Many of the heavy hitters of the corporate world – like Apple, Amazon and just about every big start-up around – are busy at present changing their business models from selling individual products to offering memberships which generate ongoing recurring revenues. This is indicative of the rise in the membership economy which looks set to become much larger in the future.
So what is the “Membership Economy”? Pure and simple membership means customers engage with an organization or a group on an ongoing basis. It’s where an organization puts the customer relationship at the center of the business model rather than the product, the customer experience or even making a one-time sales transaction.
Today, the rise of social media and other technology makes it easier than ever for customers to have an ongoing relationship with your organization. If you can get them contributing to the experience of other customers in positive ways, you’ll have a powerful competitive edge over companies which merely act as product or service vendors.
Memberships are not new. They have always been around in one form or another. What is different is that consumers are now starting to show their willingness to pay a premium if they can connect with a community of like-minded individuals who can help them get more done.
This preference for connection with others is being driven by several transformative business trends:
-The general ubiquity of online access via multiple devices, especially mobile phones.
-The dramatic decline in the cost of data storage and processing – which enables companies to provide access at very low prices.
-The decline of face-to-face communities and their replacement with virtual alternatives.
-The availability of news providers, photo sharing sites, video sharing services and more.
The membership economy is growing rapidly because even in the face of technological advancement, humans have a deep and abiding need to connect with others who share our values. The membership economy is energized by helping people form genuine connections to meet those needs.
To excel in the membership economy, you have to change your culture and your attitude, not just your marketing tactics. You have to get the right people involved and prioritize the right values to grow a successful membership-based organization.
Specifically, building a membership organization requires that you change your marketing. Retention matters far more than acquisition for membership entities and you will need to keep doing new and better things to attract attention. You’ll also need to align the entire organization behind the ideal of creating a delighted long-term user rather than generating as many one-off transactions as possible.
You’ll also need to have lots of two-way communication happening all the time.
…You will also need to empower your frontline people to do whatever it takes to help members accomplish what they’re trying to do.
Great membership organizations keep tinkering with their offerings all the time based on what members are saying they want and need. … If you have the mindset that each day, you will win over your existing customers and find new and better ways to help them achieve more, the membership model will work well for you.
…To retain members over the long haul, you have to keep looking for new ways to improve their condition and deliver more value. That’s why you’ll always be on the lookout for innovations and new technology which will help you deliver this. You have to keep investing in your community and do some creative tinkering to retain your long-term members.