Source: Williams Sonoma
Will paid perks pay off for Williams Sonoma?
Williams Sonoma has launched a new paid membership program, Williams Sonoma Reserve, costing $99 annually that includes free shipping and experiential perks.
As usual in such programs, the perks are expected to more than cover the annual fee. The perks include access to four of the brand’s virtual cooking classes ($80 value) during the 12-month period and a subscription to a new Williams Sonoma Recipes app ($39.99 value).
The recipes app features exclusive content, how-to videos and tools that assist with building grocery lists and creating virtual recipe boxes.
Free shipping excludes home, furniture and any other oversized item that come with shipping surcharges. Members save on shipping fees that range from over 30 percent for orders under $25 to 11 percent for orders over $150.
The standard bearer of membership programs is Amazon Prime, which costs $119 per year for free two-day shipping, same-day delivery on certain items for orders over $35 plus extra privileges like video/music streaming and Whole Foods discounts.
Last October, Walmart introduced a $98-a-year Walmart Plus subscription providing free grocery delivery from stores on orders over $35, free shipping on non-perishable items and fuel and pharmacy discounts. Some grocers have also rolled out paid membership programs supporting free shipping, but paid membership programs among specialty chains are rare.
Those already offering free shipping with no minimums without any membership include Nordstrom, Neiman Marcus and Zappos. For most, free shipping kicks in above an order threshold. Some chains such as Gap offer free shipping to bigger spenders in their loyalty programs.
Best Buy’s Totaltech subscription program charges members $199.99 a year for free delivery and standard installation, free Geek Squad tech support, up to 24 months of product protection on most purchases and early access to hot launch products.
Barnes & Noble Membership, costing $25 annually, earns free shipping, 40 percent off hardcover bestsellers in-store, 10 percent off everything in store and early access to in-store events.
Urban Outfitters began testing a paid subscription program earlier this year offering free shipping and returns as well as other benefits across its brands.
- Williams Sonoma Launches New Shipping Membership Program Williams Sonoma Reserve And New Williams Sonoma Recipes App – Williams Sonoma
- Meet Walmart+ – Walmart
- Best Buy Totaltech now available nationwide – Best Buy
- B&N Membership – Barnes & Noble
- Urban Outfitters Inc (URBN) Q4 2020 Earnings Call Transcript – The Motley Fool
- Urban Outfitters Pilots Paid Membership Program – RIS News
Discussion Questions
DISCUSSION QUESTIONS: Do you think Williams Sonoma’s annual subscription program will hold enough appeal for enough of its customers? Will more special stores feel the need to launch paid membership programs backed by free shipping in the years ahead or will they opt for other ways to maintain shopper loyalty?
Poll
Loading …BrainTrust
David Spear
VP, Professional Services, Retail, NCR
Katie Thomas
Lead, Kearney Consumer Institute
Testing new subscription programs for loyal customers is a smart tactic. However, as stated, when this is only $20 cheaper than Amazon Prime (with all the shipping and media benefits provided by Amazon), I don’t think the price is right. I doubt even loyal consumers are that interested in cooking classes and an unproven recipes app. Could’ve been worthwhile to partner with established options there – such as Masterclass and NYT Cooking.
I think William Sonoma is on the right track with this program, as the tangible benefits (the recipe app and access to four classes) more than pay for the membership and are of high value to their customers. I only question the name “reserve” as I am not sure it really infers the program’s benefits. Perhaps it does to their core audience but, for me, I might look for something that more directly connects to the cooking benefits.
I’m sure there are people who love Williams Sonoma, shop there all the time, and will love this program. But it’s a program that likely rewards only its most loyal and frequent customers, not an enticement to new or lighter shoppers.
Subscription programs are a good way to increase share of wallet with customers because anyone who pays wants to maximize their benefits. I´m sure Williams & Sonoma tested the market to ensure enough customers would want to join, so this is probably a good move. However I caution other retailers from following suit because how many subscriptions can a customer maintain (beyond our mobile phone bill, internet access, Amazon Prime, the gym, etc.) – and how quickly will those be abandoned if the economy turns south?
This is a me-too program – I don’t normally shop Wiliams Sonoma unless there is a sale. I used to get recipes free and it looks like that no longer will be the case, so for me it’s not worth the investment.
Following the competitors is usually not an effective strategy, I would have hoped for more thoughtful new ideas from Williams Sonoma.
A paid loyalty program is all about the value proposition because members are asked to basically pre-pay for their own discounts. The question here will be: are the perks worth it?
Aside from Amazon Prime, I’m not a fan of subscription services. Prime has so many features it’s worth the price. But $99 annually for cooking classes, recipes, and free shipping on some products? I’m a cook and that doesn’t sound very exciting to me.
