When Amazon Prime launched in 2005, it was a simple proposition. Pay the online retailer $79 per year and get free two-day shipping.That was a clear money-saver for me, as even back then, I ordered regularly from Amazon and either had to pay for shipping, or wait to order until I cleared the minimum required for free shipping.Over the years, the price has gone up, and the perks have changed, but the core deal remains rooted in getting something that has real value — free shipping (and now, it’s usually one-day).When it comes to joining membership programs at other retailers, the benefits have always been less clear. It’s easy to see why the retailer wants to charge for a membership program, as it helps lock in customer loyalty. But in many cases, the benefits for the consumer aren’t as obvious.That, however, has not stopped Dick’s Sporting Goods from launching ScoreCard+, a $99 per year version of its Scorecard loyalty program.What is Dick’s Sporting Goods selling for $99? Dick’s launches its ScoreCard+ program in July, and the retailer shared in a press release what members get for their annual $99 fee.Membership includes:Unlimited free standard shipping on all purchasesA guaranteed $100 in Rewards each year, awarded in $25 increments each quarterOne free service or experience each year (up to $100 in value)An always-on 20% discount on in-store services and experiencesAccess to exclusive discountsAn opportunity to earn 3x Points on one purchase each yearIn addition, anyone who signs up for the program in July gets a $100 credit toward the purchase of Dick’s owned brands: CALIA, DSG, VRST, Alpine Design, and Walter Hagen.The current free Dick’s ScoreCard, which will still be offered, has 35 million members and drives 75% of all sales, according to the company.”Our relationship with our athletes goes beyond transactions,” said Chief Marketing Officer Emily Silver. “…Our enhanced ScoreCard and new ScoreCard+ programs recognize the deep relationships we have with our athletes and rewards them not just for purchases, but for all the ways in which they interact with us today. We look forward to continuing to build and enhance the program with additional meaningful benefits over time.”Premium loyalty programs drive salesClarus Commerce CEO Tom Caporaso shared how premium loyalty works and defined the concept in a guest column for Retail Customer Experience.”These programs give your most dedicated customers instant, 24/7 transactional benefits like discounts and free shipping, as well as top-tier experiences, in exchange for a membership fee. These programs produce higher engagement that can foster brand ambassadors,” he wrote.Caporaso also shared data from a study his company conducted.Premium loyalty members earn their title — 94% shop at retailers where they have memberships at least once per month.Joining one program just isn’t enough. Nearly 70% of customers who already belong to a premium loyalty program will join another.Customers are ready for premium loyalty: 70% of consumers who are not in a premium program would join if their favorite retailer offered one and the benefits were valuable.These programs have been growing, according to eMarketer data, but the market leader still has a massive edge.”U.S. paid retail membership fee revenues will be higher than ever before in 2025, reaching $46.39 billion, according to our May 2024 forecast. That’s an increase of 10.8% YoY, with over half (51.8%) of these revenues going to Amazon,” the research company shared.That leaves every other retailer competing for a relatively small share of consumers’ paid membership budgets.
Some Dick’s stores offer experiences like batting cages or golf simulators.Shutterstock
Not all paid loyalty programs workConsumers will only join so many paid loyalty programs, and for most people, the bar is high.“Just like you don’t need a thousand credit cards for things, you don’t need a thousand memberships for things,” eMarketer analyst Suzy Davidkhanian said.More Retail:60-year-old retailer closes over 240 locations across 35 statesRetail giant exits U.S. fashion after multi-million-dollar scandal79-year-old fast-fashion retailer closes 128 storesFor these programs to work, they have to bring clear value for members. “Athleisure brand Lululemon once also had a paid membership tier, which was piloted at $128 in 2018. A later offering, Lululemon Studio, was $39 per month and granted access to classes through the retailer’s Mirror fitness technology — and, after Mirror was discontinued, Peloton. Lululemon’s current membership offering is three tiers, depending on how much a shopper spends with the brand,” according to Retail Dive.Dick’s faces a tough sellWhile Dick’s is offering perks worth more than the $99 it’s charging, the value proposition is stronger if you live near one of its stores.An in-store service such as having your bike tuned-up or your tennis racket restrung, offered as part of the “services and experiences” benefit, has more value for a customer who lives near a Dick’s Sporting Goods store.Dick’s is asking its best customers to pay for benefits that roughly equal the membership fee, in a category where consumers are already juggling Prime ($139) and Walmart+ ($99). That’s a narrow audience within an already-loyal 30 million member base.RTMNexus CEO Dominick Miserandino sees this as a hard sell for Dick’s, given the nature of its merchandise.”The math behind repeat buyers comes down to the business model. Walmart is a high-frequency store. You’re always going to fill your pantry,” he told TheStreet.Sporting goods simply don’t offer the same frequency of purchases for most customers.”You simply don’t buy a new golf club every Tuesday. Because a smaller percentage of the population are heavy repeat sports buyers, Dick’s has to work a lot harder to have the same membership value that the Costco/Walmart model has,” he added.As a regular Dick’s customer who lives maybe 15 minutes from one of the chain’s stores, the value proposition for this membership does not immediately appeal. Yes, I would get my $99 back in value, and probably then some, over the course of the year, but it’s not the massive savings that paying for Prime offers me.Related: Nike closes stores, fitness studios, after layoffs