Membership clubs and organizations are all the rage. Brands like Netflix®, Weight Watchers®, Crossfit® and a myriad other businesses are adopting a membership or subscription strategy to grow their businesses. According to Robbie Kellman Baxter’s best-selling book, The Membership Economy, businesses that embrace the membership model are finding success by building lasting relationships, using member networks and developing benefits with high value as a way of enhancing loyalty and boosting engagement.
Sound a bit familiar?
This new focus among for-profit memberships has highlighted some important tactics that have helped many businesses expand and grow their companies. Of course, it’s not as though these popular member-based businesses will freely share their “secret sauce” of success. But after a bit of digging and some not so highfalutin analysis, many of their methodologies can be discerned.
A key message of these best practices is the importance of creating a membership organization that aims to engage rather than just generate operational revenue. When organizations pay lip service to their member benefits, and instead rely upon the philanthropy of alumni to support the association, they are destined to struggle with acquisition and retention. In such cases, the average member lasts about five years before they move on.
The membership relationship is much like a marriage. The expectation should be that it will last a lifetime. But just like a marriage, the relationship takes a lot of work if it’s going to last. Both sides must contribute, and the relationship must adapt and grow over time. If there is little or no value in the relationship, the member will eventually feel used, neglected or betrayed, and the separation can often be bitter. Just talk to someone who has left a membership organization after a long relationship. Ask them why they left, and you’ll likely unleash some strong emotions, and it often relates to a feeling of betrayal, whether real or perceived.
1- Creating life-long members should be your overarching goal. (Life-long means perpetually renewing and engaging, and is not to be confused with a lifetime member who gives a lump sum to achieve a certain membership status.) Creating a life-long relationship is far more important than any short-term revenue a membership generates. The initial membership transaction is just the starting point, not the primary objective.
2- Membership organizations capitalize on two powerful human needs: affiliation and prestige. Successful organizations aren’t afraid to leverage these two principles to their advantage.
3- Old-school organizations are focused on minimizing member dissatisfaction…whereas the new successful membership models are focused on maximizing long-term loyalty. (It’s a cultural shift focused on developing “super-members” who will champion your association.)
4- Successful organizations spend considerable time developing their benefits, focusing on relevance, immediate value, and ease of use. Benefits must align with members’ value expectations.
a- Floundering organizations ignore or neglect the member/benefit alignment, and rush to build their acquisition program before their benefits are fully in place. This is bass-ackwards
b- When members recognize that the value of membership exceeds the cost, they will grow less sensitive to the cost of membership, and become increasingly loyal as a result.
c- Too many alumni associations under deliver on the promise of member benefits, when they should be over-delivering in order to keep members happy, and renewing each year.
5- The member enrollment experience should be simple, even if it requires a complex process behind the scenes. Successful organizations make it easy for members to stay a member, but they also make the process of leaving logically obscure or hazy.
6- The “on-boarding” process is crucial to long-term member retention. When a member senses your efforts are to build a lasting relationship at the outset, (and not just execute a business transaction), it changes the tone of the relationship.
7- When you over-deliver on the value of your benefits, members will predictably become a source of referrals, and recommend membership to qualified cohorts. Increased referrals will lower your costs of acquisition
8- Identify your “ideal member” and work hard to be worthy of him/her. Be constantly innovating and evolving your benefits in ways that both retain your long-time members and attract new ones. Today’s ideal member and your future ideal member will probably not look alike. The ideal future member will likely have higher expectations of your organization, and demand more value.
9- Pay close attention to your acquisition rates as a measurement of the value of your benefits. A tell-tale red flag that your benefits are tired, ho-hum or lack value, is a decline in member acquisition, even though retention may remain high.
10- Successful member groups allow and encourage members to interact and collaborate. Leveraging the connectedness of your alumni network will enhance member value.
11- Members can leave a huge trail of valuable data. By collecting, organizing and analyzing that data, your organization can build stronger relationships with members, and identify important trends that can help you develop new benefits and improve retention.
12- Churn is a lagging indicator of member dissatisfaction. However, by surveying members frequently it can help anticipate retention issues. If you use an auto renew system, look for a spike in members turning off their auto-renew. It’s an indicator that members are seeing less value in your benefits.
13- Allow your staff the flexibility to negotiate changes to member dues payments when appropriate. Not only will it provide a higher level of service that members appreciate, but price sensitive members will also be less likely to leave if they feel they have negotiated a special deal.
14- Survey members often, and use data to develop new strategies for acquisition, retention, and selecting new benefits. Small tests on smaller audiences can lead to scalable solutions. Develop sustainable strategies, and be constantly evolving and innovating. But remember, developing a long-term, membership organization will require less sprints and more marathons. Always keep a long view.
What’s your take? Are you prepared to move you’re alumni organization into the new membership economy?