Brand clubs: the future for marketing?

Research from specialist Arvato Loyalty Services suggests that the future of the loyalty industry may lie in brand clubs.

Some 46 per cent of people surveyed by Arvato are interested in joining a brand club and 21 per cent would be willing to spend over GBP100 to do so.

Loyalty schemes have proven a great success in the UK, with the number of schemes increasing by two and a half times in the past ten years according to recent research from GI Insight, yet new research from specialist Arvato Loyalty Services suggests that the future of the industry may lie in brand clubs.

Brand clubs can best be described as loyalty schemes offering exclusive content to their members.

Andrew Mitchell of Arvato Loyalty Services said: "After the success of loyalty schemes, it looks like clubs might be the next great initiative in customer marketing".

Brand clubs have the opportunity to build on this success by offering new ways for customers and brands to interact.

For example, members of a club linked to an automotive brand might get the opportunity to go to Silverstone for a day to test drive the company's new car before it is sent to dealerships.

Brand clubs enable a company to have a more sophisticated relationship with their customers.

Rather than simply offering a discount on products they are interested in, they can offer exclusive experiences related to their customers' interests.

The response to this may be that it sounds useful, but costly at a time when the economic downturn is likely to see marketing budgets under strain.

Yet the report also found that 40 per cent of people would be willing to pay to be a member of a brand club.

Even more interestingly, 29 per cent would pay up to GBP40 and 21 per cent would be willing to pay over GBP100.

This shows that these schemes have not only the capacity to be self-sufficient, but also to make a profit.

While companies will have to offer strong incentives to attract consumers to join their club, it offers the chance to form exceptionally strong relationships with people who have a special interest in the brand.

Furthermore, the fact that the highest level of brand membership is among wealthy people ('A' social class) shows that this can be a useful way of reaching a lucrative but elusive market.

What is it that encourages people to join these clubs? The research found that people were attracted to clubs first and foremost by discounts and special offers.

Yet people were also attracted by exclusive and advance access to products and special offers from similar companies.

The report also notes that 'we have become a nation of avid points collectors' and it could be said that club membership is something inherent in British culture.

As children we are told that 'Blue Peter badge winners get in free' and as adults we collect Air Miles and supermarket loyalty points.

People were most enthusiastic about clubs linked to supermarkets, but also expressed a high level of interest in clubs linked to leisure venues, holiday destinations and restaurants.

The report - Join the Club? A study into the popularity of brand clubs, and the factors that attract people to join - is published by Arvato Loyalty Services.

A representative sample of over 1,000 UK adults was surveyed during January and February 2008, with the sample balanced by age, gender, region and social class.

Respondents were asked to state how effective different types of advertising are at encouraging them to visit a company's website and seriously consider a purchase.

Fieldwork was conducted by Ciao Consumer Surveys, a member of the Greenfield Online Group.

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