Membership models are becoming more prevalent than ever before. We got used to them pretty quickly with gym memberships, but then Netflix hit the scene with a subscription that allowed you to receive DVDs in the mail.
Fast forward to today and every business is experimenting with subscriptions (memberships). Did you know that Panera now offers an unlimited coffee subscription for as little at $8.99/month? You can get fresh hot coffee there anytime you want.
Today, startups and established organizations are taking advantage of the membership model.
- Startups like Stitch Fix are putting together outfits for its members, while Blue Apron assembles boxes of ingredients for its members’ weekly customized dinners.
- There’s even digital services that provide subscriptions. Companies like ContentFly or Delesign offer monthly plans for content writing or adding a designer to your team.
- Even Apple is making changes to their services to offer varying subscription services. Their latest, Apple One, combines services into one monthly payment.
Subscriptions and memberships are all over. They are one of the hottest business models to use. If you are thinking of starting a business, website, or adding an additional revenue stream to your existing business, you need to look at subscriptions and memberships.
Understand the Membership Model
When you use a membership model, your customers are considered members and pay a recurring fee to access the value your site provides. Typically, various membership levels, revenue streams, cost centers and marketing activities exist.
Just like any other business model, the membership model requires a formalized set of procedures that are well communicated and well maintained if the organization plans to scale and grow. Membership marketing is an important piece of that pan.
What is Membership Marketing?
Membership marketing requires commitment and ongoing maintenance. However, membership marketing campaigns tend to have a bad reputation.
When designed the wrong way, they don’t provide enough return on investment, they can feel pushy and become frustrating to both the marketers and the consumers.
But it doesn’t have to be this way.
When designed properly, membership marketing campaigns can grow and maintain a robust membership program for your organization, deliver significant ROI and become a successful and rewarding element of your overall marketing program.
There are many benefits of a well-designed membership marketing program including:
- Added leverage: Your membership model is designed to enable your business to make the most of your knowledge and expertise. Whether you offer a course or a retail service, a well-designed marketing program enables you to reach more members and establish brand authority within the industry.
- More stable and recurring revenue: Obviously, it’s better to have thousands of members paying your membership fee every month than it is to have only a few hundred. Income is more stable, which enables you to focus on building the company and furthering its mission.
- Less pressure means more flexibility: When a well-designed marketing plan attracts the right clients, you and your employees end up spending time on more productive activities.
Growing and maintaining a base of members takes both time and effort and requires ongoing membership marketing. But the growth your company will experience is well worth the investment.
The membership model involves acquiring members and keeping or retaining them. Each of those two charges is broken down into more specific steps. To acquire members, they must be aware of you and then recruited. To retain members, you must engage them, they must renew their membership and if they cancel, you must get them back.
What Goes into an Effective Membership Marketing Campaign?
To properly design an effective membership marketing campaign, it’s important to understand the 5 parts of the membership lifecycle:
Mutual awareness is important during the acquisition stage.
Of course, members must be aware of your brand and be convinced it will provide them with value if they are to buy a membership. Did you know that only 53 percent of consumers know about the top membership services?
And while it’s important to acquire members, it’s more important to acquire the right members. For this to happen, you want to know which members are your ideal prospects and qualify your potential members.
Qualified members are those who virtually raise their hand to express interest by registering on your website, signing up to receive a whitepaper or newsletter, or by attending a webinar.
When you have created mutual awareness, chances of cultivating a relationship increase.
Recruitment happens when the prospect chooses to become a member.
As a push product, membership is sold rather than bought. Meaning that very few members wake up in the morning looking for a new membership.
You must go to them.
You must convince them to give membership a try and make the decision to join.
As a result, successful membership recruitment requires a pro-active strategy that includes special offers, messages, marketing channels, and carefully planned timing.
Many members who churn do so quickly, which suggests that you should be careful not to overinvest in free trials or heavy discounts unless these promotional investments have a clear payback.
Now that you have acquired the member, they must be onboarded. During this process, they must feel like they have made the right decision and that they belong with your organization.
The first year is a high-risk time for members to opt out. According to McKinsey, more than 30% of members who sign up for a subscription service cancel in less than three months, and over half cancel within six.
McKinsey found that members are quick to cancel services due to:
- Poor Product Quality
- Dissatisfaction with the amount of service
- Lack of Perceived Value
Another reason for cancellation is lack of usage or involvement with the membership. Therefore, it’s imperative that new members engage during the first few months. Engagement can take the form of:
- Making a Purchase
- Visiting the Website
- Completing a Survey
- Consuming Content
Many companies have dedicated marketing or customer service teams to generate and monitor these types of interactions. A new member onboarding plan enables your organization to assess the interests, needs, and goals of your members. You can also inform new members about the different ways to get value from the membership.
When a member has allowed their membership to lapse, lapsing members then decide whether to renew. The lapsed member holds a great deal of potential because for these consumers, the experience at some point was positive enough for them to sign up.
When thinking about renewals, it’s important to remember that you are undertaking a new campaign to rekindle the initial interest of these members. The campaign requires a well-planned, multi-channel, high frequency approach in order to maximize renewal outcomes.
