How to Optimize Membership Programs to Drive Customer Loyalty

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Executive Interview: Andy Hermo, iSeatz

Membership organizations occupy a unique space in the American consumer landscape. They are distinctive entities characterized by members with specific interests and motivations. So, what makes members different from general consumers? What is value to them?

We spoke with Andy Hermo, Chief Operating Officer at loyalty technology company iSeatz, who shares insights from the company’s recent report, The Benefits of Belonging: An Analysis of Membership-Based Organizations, Their Constituents, and Their Loyalty Strategies.

Andy discusses how membership-based organizations approach their loyalty goals and priorities differently than traditional loyalty programs, the distinct characteristics and motivators of members, and strategies for tailoring loyalty programs to better resonate with this unique market segment.

Executive Interview 

Wise Marketer (WM): Before we dig into the research just released “The Benefits of Belonging: An Analysis of Membership-Based Organizations, Their Constituents, and Their Loyalty Strategies”, can you define what you mean by “membership-based” organizations? Are we talking about subscription-based loyalty programs like Amazon or Walmart + or more like AAA, AARP, Costco, and Sam’s Club? It’s a big universe out there. 

Andy Hermo (AH): Membership-based organizations (MBOs) are strategic communities built around shared interests. Members often pay a fee to join and, in return, receive exclusive access to the organization’s intrinsic benefits (networking, resources, status) as well as ancillary benefits like access to industry publications or educational courses, discounts on products and services, or travel rewards.

Membership organizations can be formal or informal, large or small, local, or international. They can be physical spaces with headquarters or operate entirely online. At their core, they offer a unique way for people to connect, share interests, and gain valuable benefits. Examples include professional associations (American Bar Association), trade associations (National Retail Federation), lifestyle clubs (AARP), travel clubs (AAA), and even social clubs (Rotary Club).

Our study also captured members of more commercially oriented organizations, like warehouse clubs (Costco, BJ’s) and subscription services like Amazon. By studying the broader MBO landscape, iSeatz gained valuable knowledge to help both MBOs as well as financial services, travel, and hospitality brands optimize their loyalty programs and customer experiences.

WM: The report mentioned that while value and saving money are still important factors for this group of consumers, another important motivator is their connection with the organization. The concept of emotional attachment is easy to understand, but can you provide specific examples of the connections that consumers find valuable? 

AH: “The Benefits of Belonging” revealed more emotion-driven motivations regarding how people perceive the value of their memberships and how well organizations deliver that value, depending on the type of organization. For example, members of social service clubs prioritize connecting with people with shared interests, and 84% felt their clubs did a great job providing that connection. Similarly, sports season ticketholders and resort pass holders valued exclusive access to events and experiences and believed their organizations excelled (84% and 83% respectively) at delivering it. 

While all memberships offer some form of value, these findings show that what motivates people to join and stay engaged varies greatly. This means that for membership organizations, a one-size-fits-all approach wouldn’t resonate with these distinct audiences, and generic marketing and loyalty initiatives are ineffective. For instance, emphasizing discounts alone would not attract new members seeking social interaction. This leads us to the conclusion that organizations need the flexibility to offer the kinds of benefits that will resonate with their members.

Here is where a comprehensive travel loyalty platform with a robust rewards portfolio can have the most impact. The right travel rewards platform would allow an organization to offer exclusive access to hidden travel gems or curated experiences, creating a sense of exclusivity and incentivizing membership. It could also enable an organization to leverage member data to craft itineraries based on past preferences, catering to the desire for tailor-made travel. 

Furthermore, travel rewards can give members priority access to tours, exclusive airport lounges, or VIP hotel experiences, highlighting program value and member privilege. Each of these travel-related benefits elevate engagement and incentivizes participation in the organization through a relevant, aspirational reward system. 

WM: Where do you differentiate between “member benefits” and a loyalty program? For example, Amazon can continue to add benefits due to its enormous scope. Although they have never declared Prime a loyalty program, it serves the same purpose. When should a membership organization take the step from benefits to a formal program? How do they make that decision? 

AH: Traditional commercial loyalty programs are typically transactional. Consumers join with the clear understanding that the more they transact, the more they will be rewarded with discounts and other perks. Some memberships follow a similar structure – you pay for Amazon Prime every month, and, in return, you receive free shipping and other benefits. Many memberships, however, go beyond simple transactions, and the reason for belonging to them has more to do with the organization’s mission and values than discounts or status perks. For these groups, adopting a loyalty program can achieve different aims entirely. Here, the focus is not solely on driving spending but on elevating member engagement and building stronger bonds with the organization. 

