Membership is about providing a feeling of belonging, identification and a stronger connection and it follows that trust is of crucial importance to run a membership successfully. Get it right, and you can build hugely loyal communities that will promote your brand; get it wrong and you risk losing customers.
Transparency can be a fast route to creating trust and building loyalty. Interacting openly with members will help you gather feedback that creates a better understanding of what they really care about and want from you. This creates a virtuous circle of transparency, understanding and trust that delivers stronger bonds.
Tortoise media has fostered loyalty with members by building the proposition with 2,500 backers signed up to the project on Kickstarter during summer 2018. Since then, the process has been transparent, and members have been invited to share views and feedback at every stage. A similar approach is used by challenger bank brand Revolut, which builds and tests new products with the input of some of its most loyal and devoted customers.
Customers may even be more forgiving of an occasional misstep if the brand manages it well (like Airbnb’s handling of its community controversies in 2016), however, the penalty for fundamentally betraying someone’s trust when you’ve built up this kind of relationship can be even more significant.
From the perspective of the business owner, this continued fight for consumer trust and engagement hasn’t slowed down. In the space of six months we have seen announcements from Disney, Amazon, Uber and Nike about launching new membership models or advancing current ones. This only shows the extensive importance of implementing a membership model.
The team at Manifesto Growth Architects investigated the idea of what it takes to build a tight membership or subscription model.
However, it was very important for us to then coin where our ‘Membership Economics’ stemmed from, what it was and what businesses and SMEs needed to do to harness it (and, of course, what to expect while harnessing it).
Memberships and subscriptions are not a new entity. In sectors such as media, subscription has been the default for many years. However, membership is not a panacea, those who aim to successfully make the switch to membership or subscription services need to balance the investments they make with the revenue they expect to generate from this switch. ‘Membership Economics’ is exactly that; a new look at the underlying financial model sitting at the heart of businesses competing in the membership economy.
Following interviews with over 40 executives across six key sectors – media, retail, finance, leisure, automotive and utilities – we found that 70% of businesses believe membership and subscription models hold the key to future commercial growth, yet very few are harnessing its potential.
Our ‘Membership Economics: How to make money in the Membership Economy’ report outlines more of these findings but most importantly, how businesses can harness the potential by utilising the following:
– Subscriptions: Regular payments made to the business (generally monthly or annually)
– Transactional Revenue: Sitting within subscriptions, these are the transactions that come with a subscriber
– Advertising: For the media industry, advertising is already a great revenue driver
– Affiliates: Revenue which comes from a commercial arrangement
Ultimately, membership economics starts and ends with the customer. They have to see and feel the value of the proposition and be prepared to pay for it – one way or the other. The steps outlined in our report detail pragmatic ways for business leaders to successfully adopt the model, balancing revenue and investments to ensure a successful membership or subscription business.
Sam Jordan is executive vice president of Manifesto Growth Architects
