3 Subscription-Based Loyalty Programs to Model Yours After

It’s safe to say that the modern customer is acquainted with subscription models. Streaming services and media outlets are two common subscriptions your customer may already benefit from. Now, subscription-based customer loyalty programs are a growing presence in the restaurant and service industries. It’s an opportunity for customers to earn unique rewards and for businesses to drive revenue. 

Subscription-based loyalty programs grant your customers access to exclusive benefits for a recurring fee. It’s a relatively simple way to generate consistent revenue for your business. Popular quick service restaurant (QSR) chains like Taco Bell and Panera Bread implemented their version of the subscription model and saw enormous benefits.  

Yet, for a prospective subscription model to have the greatest impact on your business, you must first determine if it’s the right choice for your customers. This article covers the ins and outs of this loyalty program model so you can make an informed decision.

What Is a Subscription-Based Loyalty Program? 

A subscription reward model is a paid loyalty program wherein customers pay a recurring fee to earn unique benefits, discounts, or perks. Guests may pay monthly or annually.  

Subscription-based reward models differ from traditional or points-based loyalty programs because they don’t reward customers based on purchases. Instead, customers pay an upfront cost to receive exclusive rewards. 

For businesses, a subscription loyalty program marketing strategy creates predictable revenue with the potential to build on itself year after year. It invites you to foster customer loyalty and connection, turning the average visitor into a brand advocate.  

5 Core Features of Successful Subscription-Based Loyalty Programs 

A successful loyalty program is designed with proven principles in mind. Here are five core loyalty program features to grow your subscription-based model: 

1. Convenience: Good subscription loyalty programs are easy to understand and use. The rewards are easily accessible when customers go to make a purchase. 
2. Personalized experiences: Ensure a customer’s experience feels unique by offering exclusive customized rewards for special events like birthdays.  
3. Early access to new releases: Loyalty members gain advanced access to new releases. They get to try exciting new items before non-subscribed customers.  
4. Built-in referral programs: Reward your customers for inviting their friends and family to enroll in the loyalty program. It's an incentive for quality word-of-mouth marketing.  
5. Member-only events or offerings: Grant your loyalty program members exclusive access to special events, menu items, or other offerings that aren’t publicly available.

Tiered subscription loyalty reward programs can help make them more accessible to customers. For example, you might feature a standard and premium loyalty program. Each tier features unique benefits, with the premium version offering the greatest perks for the highest subscription cost.  

It’s often helpful to examine how similar businesses launched their programs. Look at these three examples of loyalty programs that performed well.  

Case Study 1: HuHot 

In February 2021, Paytronix client HuHot launched a BOGO subscription-based reward program for their customers. Restaurant guests paid a monthly membership fee of $9.99 and earned a free grill meal with the purchase of one full-priced grill meal.  

The BOGO program rewarded customers with significant discounts on every visit. Yet, HuHot’s dramatic increase in customer visits offset and exceeded the revenue that might’ve been lost through discounts. The subscription paid for itself and then some.  

HuHot subscribers visited the restaurants three times as often and spent six times more than they did without the loyalty program. Additionally, HuHot discovered that subscribers spent $100 more than regular customers.  

In the end, the program proved a resounding success, increasing HuHot’s customer engagement and revenue through a well-executed subscription-based loyalty program.  

Case Study 2: Panera Bread 

MyPanera is the subscription-based membership program by Panera Bread. The program incentivizes sign-ups by offering customers a free pastry and delivery upon registering. It additionally leverages the growing customer desire for personalized experiences by generating unique rewards based on individual customer trends.  

There are two tiers: MyPanera or MyPanera with the Unlimited Sip Club. Customers earn greater rewards in the higher tier but have the flexibility to opt for MyPanera if it better suits their needs.  

What’s more, the reward model is easy for customers to use. Customers can access their account via the Panera Bread app. MyPanera grants customers flexibility to choose a program that works for them while consistently offering valuable rewards.

Case Study 3: Grubhub 

Grubhub is a well-known subscription loyalty program that rewards customers and businesses. With Grubhub+, customers have unlimited $0 delivery fees on eligible orders over $12, a 5% credit back on pickup orders, and donation matching. 

