This story is one section of Modern Retail’s Member Dossier. In this series, we drill down on one pertinent topic in the retail industry. More from the series →
Very few companies with paid loyalty programs offer unlimited access to a variety of perks under the umbrella of a flat fee. Structuring a program in this way can be expensive, and retailers need to weigh the costs versus the benefits of an open-ended program.
Hair color brand Madison Reed, however, found that offering unlimited discounts, unlimited services or unlimited free shipping was worth it to keep customers coming back.
“By talking to our customers, we learned that they want value and quality,” founder and CEO Amy Errett told Modern Retail. “Developing our membership program to mirror the different ways our customers interact with us and adding in a rewards program gives our customers the value they are seeking in exchange for their loyalty.”
Madison Reed’s business is two-pronged: It sells at-home Color Kits while also offering coloring services at its more than 80 Hair Color Bars nationwide. Today, it offers more than 55 hair color options, and it sells products on its website, as well as via Door Dash, Amazon, Ulta and Target.
Madison Reed launched 10 years ago as a DTC brand. At the time, it offered a subscription membership on its website, Madison-Reed.com, that included 15% off automatic purchases. Once Madison Reed began to open Hair Color Bars, it began offering an in-salon membership that allowed customers to have unlimited roots services, for a certain fee. Madison Reed’s online membership has about 500,000 subscribers, while the in-salon offering has 30,000 members, Glossy previously reported.
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Madison Reed regularly collects feedback from its customers and found that two major requests dealt with the cost of shipping and the types of rewards, Errett explained. In early April, Madison Reed launched a revamped version of its existing rewards program that was more “all encompassing” to better fit in with its omnichannel business, she said.
The new program has two different tiers: Limitless Premier and Plus for those who color their hair at home, and Limitless Pro and Pro+ for those who color their hair at a Hair Color Bar. Here’s how they work:
- Limitless Premier costs no money, and members get 15% off auto deliveries, $10 in rewards for every $200 spent and welcome and birthday gifts.
- Limitless Plus is $42 a year, for an average savings of $120 a year. Its benefits include 15% off Color Kits, $10 in rewards for every $150 spent, a birthday gift, free shipping on every order, 10% off all products and services and either one free roots service a year at a Hair Color Bar (up to an $80 value) or one free full-size product.
- Limitless Pro, which starts at $40 for every four weeks, includes access to one roots service every six weeks, $10 for every $300 spent, 10% off all services and products, welcome and birthday gifts, early access to new products and the flexibility to use a membership at any Hair Color Bar.
- Limitless Pro+, which starts at $65 for every four weeks, includes access to unlimited roots services, $10 in rewards for every $300 spent, 20% off all services, 10% off all products, welcome and birthday gifts, early access to new products, the flexibility to use a membership at any Hair Color Bar and the ability to “take color to go.”
So far, customer response has been strong, Errett said. “We are seeing strong early results across the board,” she explained. “In our Hair Color Bars, 60% of appointments consist of Limitless Pro or Limitless Pro+ Members. For Limitless Premier and Limitless Plus, we’ve seen 50% month-over-month growth since launch, and for Limitless Pro, we’ve seen 40% month-over-month growth since launch.”
Madison Reed’s new program comes on the back of a period of major growth for the company. Last year alone, Madison Reed opened 30 new Hair Color Bars, raised $33 million in funding from Sandbridge Capital and Marcy Ventures and expanded into Ulta and Ulta Beauty at Target. Today, the company is focusing on opening more Hair Color Bars, as well as expanding internationally.
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Madison Reed is not alone in having an unlimited membership option. Technically, Amazon Prime is unlimited, because customers can take advantage of Prime Delivery as often they’d like, for a set yearly fee. Marvel has an unlimited membership that allows readers to access any of 30,000 comics for $5 a month. Cineworld, the movie theater chain, has an unlimited yearly membership starting at £131.88 for most of its U.K. theaters.
Still, it’s unusual for a retailer to follow that format, Melissa Minkow, director of retail strategy at CI&T, told Modern Retail. “Especially in this economy, you don’t see a ton of brands doing that,” she said. “There’s usually at least some sort of stipulation or fine print.” Dry Bar, which is also in the hair care space, has a two-tiered paid membership program. It doesn’t label it as “unlimited” — each tier limits the number of blowouts members can get per month — but it does include 10% off products and a discount on extensions.
Minkow said that Madison Reed’s unlimited program is a big perk. “Also, hair color is so experimental,” she explained. “So that way, if someone tries something and they’re like, ‘Oh, wait, that’s not for me,’ the fact that they can go right back to the brand and try something different, I think, is really important.”
A field like hair care welcomes personalization, Minkow said, which Madison Reed could apply to its loyalty program. A lot of retailers right now are interested in “one-to-one product creation,” she explained. “So, just making the customer feels extremely special and extremely differentiated.”
One-to-one products are given to a customer by a company, based off of personal interactions between the two. For example, Minkow explained, a hair color company like Madison Reed could give color consultations and advise people on which colors best match their skin tone or the clothes they normally wear. Those customers could then buy those recommended hair colors.
“Something else Madison Reed could think about doing is, if you’re a part of this loyalty program, there are certain colors that you can unlock that other consumers can’t,” Minkow said. “There’s so much that can be done with this that really elevates the sense of loyalty that consumers feel to the brand.”
Ultimately, Errett said, Madison Reed wants to give its loyalty members as much choice as possible, no matter how they use the products or whether they wish to pay a monthly fee.
“Whether you color your hair at home or regularly visit one of our Hair Color Bars, we understand that not every customer experiences the brand the same way and structured Limitless to reflect that,” she said.