A membership-based business can be considered to be a form of subscription business, rather than the choice being membership vs subscription. A membership business has all the advantages of the subscription model but places a greater focus on customer retention using strategies such as membership privileges, premium positioning, product development, and building online communities.
Let’s look at what these mean in a bit more detail.
In a membership business, customers pay a recurring fee and you provide exclusive membership benefits in return.
For example, you might have a website that offers courses on digital marketing or web development. You could then offer the top-rated courses to paying members of your website, while the rest have access to regular content. It could also be that you bundle some parts of your services for your members, while others can choose to pay for individual products. This is just one way of implementing the membership model. Another example would be a membership eCommerce business offering early access to premium products.
If you’re a subscription box merchant, membership-only privileges could be things such as free shipping, early access, community chat boards, and discounted prices. Essentially, you’re willing to offer more — premium content to discounts — in return for a recurring revenue stream.
Another important aspect of a membership business model is positioning the product or service as an offer to become part of something premium. This is also the hardest part about building a successful membership business. You might be providing value, but the market needs to have a similar perception of it.
If you’re looking to implement this model, you need to invest in building the value of the membership. This would mean finding that particular incentive that will push customers to maintain a long-term relationship, similar to a subscription business. For example, in the case of a subscription box, it could be about the use of premium materials, sustainably-sourced products, or faster or free delivery — a value proposition that makes the cost of membership worth it.
Product and service development
A customer’s membership subscription payment is just the start of the sales process. You need to focus on retaining this revenue. Practically speaking, this could translate to sacrificing short-term gains in order to improve the perceived value of the membership among customers.
You need to provide something that justifies each recurring purchase of the membership. If you’re in a sector with tough competition, it could mean considerable investment in product development. The success of Dollar Shave Club was followed by a number of similar services. But the company kept innovating, and now offers much more than the basic shaving kit with which they started.
One thing that membership businesses must do more than subscription businesses is building online communities. An interactive community adds an element of loyalty that is essential for the membership model.
It’s more common than you think. One of the most popular examples would be Duolingo, the app that helps you learn languages. One of the features that sets apart Duolingo’s services is the active community that lets you get in touch with other users learning the same language. In fact, it was so successful that the community ended up creating content for the company.
It’s an organic way to stay engaged with your customers and can save on some investment in marketing efforts. Successful communities also help in customer retention.
Adding Membership to Your E-commerce Business
The nuances involved in the subscription business model mean that there are multiple ways in which the membership model is implemented by platforms. For instance, at Subify, the membership model is meant to be used for non-physical services, such as digital courses, access to downloadable or cloud-stored files, maintenance fees for a service — basically anything that doesn’t require shipping.
A Platform Built For You
Whether you’re building a subscription business or a membership model, you need a platform that’s optimized for your unique business needs and to keep track of what matters.
Subify is an all-in-one solution for running your subscription or membership business. From building your website through marketing and analytics to shipping and logistics, we make it simpler and easier to start and grow a company that’s focused on long-term customer engagement.