The Movement to Membership – and What Every Business Can Learn From It

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Are people tired of owning things?

The question sounds a bit ridiculous, but consider the growth of companies like Netflix, Spotify and Pandora. We’re paying for entertainment we used to own.

Programs such as T-Mobile’s Jump and Sprint’s iPhone Forever essentially leave us leasing our phones.

With Office 365 and Adobe’s Marketing Cloud, we’re moving away from actually owning software.

Even your local car wash is probably offering an “unlimited washes” monthly package.

To some extent, every industry seems to be moving toward membership models. Instead of a single purchase, consumers are agreeing to make continuous payments in exchange for on-demand access to the latest and greatest.

It’s an incredible opportunity for businesses. Recurring revenue, more frequent touchpoints, and an ever-growing trove of customer data are just some of the benefits to a membership model.

But, as Robbie Kellman Baxter points out in “The Membership Economy,” it requires a different mindset from what traditional businesses are used to.

A Shift in Mindset

Historically, success was based on building a great product, then selling it to people. Ideally that product would be valuable enough to keep them coming back for the next iteration.

Robbie Kellman Baxter, author of The Membership Economy
Robbie Kellman Baxter, author of The Membership Economy
Things are slightly different in a membership model. The product is no longer the center of the universe – the relationship between customer and brand is.

In the membership world, the innovation must be continuous, and every interaction with a customer must add value. Customer service can no longer simply “minimize anger,” but instead must be about building relationships.

Instead of one big transaction, membership requires a series of ongoing transactions. Every day, month, and year, the business is earning that member’s loyalty.

It sounds like a lot of effort. Consumers are fickle and not inherently prone to loyalty, after all. But the payoff is far superior, when you consider the lifetime value of a customer, the opportunity for upselling and cross-selling, referrals, and everything that comes with highly engaged, loyal customers.

Is a Memberhsip Model for You?

Can a subscription or membership model work for any business? Probably not, though Baxter could probably make a convincing case for just about any industry. One simple step that many companies have already taken is a loyalty program. These programs, such as Amazon’s Prime or even your local grocery card, aren’t the core product, but they are a formalized relationship between consumer and brand.

Even without a formalized membership program, every company can stand to learn from some of the core tenets of a membership model, such as continuous innovation, adding value in every touchpoint, focusing on retention as a core metric instead of simply revenue.

The bottom line is when people realize a brand is giving them value every time they come into contact with it, they’re going to keep coming back. Ownership doesn’t have the allure that it used to, not when “membership” has the higher value.

(If you’re interested in hearing more about how every organization can use membership principles to build engagement and loyalty, check out our webinar with Baxter on Nov 11 at 11am Eastern. It’s free.)

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