hot dog, it is something that adds real value (in their eyes) to the larger experience of being a customer or club member. Membership creates the perception of value, but also the expectation of ongoing value, and if Costco is going to pull a hot dog from its food program, it had better make up for the loss with new benefits that are equally valuable in members’ eyes. This is the same dilemma faced by loyalty program managers and retailers trying to refresh traditional frequent flyer programs and co-brand credit cards.
Travel clubs in particular are unique among member clubs because they can function as standalone clubs or they can be added on to traditional loyalty programs and other member clubs. In the “sharing economy” ecosystem, where member clubs and loyalty programs can easily be connected to transactional and supply systems through API integrations, more brands are connecting their existing programs to new travel and lifestyle benefits from a network of brands (airlines, hotels, vacation and car rentals). Through this process or ‘ecosystem,’, these brands are elevating what they currently offer – helping to acquire new customers, retain existing members and generate ancillary revenue without taking focus away from their core business.
Tapping the Membership Revenue Stream
Travel clubs and other member clubs give companies an ancillary revenue program where they can partner with other brands, often across industries, to drive new and added value and keep customers engaged. Not everything has to be offered under the main loyalty program, and changes to the member club are conveniently separate from the main loyalty experience – which encourages ongoing innovation and new added value within the club.
When brands want to enhance their member club’s travel offering (or add one for the first time), they can’t form vendor relationships and integrations with the travel industry one by one – an impossible task that would require undue time and resources. Instead, they can partner with companies like Custom Travel Solutions to offer their members a private label, branded travel club within the context of an existing program or website. They don’t have to build or manage the new travel club themselves, which means there is little risk or investment required beyond making sure the club truly adds value to their brand.
When successful, the new travel club pays for itself through additional subscription fees, as existing customers and members are willing to pay a little extra for access to elite travel and lifestyle benefits such as discounted fares, expedited visa processing, 24/7 medical services, group trip planning and more. For the consumer, the savings on a single trip booked through a travel club often offsets the annual cost of membership and makes the subscription attractive, worthwhile and truly useful for all club members.
Beyond Dues – the Non-Revenue Benefits of Membership
Ultimately, all types of ancillary revenue programs such as member clubs are meant to solve fundamental business challenges and ultimately drive revenue. Here are three challenges that travel clubs, in particular, can help other member clubs and loyalty programs solve…
- Acquiring and retaining customers – The appeal of any loyalty program or member club depends on the benefits offered, which need to be upgraded or enhanced regularly to keep the program attractive for potential and existing members. Travel clubs immediately expand the range of benefits offered within the member club or loyalty program to include elite travel and lifestyle benefits.
- Staying relevant, useful and engaging – Member clubs such as Sam’s Club and Amazon Prime offer a range of benefits, such as discounts at Amazon-owned Whole Foods supermarkets or health screenings at Sam’s Club locations. Travel clubs provide another benefits program that existing members can access from the convenience of their smartphones and at home. These members would likely be purchasing travel products anyway (everyone aspires to travel), so why not with discounts and other exclusive benefits through a private travel club? The travel club then becomes a method for keeping customers coming back to interact with your brand regularly.
- Converting brand affinity into brand equity – As popular as travel and lifestyle benefits are, they are not a new concept in member clubs and loyalty programs. The aspirational nature of travel benefits creates brand affinity right away, but will this turn into brand equity over the long term – will a travel club ultimately help sell the company’s core products and services? Travel clubs may be easier than ever for non-travel brands to set up, but they are not a short-term play: the right travel club should add real value that helps convert immediate brand affinity into lasting brand equity and higher revenue.
Are you ready to add new value to your member club or loyalty program? Custom Travel Solutions can get you up and running with a branded travel club that addresses multiple challenges and opportunities in your existing member club or loyalty program. You might enjoy another blog on retailer loyalty programs and the 360-degree travel experience.