Dose #71: Memberships that Matter

Matt here with your weekly Subscription Prescription ??

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Dose #71: Memberships that Matter

This week’s dose we dive into why memberships are a great way to extract more value from your best customers. We go into why you should try them, how to think about them, how to offer them, and when to offer them.

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Come join me on September 21, 2023 with three of my favorite subscription people - Andriy Rudnik, Chris George, and Jay Meyers. We'll be breaking down some product pages LIVE and making suggestions on what they could do differently!

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Register soon! Now, onto memberships.

One of the most critical pieces to success in any commercial endeavor is understanding who are your best customers. You should not treat all customers the same.

Imagine you sold the best gluten free cupcake on the planet. Anyone eating it would think that it tasted like any other cupcake. How would you offer it?

Keep in mind that anyone that can eat gluten will compare your product to every other cupcake on the market. But anyone that is gluten sensitive will compare it to other gluten free products on the market.

Who is the more valuable customer to you? Who can you offer more to, and get more value back from?

This is the essence of any great ecommerce business - finding the customers that value your product, service, and experience the best.

Let’s dive into some ways you can make that happen!

Understand Two Different Customer Segments

You have two very different types of customers within your subscription program - those seeking discounts and those looking for VIP experiences.

Looking at it through the gluten-free cupcake example above, you could have customers seeking to buy your products on a subscription because they are relatively cheaper than similar products. They want the discount. These can be great customers but are more likely to churn for problems related to price (15.9% higher, according to Sticky.io’s Q3 PYMNTS report) or if you discontinued free shipping.

However, VIP customers are looking for more than a price discount. They want access to premium products, experiences, or simply buy much more than the average customer on your site. VIP customers are more likely to churn because of inconvenience or a friction point than price.

We want to uncover ways to give VIP customers more value - and charge them more for it. Memberships are a great way to make that happen.

Subscriptions Aren’t the Only Option - Try Memberships

Do you offer a membership? I wrote about the difference between loyalty, membership, and subscription programs a few weeks ago.

Subscriptions are a great way to offer your best customers a unique and valuable experience. Customers get a discount, you get predictability, and they always have what they want. Many discount seekers fall into this category. They are happy to get refills of products they use regularly at a discount.

Most brands I see, however, aren’t great at segmenting customers further to understand who is more valuable than others. This comes down to understanding what behaviors signal that someone will last longer, buy more, and more often. They’re looking for a VIP experience.

Memberships have been on my mind a lot lately because they are some incredible offerings from apps like Inveterate and Bold Memberships.

The most iconic membership is Amazon Prime. It continues to grow and deliver massive revenue for the brand, while giving millions and millions of people incredible benefits with free shipping and content.

Memberships provide you with a unique opportunity - to uncover up front who your most valuable customers are (and have them pay you more because of it).

How to Think of Memberships

Subscriptions are interesting because you engage with a customer on repeat. Memberships work in a similar manner. For anyone that is looking to buy more than once from you, there is an opportunity to leverage.

CarnivoreSnax recently launched a membership, and this is what it looks like:

Cost - $59/year

Benefits - $20 store credit to use right away. Access to exclusive products/cuts of meat. Earn store credits when you refer people. 5% cash back on every purchase.

Memberships for CarnivoreSnax have boosted their AOV and LTV. How? The exclusive products are more expensive, for one. Cashback incentivizes members to purchase more. And their membership customers are actually worth more than their subscribers.

The value of a program like this comes down to an offering for customers who value your product. They want more - so give them an incentive to purchase more.

Exclusivity helps as well for anyone sitting on the fence.

Another brand I’ve mentioned before (that I personally use) is Xendurance. Their membership costs $95, gives you 25% off sitewide all the time, $100 in product credits, and free shipping on all orders.

Their offer sounds like they’re losing money each time, but the membership covers the cost of free shipping, and members spend more on the site. It’s a no-brainer for anyone that uses their products consistently, and the membership ensures you keep shopping there.

How to Offer a Compelling Membership

Creating a compelling membership offer is difficult when you have subscriptions in the mix. You may already offer free shipping on orders, or on subscription orders. Cash back, site wide discounts, and exclusive product offers are a great place to start with memberships.

Consider this offer from West China Tea for $1,000 annually:

• 20% off all tea
• 20% off all teaware
• Access to limited stock items
• Free tea service at all locations
• Option to go on tea sourcing trips!

The goal here is to do more than just reward repeat customers. Get money up front with recurring revenue from memberships while incentivizing more purchases. You can even tier this system for different levels of VIP experience (West China Tea has a monthly membership option as well, for example).

Let’s go back to our gluten free cupcake example. Members pay $100 a year. Here are some ideas I’d try for members:

• Same day shipping - fast and fresh
• Cash back on all purchases
• Access a member forum (create a community!)
• Access to a gluten free recipe library
• Access to the newest gluten free product drops
• Free cupcakes on every order (get 12 when you order 6)?
• Referral incentives (you want anyone with gluten sensitivity sharing your products!)

When you have a group that struggles to find quality products and often feels disconnected from people because of something like gluten sensitivity, content, and community building are highly desirable.

Members make you more money. They are more engaged and a captive audience for more products.

When To Offer Memberships

Yes, you should highlight it on your website. But most people aren’t going to buy the membership right away. I didn’t buy XEndurance’s membership until my second purchase. That’s when I knew I’d be using their product a lot.

Think through touch points when it makes the most sense to reach out. Can this be a product insert? An email after any first, second, or third purchase? Testing different opportunities for outreach and seeing how they convert is important to make this right.

Memberships provide an incredible opportunity for you to get more revenue from your customers by increasing LTV among your brand’s VIP customers while incentivizing these same customers to spend more on your store. If you want to bounce some offer ideas around, hit reply and let me know.

That was a lot of this week’s dose, but I hope you found something useful. I’m happy to provide some insight.

Stay tuned for Dose #72 next Tuesday!

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- Matt Holman ??

Head of Partnerships, QPilot