The renewal process can be standardized and should involve a combination of automatic and personalized human outreach that is continued until the cost exceeds the potential value of the renewal.
No one wants to think about losing customers, but it is an unfortunate fact that is a common part of the member’s journey.
Persuading former members to return is always easier and more cost effective than recruiting new members. The reactivation piece of the lifecycle is where you work to understand the reason for leaving, provide solutions and get that member back.
How can you get customers back?
There is an old saying: “Look where you tripped, not where you fell.”
Former members may have opted out for an array of reasons. Perhaps a better offer led them away. Perhaps their lifestyles or habits have changed. For others, they simply may have never made that emotional connection with your brand.
In some cases, you may need to do more market research. It helps to know that the most likely member to return is the one who most recently left.
The effort may also involve persistent outreach to highlight new opportunities and new membership options that resolve pain points that you know exist. Successful memberships never give up on trying to get former members to come back.
How to Integrate Your Marketing Plan into the Membership Marketing Lifecycle
As with any marketing strategy, a long-term approach that considers the entire relationship with a customer achieves greater ROI.
Instead of focusing the majority of your efforts on attracting new prospects, spread the focus more evenly over the entire membership lifecycle.
A recent report from Salesforce explored the value of membership lifecycle marketing. The research found that few companies actually use it. Some of the surprising statistics include:
- Only 20% of organizations used marketing across the entire lifecycle.
- Companies spent twice as much on marketing to new customers than to existing ones.
- An average 88% of the budget for customer lifecycle marketing goes to awareness (top-funnel) strategies.
- 55% of respondents spend “minimal” or “none” on retention and advocacy phases.
A lifecycle marketing approach can prevent members from reaching the end of the buyer’s journey and instead, encourages them to circle back to the engagement phase and maintain an active membership.
By keeping existing members engaged, you will reap the following rewards:
- Cost savings: Existing members are easier to upgrade than new prospects are to convert.
- More revenue: Existing members are typically more likely to engage with your higher margin products. In fact, research from the Harvard Business School shows that even a modest 5% increase in customer retention can increase profits by up to 95%.
Let’s take each membership lifecycle stage and examine the marketing strategies that will be most effective.
Awareness Phase Marketing Strategies
During this stage, mass-market strategies are often used to expose the brand to key target audiences, including:
- Google AdWords, social ads, ppc based ads.
- Sponsorships of podcasts, online events, or in person events.
- Influencer marketing promotions.
Questions to Address in the Awareness Phase:
- What problems and pain points does your membership address?
- What products or services does your membership offer?
- Why is your membership the one to choose?
Recruitment Phase Marketing Strategies
Consider guest blogging opportunities, which will allow you to create content for your ideal members audience.
Publishing informative pieces that address pain points on sites that share your target audience can provide exposure and promote awareness for your brand.
Engagement Phase Marketing Strategies
Members make a series of judgments after opting in. Their decision to join is either validated or questioned during your first few interactions with them.
Do your best to validate a new member’s decision to join. Here are a few suggestions:
- Create a Welcome Kit. Show them how much their membership means to your company. Everyone sends an email. Set your brand apart by sending a branded gift like a t-shirt or a mousepad.
- Provide a Concierge. Today’s world is so impersonal. A real human being to interact with and serve as a single point of contact will shock new members and demonstrate the kind of service they can expect going forward.
- Encourage Usage of Member Benefits. Most members will need a slight push to take full advantage of their membership. Some are not even aware of all the member benefits.
Retention Phase Marketing Strategies
The marketing strategy during this phase is all about:
- Proving your value to those members who are unconvinced.
- Solidifying relationships with established members.
- Extracting some information from those who choose to leave.
Hopefully your rewards for new members were somewhat limited. Too many rewards for new members can decrease the likelihood of renewal because existing customers might feel that their loyalty to the organization is being overlooked because new members receive all of the 5-star treatment simply for signing up.
Instead, save the good stuff for members who renew.
The marketing campaign during this phase should communicate how you plan to reward and incentivize current members at renewal. Not only will this drive membership retention, but you will see fewer memberships who had been planning to cancel at renewal all along.
Some perks you can offer for members who renew include:
- Early renewal discounts.
- Offer perks and benefits, perhaps with outside parties.
- Membership milestone benefits.
Reinstatement Phase Marketing Strategies
Naturally, the best customer reactivation strategy is preventing customers from becoming inactive in the first place. But some members, unfortunately, will leave.
When marketing to former members, the goals are:
- Remind them why they signed up
- Spark curiosity
- Introduce new concepts
A “Where Have You Been” email campaign is well-suited to accomplish all of these goals.
Email marketing is one of the most profitable marketing channels, generates an average return of $38 for every $1 spent. Be sure to give the former member three chances to rejoin since studies show that only 25% of former members will open your first email, but more than 50% will open subsequent emails.
Commit to taking a long-term view on your relationships with your members. Not only will you achieve greater ROI on your marketing efforts, but you will see more satisfied members and increase the possibility that they will become brand ambassadors for your organization.