How GNC's Loyalty Program is Helping Turn Around the Business

In late 2016, GNC, one of the largest nutrition and supplements businesses in the country, made a bold move. With giants like Vitamin Shoppe and Wal-Mart cutting into its profit margins, GNC decided to close all 4,400 of its stores for a day and reset its pricing strategy, offering one simplified price across all channels and lowering prices on 50 percent of its available products. Additionally, GNC got rid of its outdated and unpopular Gold Card rewards program and replaced it with a new, simplified one called myGNC Rewards. All of this was part of a larger One New GNC initiative, which was meant to improve the customer experience and build a much more hospitable environment, eventually encouraging growth.

The changes didn’t come all at once, however, as GNC made a splash in March 2016 when it quietly launched myGNC Pro Access, its premium loyalty program. MyGNC Pro Access, which is $39.99 per year, offers members additional perks, like free shipping, customized PRO boxes (with new products, samples and coupons based on the member's lifestyle and goals), quarterly sale days and much more.

While the launch was quiet, the impact to the business has been loud. In a recent earnings report, CEO Robert Moran said that GNC Pro, in Q2 2017, had:

• enrolled nearly 325,000 members since its launch four months ago;
• saw PRO members visit stores two times more than nonmembers; and
• noted that Pro members had purchased twice as much and spent significantly more than a regular non-PRO customer.

These numbers shouldn’t come as a shock to anybody in the industry, though. With a premium option for customers, GNC is building an environment which brings in qualified and engaged customers, who are entering through the lens of a loyalty program.

What’s admirable is that GNC, which long knew that its Gold Card rewards program was failing, decided to scrap its status-quo points program and build a modern and engaging program. The move has caused customers to give back in spades.

In essence, that rationale fits in with the general movement of modern consumers that expect brands to reward and consistently nurture their loyalty, whether they're new or long-standing. In a retail environment where 77 percent of consumers admitted to retracting their loyalty more quickly than ever before, GNC sent a clear message that it won't be a part of the nearly 8,000 store closings projected for 2017.

However, obviously time will tell whether GNC can turn its falling revenues and profits around in time to stay viable against some of its biggest competitors. For now, GNC made a small, yet shrewd business move with its loyalty programs that could have a profound effect down the line.

Amazon.com made a similar decision 12 years ago, introducing its premium loyalty program Prime to the world. This occurred at a time when growth was slower, and competitors were chipping away at Amazon's market share. Now, Amazon has over 80 million Prime members, who are extremely valuable to the company's bottom line.

Therefore, if the most valuable company in the world saw value in it, there must be validity to this whole premium loyalty movement. GNC is taking advantage of that fact.

Tom Caporaso is the CEO of Clarus Commerce, a provider of e-commerce and subscription commerce solutions.