This shift is shown in the program’s structure. A well-designed loyalty program becomes an ongoing strategy for strengthening these bonds. It’s a structured system with points, tiers, or benefits earned through activities aligned with the organization’s mission. The goal is to keep members engaged, not just to get them to spend more. Rewards can be personalized and data-driven to cater to different member preferences, ensuring a more rewarding experience for everyone. By understanding member behavior through program participation, the organization can tailor communications and offers, further deepening engagement. 

Joining a membership organization offers intrinsic benefits – networking, camaraderie, etc. – and tangible rewards (like travel discounts and booking) that enhance those core benefits. A loyalty program that leverages tangible rewards can augment ongoing engagement and keep members returning to the organization more frequently.

The decision for a membership organization to transition to a formal loyalty program involves engagement levels, data, and competition. Is your member engagement stagnant? A loyalty program can incentivize more frequent purchases or participation. Do you have enough data to personalize rewards and target specific member segments with relevant offers? Are competitors using loyalty programs effectively? A structured program might be necessary to keep up. While loyalty programs can boost engagement, they also involve additional costs and complexity for membership organizations. 

There’s more to member engagement than just points. While point systems can be effective, consider alternative approaches. Organizations like Costco, AARP, and Walmart+ successfully leverage non-points-based loyalty programs – that, not coincidentally, feature a wide variety of travel-related benefits – to incentivize membership and retain high-value members. 

WM: Fan loyalty is intense by nature. The report shared some results from sports team season ticket holders. Can you share more about that and what you learned that can be applied to membership organizations? 

AH: Fans with season tickets for sports teams show an interesting affinity pattern. According to our survey, they value “discounts” and “exclusive access” equally (21%) in terms of what they expect from their interactions with their team.

While discounts might seem redundant – after all, season tickets are essentially a buy-in-bulk discount over single-game tickets – the preference for exclusive access to content and events is revealing. Consider this scenario: an Inter Miami season ticket holder gets a discount on their seats (which is why they bought season tickets in the first place), but they also get exclusive access to Messi’s debut and first-in-line opportunities for his introduction, meet-and-greets, and other special events. Both benefits align with their fan passion – saving money and experiencing something special. This is part of why 87% of season ticket holders feel their team delivers exceptionally on what they value most, suggesting a strong connection between the organization and its loyal fans. 

The takeaway is that even the most passionate sports fans need more than love for the team to stay engaged. Organizations that offer additional value and exclusive experiences can significantly boost fan engagement and retention, which are top priorities for any membership organization. This lesson can be applied to all membership groups. 

Like sports team season ticket holders, passionate fans are the lifeblood of any membership organization. But these days, simply loving the team (or brand) isn’t enough to guarantee long-term engagement. Consider the 80/20 rule, which says 20% of your member base often drives 80% of your revenue. These highly engaged members are prime targets for both MBOs and commercial loyalty programs. For example, successful travel-focused programs like Costco, AARP, and Walmart+ leverage a variety of points- and non-points-based incentives, including travel rewards, to engage and retain their top 20% of customers. 

The current approach to travel rewards in membership organizations often falls short. While many offer traditional travel rewards like flights, hotels, and car rentals, there’s a lack of variety in travel options being offered and few well-integrated travel booking tools. This creates a gap between what members truly value (diverse reward options and easy booking experiences) and what organizations prioritize (marketing efforts and overcoming user experience challenges). 

The solution lies in a comprehensive travel reward and booking platform that incorporates personalization, ensuring a relevant and more rewarding experience. By offering a wider range of rewards, including various travel options, and by integrating a user-friendly booking platform with their loyalty programs, organizations can significantly boost member engagement and loyalty.

WM: Can you summarize the three to four key findings about how to increase engagement and loyalty among these membership groups? 

AH: Many membership organizations offer travel rewards (mostly air, car, and hotel), but there is a missed opportunity for a wider variety and integration with booking capabilities. There is a gap between what members value (e.g., more reward options, travel booking) and what organizations prioritize (e.g., marketing, user experience is a challenge). 

