喜剧演员约翰Hodgman-known personification of a PC in Apple’s “Get a Mac” ad campaign—relished the elevated social status that came with ascending Delta’s SkyMiles programso much that he namedhis 2019 memoirMedallion Status. Although the reference is meant as a self-deprecating joke about the author’s hankering for fame, it also illustrates how a successful VIP program can influence customers.
VIP program exclusive rewards—and the prestige they offer—can be an effective way to build a loyal customer base. Here’s how VIP programs for businesses work, a few successful examples, and how to create one for your business.
What is a VIP program?
A VIP (very important person) program is acustomer loyalty programwhere a business offers benefits—discounts or access to exclusive goods, content, and other rewards—to a specific group of customers. Membership may cost a fee or depend on specific metrics like purchases or engagement.
How does a VIP program work?
VIP programs typically vary from business to business.
One common type of VIP program is a loyalty program, where dedicated customers enter different VIP tiers through a points system. Customers usually earn points through repeat purchases. For example, customers earn a point for every dollar spent. Some businesses also award points for brand advocacy, like following social media accounts, using brand hashtags, or leaving positive reviews.
In some cases, once customers accrue enough points to enter a new tier, they might enjoy rewards like free shipping, discounts, and early access to new products. Some programs offer more exclusive rewards, like access to products, content, spaces, or events. For example, Adidas Creators Club members can win gear signed by professional athletes.
Other businesses, like Costco, allow customers to buy directly into VIP status and the benefits that come with it.
What are the benefits of having a VIP program?
VIP programs can help you retain customers and even create loyal brand advocates. According toBond’s 2022 Loyalty Report, 78% of consumers say loyalty programs make them more likely to do business with a particular brand. The same report shows that 72% of consumers believe loyalty programs are an important part of their relationship with a brand and that 74% were more likely to recommend a brand with a good loyalty program.
VIP status makes customers feel special. Because joining groups satisfies our need to belong, exclusive VIP programs can help drive sales and customer loyalty. According to a 2020McKinsey surveyon loyalty programs, members are 60% more likely to spend on the brand after subscribing.
Examples of successful VIP programs
Here are a few examples of successful programs, in case you need inspiration as you design a loyalty program:
Adidas Creators Club
The Adidas Creators Clubis one of the most successful VIP programs because it offers various rewards and ways to earn them. Creators Club consists of four tiers, with more rewards the higher you go. The top tier includes invitations to special events, like free concerts, games, and meet and greets with athletes; priority access to limited edition product launches; 12 months of free premium access to Adidas Running and Training apps; and surprise rewards, like the opportunity to win signed gear.
Creators Club members ascend VIP tiers with points (making the club a type of points program as well). They earn points by purchasing Adidas products, logging workouts on the Adidas Running and Training apps, reviewing purchases, and participating in Adidas Runners events. Customers can then spend their points on products, raffles, and more.
Costco Memberships
Costcorequires a membership to shop at its stores, so Costco customers enjoy a sense of exclusivity by default. Unlike a loyalty VIP program based on points and repeat purchases, a Costco membership can be purchased annually for $60, or $120 for an Executive Membership—the top tier in Costo’s VIP program. This not only provides the business with income from dues but also creates a sense of commitment for members. You might be more compelled to shop often to get your money’s worth. While the $60 level provides access to shop in Costco warehouses and take advantage of their offers, the $120 Executive Membership tier gets that plus 2% cash back annually, delivered in the form of a gift certificate to spend at Costco.
Costco’s members-only business model seems to be paying off. Its renewal rate ismore than 90%.
REI Co-op
Like Adidas Creators Club,REI Co-op membershipcomes with various perks, including discounts, free shipping, early access to limited-edition releases, and invitations to member events.
However, what truly sets REI’s VIP program apart is that a one-time $30 lifetime membership fee makes you a co-op member—an owner, technically—which comes with annual patronage dividends in the form of money back (typically 10% of what you spent at REI in the prior year) on your purchases. It also entitles you to vote on candidates for the co-op board.
How to create a VIP program
There’s no one right way to run a VIP program. Regardless of how you design your reward system, here are the three steps to creating a VIP program for your business:
1. Decide how you will assign VIP status
Start by determining how VIP status will be assigned. Will your customers pay to join, or will you opt for a rewards-based system where loyal customers earn their way to VIP status through repeat purchases or brand advocacy? Then, decide whether you want to create a single VIP group or a tier system where each level receives different rewards.
2. Choose perks for rewarding customers
Once you’ve worked out how customers achieve VIP status, decide what kinds of exclusive rewards you want to offer. Get as creative as you want with this step. Unique rewards like invitations to special events (Adidas Creators Club) and decision-making power (REI Co-op) can make customers feel special. However, more standard perks like free shipping, the option to earn redeemable points, and early access to product launches can also help build brand loyalty.
3. Get customers to join
Once you’ve established the rules for your business’s VIP program, decide how to market it to your customers. If you choose a rewards-based program, you can automatically sign customers up when they make a purchase and tell them when they’ve earned points and how to redeem them. If your VIP program requires a membership or initiation fee, create a sense of exclusivity and highlight the value of the rewards so customers are compelled to pay.
VIP programs FAQ
How do VIP programs work?
VIP programs work by offering a specific group of loyal customers exclusive rewards to incentivize them to come back or spend more.
How do you reward VIP customers?
Businesses can reward VIP customers however they see fit. Some of the most common rewards include discounts, free shipping, and early or exclusive access to products.
Why are VIP programs important to your business?
VIP programs are a great way to build a loyal customer base, which keeps customers coming back, thereby reducing the need to spend money to constantly acquire new customers.