Growing Value and Loyalty — Not Just Revenue —Through Subscriptions 

Last month, Target made headlines when it launched its Target Circle 360 membership program, a paid extension of its existing Target Circle Rewards program. While media coverage notes that the recurring revenue generated by a subscription program could help mitigate Target’s recent trend of declining sales, it’s also a real-time case study for how retail subscriptions can boost shopper loyalty and deliver extra dollars. 

Notice how many popular retail subscriptions offer more than a simple transactional exchange of value, which is critical to developing stronger customer relationships. In the case of Target Circle 360, members receive free delivery in less than an hour on participating items, more personalized benefits, and extended time on returns. Amazon Prime offers streaming entertainment along with free shipping, as does Walmart+ through a partnership with Paramount. Walmart’s program also includes auto care specials, early access to Black Friday deals, and more.  

When done correctly, paid memberships can lift shopper loyalty to a new level. Here are some tips to keep in mind to ensure a successful subscription-based program. 

Take Advantage of First-Party Data to Personalize Plans 

Shoppers who engage in a paid membership or loyalty program supply retailers with a wealth of first-party data. This can include identifying purchase history trends, product attributes that matter to each shopper (e.g., sustainably sourced items), and insights into online and in-store customer shopping behavior.  

This data allows retailers to learn about each customer and deliver relevant, personalized offers and rewards to each loyalty member or subscriber. Consumers willing to pay a monthly fee to a retailer deserve a personal touch in return. Retailers that deliver on a promise of advanced personalization are more likely to retain paid subscribers, too. 

Emphasize Omnichannel Engagement 

When consumers think of a membership plan, they often equate the service to free delivery or free shipping on items. Retailers need to expand this definition, and one way to do that is to accentuate the omnichannel experience so members see the benefits whether they’re shopping online or in-store. 

For example, a grocer with a subscription program can reserve free or specially discounted local items for members only when they’re shopping in-store. This benefit makes members feel special while connecting them to brands and products that are meaningful to their community. 

Commit to Subscribers 

It may seem obvious to state, but a paid program must also commit to its subscribers. Just as a consumer exhibits a commitment to its preferred retailer by signing up for a paid program, a retailer, in turn, needs to commit to that subscriber.  

A paid membership is transactional, but there’s a psychology at play with subscriptions, too. Consumers are subscribing to a sense of community or belonging to a retailer. Companies should encourage a communal aspect to the paid program, such as developing events and contests and building subscriber interactions. A membership or subscription program can succeed if a retailer respects the committed relationship between retailer and shopper, growing through personalization and a unique omnichannel experience. 

Memberships on the Rise 

Because paid memberships can cultivate stronger relationships between shoppers and retailers while offering a new revenue stream for the retailer, consumers can expect to see more retailers launching subscription-based programs. Deloitte’s 2024 retail industry outlook study found more than half of the retail executives surveyed said enhancing how they present loyalty programs will be a pivotal opportunity for growth this year, ranking it first among the strategies listed. Subscriptions or membership services linked to loyalty, like Target Circle 360, will undoubtedly be a strategy for retailers to consider. 

There's tremendous value to retailers in rolling out a subscription-based loyalty program. At the same time, more competition will arise as other merchants develop their own paid programs to drive recurring revenue and win loyal shoppers.  

Of course, not every consumer will subscribe to every retailer’s program. However, the retailers that create powerful, personalized connections within their paid programs are the ones that will prevail. 

Sarah Jarvis is communications and propositions director at Eagle Eye, a SaaS technology company enabling retail, travel, and hospitality brands to earn the loyalty of their end customers by powering their real-time, omnichannel and personalized consumer marketing activities.