Membership Drives Your Growth
Welcome to 2040’s thought leadership series on how to build businesses and organizations that thrive in a post-pandemic marketplace. Amazon is credited with kick-starting a massive change in consumer behavior…and expectations. The public conversation and market trends reflect these systemic shifts: quick delivery, free shipping and returns, the digital marketplace platform, a trusted source for search and most importantly, a relationship based on membership and the personal or professional rewards that relationships deliver.
Remember, a relationship (not a transaction) creates ongoing relevant value that leads to customer, subscriber and member loyalty and retention. The Harvard Business Review report, “The Truth About Customer Experience” reveals that organizations that design systems to connect touchpoints and the cumulative experience had a 20 – 30% increase in results to include higher revenue, long term retention and positive word of mouth. Each is incredibly important for sustaining and growing revenue while reducing expense.
Low customer, subscriber and member retention have a direct financial impact to an any organization whether they be focused on consumers (B2C), businesses (B2B), or professionals (B2P). While the acquisition of new customers, subscribers or members is critically important to maintain and grow, retention ultimately becomes more cost-effective and lessens the stress of applying time and energy to constant all-consuming acquisition. High rates of retention ensure an overall lower cost of servicing the member/customer/subscriber.
Associations, societies, specialized publishers and media companies have long been in the business of offering memberships and/or subscriptions. Pre-digital and pre-pandemic positioning was often focused on replication of an old but long-successful model in offering something at a yearly cost where those with professional or personal interests would come and stay … for life. The perceived value of connecting with others of like mind, specialized and relevant information and product or partner discounts, kept individuals and companies coming back.
Yesterday’s model of what was offered as benefits and value do not necessarily have the same meaning or depth in today’s dynamic digital economy and ecosystem accelerated by the pandemic. Since information is pervasively available online, finding those of like mind is easier than ever and anyone can find discounts or services everywhere with a few clicks and swipes. This overabundance of individual ability sets another challenge for companies who seek to retain and/or re-acquire customers, subscribers or members. So, what is an organization to do?
The emphasis needs to be on delivering more unique value faster in more directly relevant and personalized ways. And critical to the value equation is ensuring that whatever you offer customers, subscribers and members is what they want and need. Sounds pretty black-and-white and perhaps even easy, but it is actually challenging and requires critical thinking leaning heavily on historical and ongoing quality data.
Don’t make any assumptions about consumer behavior because if you do, you do so at your organization’s peril. The changes emerging from the pandemic are here to stay. It’s time to change and transform, not get caught shortsighted basing direction on uninformed assumptions.
Any business or organization can take a page from Amazon’s playbook in rethinking its basic operating practices to move quickly and intelligently to remain relevant to customers and/or members. Whether it’s information, products or services — customers want it now and they want it customized to their needs and interests — whether those interests, wants and needs are personal or professional. And they want to feel like they are a part of the process and recognized for their contributions. The art of personalized engagement is engineered by the science of digital tools and data that enhance the overall experience with an ongoing effort to learn more about member needs and behaviors. Transcending the overall experience is a relationship between an individual and the business/organization that may be represented by a membership, subscription, or even repeated use. A quality relationship then drives loyalty, trust and relevance. That relationship results in sustained and growing revenue.
Here’s the paradigm shift: Subscribers and customers become redefined as members of a community. Savvy retailers understand this with Costco, Walmart and Amazon leading the customer membership model. Membership can be successfully applied to other industries with cascading benefits. Here are a few big-picture thoughts on transforming to a membership model.
- Membership moves beyond the impersonal transaction to building a trusted ongoing and reaffirmed relationship that demonstrates and provides value.
- A member’s sense of affinity with others and a purpose comes with belonging to a community catering to their needs, interests and wants.
- The cost is much lower for any organization or business renewing a membership or subscription instead of acquisition.
- Retention is significantly lower in maintenance cost and more cost-effective than the wide-ranging high costs of customer acquisition.
- Optics are everything and giving members a choice of personalized products and services strengthens the overall value of membership.
Here are a few data points that should stoke some additional thought on your part:
- Members in an organization typically have a higher retention rate than the traditional transactional customer renewal model.
- The average total cost to acquire a new member is five times the cost of keeping an existing member.
- The average total value of a renewing member is worth 35.7% more than that of the average total value of a newly acquired customer/member or subscriber.
- The average net value of a retained member is 66.1% greater than that of an acquired member.
- Monthly membership renewal models deliver more perceived value than annual dues. Consider a hypothetical replenishment membership model with an automatic $10 monthly payment versus a one-time $120 annual fee. That $10 monthly fee escalates in perceived value.
- Membership offers the opportunity to upsell and upgrade through ongoing engagement. Back to Costco; member services (business services, home and auto financing, insurance, identity protection, etc.) account for 20% of all revenues.
In the arena of intangible benefits, membership and the relationship it builds is an antidote to experiencing months of isolation and loneliness in various stages of lockdown and remote work.
Tap into your members’ emotional and psychological needs for belonging and learning from a trusted professional community of experts who understand the pain points, challenges and opportunities your industry is facing. Add to that, communicating with members who have invested in your organization requires a nuanced, empathetic approach. Making it personal and relationship-based, changes the level and tone of your messaging. Use a lesson we learned from the pandemic for your outreaches: We are all in this together. The crisis has revealed a golden opportunity to be meaningful and matter with your customers in authentic, transparent ways. Earn their trust every day.
We at 2040 deeply understand how membership models can transform an organization from a nice-to-have to a must-have. We’ve walked in your shoes, literally, facing the challenge of transforming companies into new membership models by re-engineering traditional membership models to market currency for existing membership-oriented organizations each adding membership engagement organizational structures. We are masters at diagnostics and prescriptives to help you build your brand, build your relationships and position your organization and you for the success you seek.
Onward and upward!
The 2040 Team
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2040 helps organizations navigate the sea changes of finding their new normal. We offer actionable expertise in the strategy and operations of digital growth and engagement, empowering an empathetic workplace culture, strengthening your value proposition and driving revenues. We’ve been in your shoes and we know what impedes transformation … and what unlocks it.
Onward and upward from the 2040 Team