"...The market favours recurring revenues and narrative over transactional revenues and EBITDA." - Scott Galloway
Memberships are big.
Yes, businesses love recurring revenue.
Who wouldn’t love it, as a customer, to receive value on an ongoing basis?
But during the pandemic, the already declining brick and mortar contingent went into overdrive to get online and stay in business.
Companies that relied on foot traffic had to entice people to make purchases with them regularly online. “We saw a three-year adoption cycle get compressed to three weeks,” David Rusenko, head of e-commerce for Square (a major mobile payments company) said in the early days of the pandemic. So how do we market to these customers and keep them coming back? Enter membership-based businesses. While not a new concept, it’s certainly seeing a renaissance.
What is a membership-based business? People are often surprised to learn how broad the term membership can be. Everything from streaming services like Netflix, to gyms, to Costco are all included. If money comes out of your account in order to access goods or services on a monthly basis, it’s probably a membership.
Recently, I took an informal poll on my social media channels. I made some interesting discoveries. I asked people if anyone had a membership that they love. Here are some findings that will hopefully help your membership-based business stand out from the noise.
There’s a Certain Cachet…
People take pride in associating themselves as members of a particular brand or experience. Think of the phrase, “you are what you eat”. In this case, you are what you’re a member of and this is true both online and off. Establishing a consistent and polished brand is important to this customer base.
The social component of Strava is like word of mouth on steroids. Entire social groups felt compelled to fork out the cash for a smart trainer and in some cases a new bike just to join in the fun.
2. Make It Irresistible
Incentivize natural brand ambassadors. Give current customers such a good experience that they want to share. Influencer marketing or top user rewards would be a great way to reach this customer base.
3. Word of Mouth
Social Proof reigns supreme. In the early stages of brand awareness almost 40% noted that someone they trusted (personally or as a public figure) made mention of the product.
Brand recognition: One user started noticing the boxes Thrive Market delivers goods in and Googled it to learn more.
4. The Purchase
A pattern emerged with online customer journeys. Of those surveyed that could recall their purchase decision making journey, the most common path is as follows:
Word of mouth - friend, family member or someone trusted recommended the membership.
Search / social media search
Retargeting on social media
Discount or offer closed the sale
The most popular membership listed: Peloton.
5. You Heard About It Where?
Podcast marketing dominated the poll. Both branded podcasts and mentions of a business on popular podcasts regularly converted people. Social media is and will continue to be a major marketplace for businesses to be seen. However, just as people need to see a product multiple times (7 on average) before converting, these other marketing initiates were also top converters:
Email marketing
Physical product placement in places such as hotels or AirBnBs
Dominating search results
Offering exclusive content, discounts or products behind a paywall
Of the 40 people that responded to my amateur poll, the age range was 28-75 and included both women and men. Curious about what memberships made the list? See the word cloud below:
While the concept of selling a membership isn’t new, the global pandemic has certainly forced some creativity into the space. Both from a product and a marketing perspective. Know of a new business that’s thriving with a membership product? I’m always curious. Leave a note in the comments!
