What is a membership model?
A membership program has all the advantages of subscription business models, but place a greater focus on customer retention using strategies such as giving access to membership privileges, premium positioning, product development, and building an online community.
For example, you might have a new membership site that offers courses on digital marketing or web development. You could then offer the top-rated courses or other exclusive content to paying members of your website, while only those with free membership to gain access to regular content.
It could also be that you bundle some parts of your services for your members, while others can choose to pay for individual products. You might even create multiple membership levels to cater for people with different budgets.
Types of membership model
Freemium memberships
Freemium memberships involve offering a basic level of service for free, often to funnel non-members and casual website visitors into purchasing your paid content, accessible via a members only site.
Digital subscriptions and online courses are a great example of successful membership sites — newsletters and major publications particularly. Some people also use this model to take the first step turning their hobbies into a business.
Example of a freemium membership: Medium
- Free membership: Read a limited number of articles for free
- Paid membership: Read unlimited articles for free
Tiered memberships
Tiered memberships allow members to pay more to access additional benefits and features. This can apply to both physical and digital products.
Example of a physical membership business: Crunch Fitness
- Tier 1 — One Crunch: $104/month
- Access one location
- Group classes included, bookable 1 day in advance
- Tier 2 — City Crunch: $120/month
- Access 10 locations
- Group classes included, bookable 7 days in advance
- Includes access to digital activity challenges paid in credit
- Tier 3 — All Crunch: $150/month
- Access 431 locations
- Group classes included, bookable 7 days in advance
- Includes access to digital activity challenges paid in credit
- Includes access to additional streaming workouts
Example of a digital membership business: PlayStation Plus
- Tier 1 — Essential: $9.99/month
- Includes access to multiplayer, selected free monthly games, and exclusive discounts
- Tier 2 — Extra: $14.99/month
- Includes access to multiplayer, selected free monthly games, and exclusive discounts
- Includes access to full back catalog of free games and Ubisoft+ Classics
- Tier 3 — Premium: $17.99/month
- Includes access to multiplayer, selected free monthly games, and exclusive discounts
- Includes access to full back catalog of free games and Ubisoft+ Classics
- Includes access to game trials and cloud streaming
Loyalty or rewards programs
Often associated with traditional businesses like supermarkets and chain stores, the loyalty and rewards model has expanded significantly over the last few years, with companies from food delivery apps (like Uber Eats) to local business partnership stamp cards implementing new ways to drive repeat purchases and customer retention through their own dedicated membership.
While there’s definite overlap between this model and tiered memberships, loyalty or rewards programs are different in that they are normally free to join, but members advance through the ranks by adhering to certain rules over a certain period of time, rather than paying a fixed price.
Example of a loyalty-based membership: Virgin Atlantic points
- Red card
- Free to get
- Earn points for every flight
- Silver card
- Unlocked when you collect 400 points within 12 months
- Earn 1.3x as many points per flight
- Includes 1 extra piece of luggage, premium checkin, and free seat assignment in Economy Light
- Gold card
- Unlocked when you collect 1,000 points within 12 months
- Earn 1.6x as many points per flight
- Includes 1 extra piece of luggage, Upper Class checkin, lounge access, and additional seating benefits
Example of a loyalty-based membership: Gregory’s Coffee
- Gregular
- Free to get
- $5 for every friend referred
- Hot Shot
- Unlocked once you collect 400 points total
- Receive a free bag of coffee when you hit this milestone
- $5 for every friend referred
- Get free drip coffee refills
- Visionary
- Unlocked once you collect 1,000 points total
- Receive a free diner mug when you hit this milestone
- $10 for every friend referred
- Get free drip coffee refills
- Get a free pastry once a month
- V.I.G.
- Unlocked once you collect 2,000 points total
- Receive a free hat when you hit this milestone
- $10 for every friend referred
- Get free drip coffee refills
- Get a free drink once a month
- Invites to exclusive events
What are the benefits of a membership model?
Maximize operational efficiency
As we’ve said before… it’s easier to retain customers than it is to get new ones. Membership models can be optimized to run like well-oiled machines through automation and clever operational planning. It’s true for all businesses, but especially for memberships, once you’ve found the perfect balance of routine and novelty, retention will be sky-high.
Easier to provide consistent value
Memberships are enticing and attractive to join by design, and people often sign up for similar reasons, seeking similar value. Creating a permanently relevant offer (access to a full library of evergreen content, flexibly accumulating rewards points, bookable gym classes, etc) that can be scaled infinitely makes it a lot easier to grow over time.