  • Beyond points: While points-based programs have value, the report highlights the success of non-point-based approaches. Organizations like Costco and AARP effectively leverage exclusive access, travel discounts, and curated experiences to incentivize membership and drive engagement. 
  • Personalization is key: Data-driven personalization is crucial. Understanding member needs and preferences allows for crafting loyalty programs with relevant offers and desired benefits. This fosters a deeper connection and a more rewarding member experience. 
  • Focus on unique value proposition (UVP): The report emphasizes the importance of a strong UVP. Membership organizations need to clearly communicate what makes them unique and valuable to their target audience. This could involve exclusive experiences, personalized travel itineraries, status perks, or more tailored rewards portfolios. By offering a compelling UVP, organizations can stand out from the competition and attract and retain loyal members. 

Membership organizations can enhance member engagement and loyalty by offering more diverse and personalized rewards, including travel options, investing in a user-friendly travel booking platform integrated with their loyalty programs, and leveraging personalization to provide relevant offers based on member preferences. 

WM: Can you summarize where brands would be wise to invest to drive higher loyalty among membership groups? 

AH: Membership organizations prioritize marketing and personalization for member acquisition, whereas traditional brands focus on loyalty program experience and platform improvements. Their top investment priorities are marketing (60%) and personalization (37%). Membership groups potentially undervalue technology investment for digital engagement.

With a focus on core value, membership groups might rely on the inherent value of membership (community, shared interests) and downplay technology’s role in boosting digital engagement or adding transactional benefits. They might see marketing and personalization as the most effective ways to acquire new members, which is their top goal, and allocate resources accordingly. 

WM: What is the connection between travel and membership groups? 

AH: There are membership organizations that are specifically travel-oriented, but the most apparent way travel and membership are connected is through travel rewards. Although most membership groups (72%) offer travel rewards, the report supports our argument that they’re not the primary motivator for people joining a membership group. 

The relationship between travel and membership groups is multi-faceted. While travel rewards might not be the main reason people join, they still play a significant role. Dedicated travel membership groups thrive by offering exclusive deals, unique experiences, and valuable resources to passionate travelers.

For other memberships, travel rewards serve as an enticing bonus. They can incentivize people to join and encourage them to spend more to maximize those benefits. Interestingly, some groups, like professional associations or alumni networks, might even offer travel discounts specifically tied to conferences or networking events, seamlessly aligning travel with their core mission. 

WM: Do membership organizations employ specific tactics or strategies that could be effectively applied to traditional loyalty programs? 

AH: Absolutely. Traditional, points-based, transactional programs only reward one kind of behavior – spending – and therefore inspire a specific type of loyalty. Membership groups inspire deeper engagement by prioritizing experiences like exclusive events or early access to build excitement. For a commercial brand, offering a more comprehensive range of rewards, including experiential and exclusive perks, can help unlock advocacy and a deeper relationship with customers. Similarly, tiered benefits can also cover a variety of consumers, with basic discounts in lower tiers and more sophisticated benefits for higher tiers. 

Highlighting your brand’s story and values creates emotional connections with customers. You can also reward advocacy by incentivizing members who share your brand within their personal communities or support your cause. You can segment your customers and target offers based on interests and purchase history. By adopting these strategies, loyalty programs can create engaging experiences that drive customer loyalty. 

WM: Did you find that more trust is created among members of a membership organization? Is it easier to communicate and gain valid feedback from members due to this trust?

AH: While our survey did not directly address trust, member responses about their priorities suggest trust is easier to build with organizations than with commercial brands.

Trust thrives on open communication and member feedback and is fueled by consistent engagement and interaction. This is where membership organizations and commercial brands can elevate their game by offering compelling rewards and creating more frequent engagement opportunities. 

Members seek a sense of community and shared interests. Organizations that understand this and develop a clear mission and values that resonate with their members can build a foundation of trust.

Members who believe in the organization’s intentions and leadership are more open and receptive to communication. Trust also encourages members to provide honest and constructive feedback. This valuable feedback allows organizations to continuously improve their offerings and services, ultimately strengthening the member experience. 

Overall, creating a sense of belonging through trust is crucial for a thriving membership organization. 

Editor’s Note:

Andy Hermo is the Chief Operating Officer at iSeatz, a loyalty technology company. As iSeatz’s COO, Andy leads key business development and customer success strategies to drive enterprise growth, profitability and improve customer satisfaction. Andy has over 30 years of leadership, commercial strategy, and operations experience in the travel and hospitality, consumer packaged goods/retailing, and financial services industries. Before joining iSeatz, he was VP and General Manager of Enterprise accounts at Sabre Hospitality Solutions and a founding partner with Hudson Crossing, a Travel Industry consultancy. Andy also held commercial leadership positions with other esteemed brands, including Cendant Travel Distribution Services, Dun & Bradstreet, and GE. 

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