Thursday, 12 August 2010

Rewards for existing members

How many times have you been embittered by new member offers when you are already a member? To sign up afresh would actually get you a better deal than the one that you are locked into.

Department stores (e.g.
Debenhams) often give new cardholders a 10% discount offer for signing up that day. These are advertised on banner displays around the store, but not available to existing cardholders. Sky TV offers fantastic bundles to new subscribers, while existing customers need to (try to) cancel their subscription and start again to benefit from similar deals.

Compare this to the mobile phone industry, which rewards users on contract renewal with discounts of 20% on new call packages, in addition to free handset upgrades. In this highly competitive market, phone companies know that loyalty is key and focus on the positive existing customer experience, knowing that it will bring more friends and family onto the network.

Unfortunately, the health club industry is still like the former in general. Banners call out to new members as they arrive in the car-park advertising “no joining fee”, “August for free”, “2 for 1 membership”… none are aimed at the existing member. A highly motivated, positive thinking member might tell their friends about the offer, but most will just be disappointed that new members are getting a better deal.

The existing member must feel that they are equal if not better off than the new member. Paying last year’s rate is a safe, revenue protecting strategy (if fees have gone up this year). More audacious clubs will offer a month or more free after a year or two, a less exciting offer might be a free bag. The key is to make the existing member feel really appreciated for staying for another year, and to keep rewarding them and turn them into members (and fans) for life.

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