As your company grows and evolves, you’ll need to prioritize customer retention over growing your audience base by attracting new customers. One of the best ways to do that – and to build brand loyalty simultaneously – is to start a membership program for your company.
But if you don’t launch your membership program properly, you could end up costing your company far more than you anticipate. In the worst-case scenario, your membership program could be a total bust. Read on for six things to consider before starting a membership program for your business to ensure it results in major benefits.
1 – The Type of Membership Program
Firstly, membership programs are available in several different types. “Depending on the type of mentorship program you provide to your customers, you might see better or worse results in terms of revenue increases, conversion rate boosts, and other metrics,” says Fred Gerantabee, Chief Experience Officer at Readers.com. “Because of this, you should consider the membership program you implement very carefully. Choose the wrong type, and you may not see good returns on your investment. Or you may cost your business money.”
Loyalty Programs
Loyalty programs are among the most common membership programs used by businesses. Put simply; they reward customers who sign up for their loyalty by providing things like:
- Discounts on products
- Free credit to use on certain products
- Special announcements or newsletters
Generally, loyalty programs have to lead to a regular reward for them to be worthwhile for your core consumers. “Most consumers want to know that they get something out of their loyalty,” says Omid Semino, CEO and Founder of Diamond Mansion. “Unless they’ve been buying from you for many years, you need to provide them with real-world value or they’ll quickly switch their loyalty to one of your top competitors.”
If you want to go with a loyalty program, make sure you have a good reason for someone to sign up for the program in the first place. Loyalty to your brand is not usually enough.
Monthly Memberships/Subscriptions
Other membership programs take the form of monthly subscriptions or memberships. These require consumers to spend a certain amount each month to remain a part of the program. Examples are software as a service companies that require companies to pay the same amount each month or year to maintain access to core software offerings.
“Monthly memberships in subscriptions can provide your business with reliable, consistent income,” says Ryan Rottman, Co-Founder and CEO of OSDB Sports. But again, these require you to have something valuable enough to inspire people to sign up in the first place.
Because of the possibility of consistent income, lots of companies look to force subscription plans into their business models. “That’s never a good idea,” says Ubaldo Perez, CEO of Hush Anesthetics. “It can easily come across as money-grubbing or as bad business to consumers.”
Free Opt-In Memberships
Opt-in memberships are usually free. Since these have the lowest barrier to entry, you can usually get the highest number of people to sign up for them.
These are mostly advantageous if you want to send more people your email marketing newsletters. “From time to time, you can also offer discounts to opt-in members to inspire them to make another purchase or sign up for a more involved loyalty program,” says Lina Miranda, VP of Marketing at AdQuick.
2 – The Sign-Up Process
Next, you should consider the sign-up process for your upcoming membership program. Depending on how your sign-up process works and its length, you could see better or worse success rates when trying to get people to complete it.
The Importance of an Easy Sign-Up Process
No matter which type of membership program you launch, it must be very easy to sign up for. This is the single most important factor to keep in mind when starting a membership program in your company.
As Rym Selmi, Founder of MiiRo says, “It doesn’t matter how valuable a loyalty program or membership is if it takes a customer several minutes to sign up or if there’s an overly involved, complex process from start to finish. Simply put, people don’t want to spend extra time signing up for membership programs they aren’t sure they’ll like.”
Instead, you should make sure your sign-up process is:
- Very easy to understand. Ideally, it should only require that customers or website visitors input a few pieces of information.
- Very quick to finish. Your sign-up process should take less than two minutes to complete on average.
- Not pushy. People like to choose to join membership programs, not be bullied or cajoled into doing so.
As you develop your membership program, test out the sign-up process or page yourself and ask yourself whether you would sign up for the program in question.
3 – Will the Membership Program Add Real Value to Your Brand?
Then you’ll want to consider whether your chosen membership program will provide real value to your brand. If not, it might be wiser to focus on other elements of business expansion and customer retention rather than offering a loyalty program that won’t provide any major benefits to your company.
Added Revenue
Some membership programs have ad revenue. “For instance, subscription services or memberships provide your business with consistent revenue you can count on month after month. Not only is this great for your bottom line, but it’s excellent for improving customer retention,” says Theresia Le Battistini, CEO and Founder of Fashion League.
But why? It’s usually harder to cancel a subscription than it is to simply not buy something. In this way, certain membership programs can take advantage of human psychology to net your business extra revenue.
Improved Customer Loyalty
Other membership programs may improve customer loyalty.
“Loyalty programs, in particular, can help drive emotional connections to form between your customers and your business,” says Patrick Robinson, CEO and Founder of Paskho. That’ll make it more likely that they will continue to shop at your brand rather than going to a competitor, even if said competitor offers a minor benefit like a slightly lower price for the same product.
Bolstered Marketing Potential/Reach
Alternatively, maybe your membership program is designed to improve your marketing reach or potential. Opt-in memberships, for instance, may allow you to send more marketing newsletters to more people. In this way, your marketing department can see major benefits in terms of how many conversions it sees each month.
4 – The Cost of a Membership Program
Don’t forget to think about how much a membership program costs. This isn’t necessarily in dollars alone. A membership program can cost your customers in terms of:
- Money, of course.
- Their time. If a membership program takes a lot of time to maintain or check on each day, you can bet that you’ll have high member turnover.
- Their attention. Again, a membership program should provide passive benefits in the background, not require your regular customers to spend extra time or attention maintaining their profiles or answering needless questions.
Costs also apply to your brand. If, for instance, you predict that a membership program will cost more for your business than it will increase revenue or email sign-ups, a different marketing strategy may be wiser.
5 – How Long the Program Takes to Launch
Think about how long it’ll take to launch your prospective membership program. The longer it takes to launch, the longer you have to wait to read any of the above possible benefits.
Generally, membership programs that can be ideated, developed, and launched in a matter of months are ideal. “That way, you can try out the membership program and see what dividends it brings to your business while making adjustments in the short term,” says Karim Hachem, VP of eCommerce at La Blanca.
Talk with your team or department leads and figure out how long it’ll take to launch a membership program, given the projected benefits or returns you’ll see from the investment. If it is projected to take too long, try to truncate or streamline the membership program.
6 – All Membership Programs Are Long-Term, Not Short-Term
Lastly, remember that any membership program you launch is a long-term investment rather than a short-term attempt to get more money. While you may indeed see a short-term bump in revenue, the primary purpose of a membership program is to improve your business’s prosperity in the months and years to come, not just over the next few weeks.
Karim Hachem, VP of eCommerce at Maxine of Hollywood, says, “A successful membership program will solidify your customer base and result in much better consumer retention over several years. With that in mind, don’t immediately pull the plug on a membership program if it doesn’t result in major returns or tons of new website visitor conversions.”
Instead, think of your membership program as an investment in the future of your target audience. The better it is, the better positioned you’ll be to enjoy market stability overall.
Conclusion
When you launch a membership program, you must consider the above factors and make sure you launch it strategically. When launched properly, a membership program can improve customer retention in the long term plus provide major benefits to revenue. With a little luck and with the tips above, your membership program launch will go off without a hitch and provide important benefits to your company.