Leveraging your community
One of the best things about memberships is the capacity you have to leverage community. From your founding members to your first full cohort, enthusiasm breeds enthusiasm, and the knock-on effects are huge.
While this sounds like it only applies to digital memberships, that’s not true! Even if you’re selling a physical product or experience (gym memberships, coffee rewards, etc.) you’ve got a great opportunity to solicit user-generated content through giveaways and competitions open to members only — even the free ones. Don’t ghost people, show gratitude with tailored thank-yous, and your members will be delighted time in, time out.
How do you create a successful membership site?
Decide on a model
Have a think about what works for your business when you’re settling on your model for a successful membership site. It’ll affect pricing as well as the expectations of your members further down the line. Make sure you ask yourself the following questions:
- Am I selling physical content, digital content, or both?
- Is this a brand new concept or am I adding a membership to an existing business?
- How do I want to attract members?
- Am I targeting a big group or a select few?
- Is this a local membership, or does it cover a big area?
- How often do I need to charge members to optimize my cash flow?
Develop your offering
Once you have the basic building blocks in mind, start putting together your offer.
Now’s the time to plan out membership tiers if you’re using them and look at how you’re going to create ongoing value. It’s also worth getting a sense of your costs and the margins you’re planning to make.
This is also the time to create members only content, and plan what benefits they’ll be able to access from their members only area.
Choose a platform for your membership website
Ready to create a membership website? Here’s some pointers for you.
While some people may choose a membership plugin and a separate hosting platform to set up their business, cutting corners to hack together up a basic membership site will start to drain your resources as you scale. We recommend using a dedicated membership platform with everything you need already built in to optimize your time and budget.
When it comes to setting up a fully functional membership site, be sure to pick membership site software that includes the following features.
Key features for membership sites
- Dedicated membership website builder
- Web hosting
- Ability to offer exclusive content or members only pages
- Ability to offer different levels of membership fee
- Ability to support free members
- Membership management tools
- Email marketing tools
- A secure user login form for existing members
- Support for multiple payment gateways
Refine your positioning
Another important aspect of running your own membership site is positioning the product or service as an offer to become part of something premium. This is also the hardest part about building a successful membership business. You might be providing value, but the market needs to have a similar perception of it.
If you’re looking to create a robust membership model, you need to invest in building the value of the membership. This would mean finding that particular incentive that will push new members to maintain a long-term relationship, similar to a subscription business.
For example, in the case of a subscription box, the right strategy could entail the use of premium materials, sustainably-sourced products, or faster or free delivery — a value proposition that makes the cost of membership worth it. In the case of membership websites, it might be about providing a super intuitive user experience, or access to digitally accessible high-value content or experiences, such as custom-made resources or access to your time in individual or group contexts.
Iterate your products and services based on feedback
A customer’s membership subscription payment is just the start of the sales process. You need to focus on retaining this revenue. Practically speaking, this could translate to sacrificing short-term gains in order to improve the perceived value of your membership features amongst your target audience.
You need to provide something that justifies each recurring purchase of the membership. If you’re in a sector with tough competition, it could mean considerable investment in product development.
Indeed, the success of Dollar Shave Club was followed by a number of similar services. But the company kept innovating, and now offers members much more than the basic shaving kit with which they started.
Grow your community
One thing that membership businesses must do more than subscription businesses is build online communities. An interactive community that exists outside of your membership site adds an element of loyalty that is essential for the membership model.
Community building is a more common growth strategy for membership sites than you’d think. One of the most popular examples would be Duolingo, the app that helps you learn languages. One of the features that sets apart Duolingo’s online courses is the active community that lets you get in touch with fellow members learning the same language. In fact, it was so successful that the community ended up creating content for the company.
A community based around an online membership site is an organic way to stay engaged with your members, and can save at some investment in marketing efforts. Successful communities also help you retain customers.
TL;DR
The membership business concept can be applied to a huge variety of use cases and product types. From gym passes to paid membership sites, the possibilities are endless. Want to create a membership site of your own? Subbly has 100+ features to help you do just that without a single separate membership plugin! Start your free trial today.
Subbly is an all-in-one solution for running your subscription or membership business. From building subscription sites through marketing and analytics to shipping and logistics, we make it simpler and easier to start and grow a company that’s focused on long-term customer engagement.
Register now to start your 14-day free trial and see how Subbly can help your business grow.
