Friday, January 2, 2009

The value of paid membership programs

For the past two years I've purchased the Barnes and Noble Membership Card, but this year when my membership came up for renewal I faltered. My membership served me well. I first purchased it during a period in my life when I was going to graduate school and the discounts on textbooks paid for the membership. The value was there and I was happy to pay the $25 yearly membership fee. There's also the psychological aspect of saving ten percent on all your purchases just feels good, even if it's only on a cup of coffee. And the reality is, after the first outlay of $25 you begin to forget you had to pay for the privilege of saving.

But then life changed, I graduated with my Masters and no longer needed to buy textbooks and Borders set up shop in my neighborhood. Borders has a free membership program, one of the benefits being a weekly coupon, usually for 20 to 30 percent off the list price of one item. I tend to only buy one item at a time so the free membership outweighs the paid membership for me.

The sad thing (for Barnes and Noble) is I still spend an equal amount of time at Barnes and Noble. I prefer Barnes and Noble to Borders. But now I'm just browsing at Barnes and Noble. When I'm ready to make a purchase I wait for my weekly coupon to show up in my email (it was even better when it showed up as a text message to my phone) and I stop in at Borders on my way home from work to pick up the book I eyed at Barnes and Noble.

If you're offering a paid membership program, no matter how insignificant the price - it's best to keep track of your competitors free programs and make sure you outshine the free program in a multitude of ways. The answer need not lay in matching discounts, but could instead focus on service extras. Ideas include priority lines, VIP reading sections in the store, call ahead shopping services, table reservations at the in-store Starbucks, etc. A paid membership program should be more than a blanket discount on goods, it needs to be special and hold true value for the people willing to pay for it, not just a simple calculation of if I spend $250 per year at Barnes and Noble I should purchase the membership card.

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