The program’s newest feature offers customers milestone rewards for events like birthdays or anniversaries. For businesses, Grubhub’s compelling features to customers, ease of use, and convenience often lead to increased sales. 

Grubhub OnSite is a loyalty program that specifically delivers to hotels, stadiums, and college campuses. Restaurants can create location-exclusive deals and rewards to prompt return customers. 

6 Challenges in Implementing Subscription-Based Loyalty Programs 

With any new loyalty program, it’s wise to understand the possible challenges. As you create your subscription-based loyalty program plan, have these six challenges in mind: 

1. Up-to-date metrics on customer behavior: With up-to-date customer data, tailor your program to loyal customers and make it worth their investment—both financially and timewise. 
2. Provide actual value: A successful loyalty program offers unique and exciting value to customers. Make customers feel like they’re actually being rewarded.
3. Differentiate your program from competitors: An effective restaurant loyalty program stands out from competitors. Ensure to differentiate yourself from other options.
4. Resources to manage high upfront investment: Your program requires resources and might not generate revenue immediately. Patience and consistent marketing efforts are key. That said, ensure you have ample funds to support your initiative until it takes off.
5. Overcomplicating the loyalty program structure: The more complicated a program, the less likely a customer is to sign up and stay active. Keep your loyalty program simple and valuable.
6. Ensure value increases with time: Maintain customer engagement by revamping your offerings. It gives customers new ways to use their membership.

As part of your loyalty program scoping process, build a list of actionable solutions you can refer to if such challenges arise. This resource allows you to quickly iterate on your loyalty model.  

With your subscription program ready for launch, make sure you have a clear strategy for tracking its progress, measuring customer loyalty, and overall reception. Prepare reporting dashboards to view your guests' latest activity as soon as your first few signups roll in. 

Measuring Your Loyalty Program’s Success 

First, define the key performance indicators (KPIs) you’ll use to measure your subscription-based loyalty program’s impact. Track these metrics in addition to the top KPIs that all restaurants should measure. These five metrics can be helpful to understand your program’s success: 

1. Enrollment rate: Track the number of new customers who enroll over time and how many choose to renew their subscription.
2. Engagement rate: Measure how actively your customer base engages with your brand, offerings, and content. 
3. Churn rate: Monitor when customers cancel subscriptions to reveal potential dissatisfaction, allowing you to pivot quickly to better serve them.
4. Revenue: Keep track of revenue fluctuations month after month, especially after your initial launch.
5. Average customer lifetime value (CLV): Measure the total value a customer brings to the company throughout their engagement.

The simplest way to track loyalty program metrics is to leverage customer loyalty program platforms. You can uncover performance trends, aggregate reliable metrics, and discover unique insights within one easy-to-navigate loyalty solution. Use this information to make data-driven decisions that bolster your business.

5 Trends to Expect from Subscription-Based Loyalty Programs 

Use these trends to your advantage to stay ahead of the competition and continue meeting customer needs. Create your loyalty program with these five trends in mind: 

1. Increased use of AI: This technology is an ever-more-powerful tool for businesses looking to grow revenue and cater to customers.  
2. Highly personalized programs: Customers crave personalized experiences. Use data and technology to include these unique offerings in your program.
3. Loyalty program partnerships: Some businesses opt to form partnerships with other companies and create added value for both reward programs. 
4. Mobile apps and wallets: Leverage a loyalty mobile app or wallet to make it easier for customers to take advantage of your rewards program.
5. Customizable loyalty program software: It’s a tool to help streamline implementation, understand your customers, and make data-driven decisions. 

Using trends to your advantage ensures you’re on the cutting edge of customer loyalty and engagement. You keep customers excited about your brand. It also helps ensure that you stay ahead of competitors.  

What This Means for You 

Subscription models open new doors for you to engage with customers. One of the greatest benefits of a subscription-based loyalty program is an increase in revenue.  

Yet, a subscription-based model isn’t without challenges. It’s important to ensure it’s the right choice for your business and customers. Any loyalty program must provide genuine value to make it worthwhile for customers.  

A subscription-based reward program may be the solution to engaging customers and boosting revenue. Download our annual loyalty report to leverage real-world insights in your decision-making and planning process.  

Ready to accelerate your customer retention, LTV, and financial success? Book a demo now to see how our end-to-end loyalty tools simplify program launch and refinement.