Consumers can get cooking classes for free on YouTube, in fact YouTube’s new commercial is all about free learning. Complementary recipes are available on a gazillion sites and apps, and free shipping is commonplace now. I just don’t see the value in this program. Sure, it’s from Williams Sonoma but what are the exclusive perks consumers cannot get anywhere else?
Membership is an incredible way to drive loyalty and should arrive in specialty stores. RH established the blueprint for high priced lifestyle memberships (as compared to Prime, tech support or groceries) and it is generally considered a huge success.
Paid loyalty programs can be very successful. Assuming Williams Sonoma has done the research to build an accurate financial model the program should drive further loyalty and spending with its most loyal customers. The focus of these programs is always to expand spending, services, and top-of-mind presence with a retailer’s most loyal customer. As long as they have built a financial model that can support the price point the program should be successful.
Annual subscription programs are certainly becoming the soup du jour these days as we see one roll out nearly every month. How many is too much? Where is the tipping point for consumer frustration? And can the average consumer digest five to seven annual subscriptions amounting to $500 to $700 per year? These start to get expensive and one wonders if they actually pay off. I’m a fan of WSI and think their products are fantastic. However I don’t think WSI’s program will hold enough appeal for it to succeed, primarily because WSI doesn’t fill the same practical need as a frequent grocery retailer does. Retailers need to look beyond subscriptions to bring and keep shoppers into their brand franchises. Time for some radical and collaborative innovation.
The price is a little high, but maybe not for the target audience. The real problems is that this a catch-up move, not a market leadership move. I think these programs will simultaneously become increasingly the norm and less and less effective.
Williams Sonoma’s annual subscription program will succeed with its most loyal customers, but it is unlikely to attract new customers. Consider this move as a defensive strategy instead of a meaningful revenue-enhancing one.
My first question is if there are enough customers to make this type of program really pay off. (The answer is probably YES.) For a regular customer of Williams Sonoma, this could be a good value. Why else would a customer want to invest $99? Once the customer does make the investment, they will try and use it. They want to get their money’s worth. While they may not go out of their way to spend more money at Williams Sonoma, they will choose the brand over competitors.
It cracks me up that we insist on saying that “free shipping” is the foundation to so many programs. We refuse to say “paid in advance shipping.” It just doesn’t roll off the tongue as nicely. And “free” is such a fun word to use. How many times a year am I going to buy from Williams Sonoma versus Amazon? Not even in the same universe. It’s not about the price, it’s about the value. I like Williams Sonoma — a lot. To me they are a headquarters store for all things kitchen and cooking. But I just don’t see getting the value out of a $99 subscription. The value of Amazon Prime is a slam dunk. The value of the Williams Sonoma program is a lot harder to predict, at least at my level of cooking.
The variety of services offered by the program are likely to appeal to current Williams Sonoma consumers. It will probably not attract new consumers. One of the appeals of the Amazon, Walmart, and Target programs is the variety of merchandise available. Paying around $100 a year for retailer specific programs may be attractive for current consumers who regularly purchase from that retailer. Consumers are not likely to spend that money for a retailer at which they are only occasional visitors.
In “The Customer is the Channel” chapter of “Remarkable Retail,” Steve Dennis lists two table stakes for retailers now and in the near-future: 1) Enabling true blended channel orchestration and seamless omnichannel shopping; 2) Organizing around the customer: seeing the customer as the primary organizing principle.
Amazon Prime has shown us many things, the most powerful perhaps: realizing the brand loyalty output in leveraging the data and managing the technology to speak directly to customers with convenience, value, and personalized relevance. This IS organizing around the customer.
So, no real surprise in seeing Walmart, Best Buy, Nordstrom. Neiman, Gap and Williams Sonoma following the lead of the standard bearer Amazon Prime in launching membership programs backed by free shipping. We are embarking on what some are starting to call the membership economy were establishing a recurring revenue stream and deploying data to understand in detail and enable the building of a protective value fence around your most-loyal, most-valuable customers, can be two headliner benefits. But, like Amazon Prime: the value has to be there to maintain the appeal for customers. That is the never-ending challenge ahead for retailers launching subscription programs.
The subscription model is unquestionably an extra cash stream for merchants. Customers, on the other hand, must be convinced that paying a particular amount of money in advance would provide them with financial or other benefits.
However, with all merchants turning to membership models in order to capture a fair share of their customers’ wallets, these models may soon become worthless. This is especially true for William Sonoma’s membership program, which provides no significant benefits to its customers.
A better solution, in my opinion, is to build alliances in which one partner’s subscribers receive certain reward points or offers every time they shop, redeemable at the end of the other partner. In this scenario, an ideal partner will be a retailer whose products either complement the products of the other retailer or are completely different yet appeal to the same customer niche.
This way:
Overall, it’s a win-win situation for both retailers and their customers.