Membership Fees and Repeat Purchasing

Church of the Customer’s Ben McConnell uses the airlines’ current troubles as a springboard to discuss membership fees — would instituting a membership fee (like Costco, etc) in frequent-flyer programs generate real loyalty?

Research in the 1990s by Alan S. Dick in the Journal of Product and Brand Management might indicate yes. In conducting computerized shopping experiments focused on video store rentals, Dick found that a membership fee can become “psychologically amortized” in the minds of customers, making them “hesitant to switch as the would feel uncomfortable ‘wasting’ the investment” of the membership fee.

In other words, membership fees increase repeat purchases.

Worth considering in many retail businesses, actually. If you’ve instituted a membership program in your business — or attempted to — I’d love to hear about it. How did it work, or not work?

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