As we’ve discussed over the past two weeks, Veterinary practices across the country are employing Wellness Plans to increase office visits and customer loyalty, while ensuring consistent and personalized care for pet owners.
The principle at the core of the Wellness model’s success is the strength of membership and loyalty programs, a concept tried and true in multiple industries. For a key example, we can look no further than the juggernaut of members-only-savings, Costco. In its nearly three decades in business, the success of the plus-sized wholesale chain is dwarfed only by the pallets of foodstuffs, appliances, and household items that line its aisles. By paying a small annual membership fee, consumers gain access to savings and benefits they wouldn’t find at any other retailer. Once they’ve committed to a membership (as 1 in 5 Americans have), consumers are consistently more likely to patronize Costco over competitors, and spend more freely due to the perceived savings afforded by the program.
A 2007 Harvard Business School study referred to this phenomenon as the “fee-to-savings” link. Through field data research and a series of customized studies, they showed that fees can serve as a signal of price discounts. Stores that charge fees are perceived as offering better deals for identical items, and the presence of fees can increase consumer spending and overall store profitability. The study additionally showed that the presence of fees can drive choice of retail outlets, such that stores with membership fees are more popular even when they offer the same goods at the same prices as stores without fees.
Furthermore, the loyalty that comes with a consumer’s commitment to a membership program carries benefits beyond that single member’s spending. A 2011 Colloquy Loyalty Census, entitled “The Billion Member March,” showed that members of a loyalty program are 75% more likely to refer other members to that service.
While the business needs of medical practices are certainly different from those of wholesale retailers, these basic consumer spending principles at still at work in the Wellness Plan model. Practices in the Veterinary industry are reaping similar rewards in terms of loyalty and referrals, and the customization and discount options afforded by Wellness Plan software modules make it easy for any practice to create and operate their own membership program.
The success of Wellness Plans in the Vet space has caused other industries to take notice. Next week, we’ll speak with Dr. Dan Marut, founder of Quality Dental Plan, an Extend Credit partner, and look at how Dentists are employing Wellness plans to provide dependable, customized care to their patients.