customer retention
customer retention
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 min read
March 1, 2017

Fee-Based Membership Programs, Customer Loyalty, and the Change in Online Shopping Patterns


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Successful e-commerce and m-commerce merchants like Amazon, Costco, Instacart and others have been implementing fee-based programs that have changed online shopping patterns. For the members it is an incentive to shop with them; for the business it acts like a loyalty program of sorts.

Online shopping has spelled a paradigm shift for the commercial world. And within that shift has formed many substrata. Nowadays, with so many merchants taking their trade online, the initial wow of this medium has given way to a more pressured competition. So how do retailers match their rivals and seal the loyalty of their patrons or visitors? Thriving enterprises have seen favourable outcomes by employing the membership program. So what does this mean – the advantages, disadvantages, and the incentives required to hook new members?

Customer bait

Let’s first think about the customer.

  • They pay a membership fee and get exclusive incentives, or advantages over the regular offers.
  • They get a better deal for their overall shopping experience throughout the year, which negates the blemish of a membership fee.
  • They can shop for more products on a site they are already familiar with, with the pleasure of knowing they can cash in on certain perks of the membership every time.


The customer is happy. Now what about you?

  • Customers are hardwired to take the bait on incentives. So the likelihood of signing on with you is high.
  • Patrons are quite likely to return to shop more to realise a greater return on that initial membership fee payment.
  • The customary incentives offered are free delivery, quicker delivery, or discounted prices. These are solid baits for practical every-other-day purchasing. For instance, an online grocery distributor can work the free delivery angle because this is something people buy and need every day. A household product supplier could use the attraction of offering discounted prices because (without a doubt) these are commodities that are going to be purchased very frequently and the discounts will keep your customers in the pen.
  • It establishes loyalty. Loyalty because they come back to shop from you. But more importantly because you give them their money’s worth and build a relationship through your program.


There’s a downside that needs to be balanced out.

  • The incentives need to really whet the appetite to even get customers to sign up. If it isn’t tempting enough what credits the extra payment’s worth? Let’s look at two examples. 1) If you are a haberdashery and your notions are already small budget, having a membership program that gives you a discount above a pretty high amount won’t be availed by many. 2) If you offer doorstep beauty services, it would make more sense to offer discounts instead of instant services. Your clients know what your services are and that appointments are required. In all likelihood they are going to plan the session around they schedule. So offering a discount would be more valuable that offering instant services to members.
  • The services offered means an extra cost that retailers need to absorb and may not be easily recouped. Using the same example of the doorstep beauty services, if they can offer both discounts and instant services they would have a delighted clientele. However, they would incur costs on having to maintain a few handy staff to cater to the instant service requests.

These fee-based programs have a huge potential in keeping you running in the market. With a little balance and planning, you can offer viable programs that keep customers signing-up by the dozen without burning yourself out.

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