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Membership Economics: How to make money in the Membership Economy

This isn’t about the difference between Membership and Subscriptions

The Subscription Economy? The Sharing

Economy?

The Membership

Economy?

Subscriptions

Purely and simply a way of paying for something

And one way to pay for membership

Membership

Something you feel part of and connected to emotionally

And it may even be free

Utilitarian Meaningful

Convenient Fulfilling

Ongoing Relationships

This is about a new way to think about and grow customer relationships

An ongoing relationship, based

on an experience, driven by

engagement,

that delivers value over time

70% of businesses said they think membership

and subscription models are the future commercial model of their industries...

Quantitative and Qualitative Study

However, only 7%are currently

generating significant revenue in this way

We’ve spoken to:

Membership EconomicsTM

Revenue

“It’s really hard to be good at multiple revenue lines”Ed Roussel, Chief Innovation Officer, Dow Jones

Subscriptions

Transactions

Advertising

Affiliates/Partners

Direct Indirect

Revenue

Subscriptions

Transactions

Advertising

Affiliates/Partners

ARPU +£540

Core Capabilities and Investment Areas

Product

Marketing

Data

Partnerships Delivery model

Marketing

“Engagement is absolutely one of the biggest priorities in our business”

Karl Wells, General Manager Membership, The Wall Street Journal

With a focus on engagement

Engagement it the thing thats drives revenue

Transactions

Advertising Affiliates

Subscriptions

OFF-PLATFORM

(SOCIAL)

ANONYMOUS

TRAFFIC

KNOWN

AUDIENCES

TRANSACTING

CUSTOMERS

MyFood App

Gardening Magazine (Print)

Health Magazine (Print)

Weekend Paper (Print)

Pet Advice (Digital)

My Wine Tasting

My Drinks Festival

My Cookery School

My Events

LowHigh

£ ARPU

Facebook Channel

Instagram Channel

Youtube Channel

High

Low

AUDIENCE SCALE

Shopping:

MyShopping App

Other:

MyGarden.com

MyFlorist.com

MyPet.com

MyWine.com

MyShopping.com

In-store

Food Magazine (Print)

Recipes in store

Drinks Magazine (Print)

Building engagement and value through multiple overlapping propositions

Marketing activity based on ‘big bang’ theatrical releases

Disney Releases 2015

Shifted to audience-based engagement around franchises

Engagement

Always-on activity

Disney Releases 2019

Building Engagement Habits

Created exhaustive list of everything a member could do on WSJ’s site

Borrowed techniques from the medical sector, analysing actions in the first 100 vs 365 days

Identified 3 value drivers

Loyalty

Cadence

Play

2)

1) 3)

Habits are formed early on. If you look at a member’s likelihood to adopt a new habit, that percentage is halved by Day 50 and plateaus soon after Day 100.

Like

liho

od

to

ad

op

t n

ew h

abit

Low

High

Likelihood to adopt a new habit in the next four weeks

Associate Director of Engagement WSJ

Media

Gaming

Groceries

Amazon Retail

Payments

Devices

Amazon’s Prime Ecosystem

Transactional

Each type is valuable in its own right… and the opportunities for creating value multiply as the data is combinedData

PR

OD

UC

T EN

GA

GEM

ENT

At the heart of the model is the customer

“The first question everyone asks, everytime about everything, is: What would this mean for our members?”

Lisa Oswald, Head of Customer Services, Travelzoo

Money’s the scorenot the game

EngagementFrequency

Recency

Depth

Breadth

Using leading metrics to provide focus and deliver financial targets

Using the model 1. Do I have a compelling

proposition that customers will commit to?

2. Do I have the

capabilities to deliver?

3. What revenue can I generate and how much?

5. Do the ‘Membership Economics’ add up for me?

4. What pricing model should I use?

Key takeaways

1. You will lose money when you acquire a new customer, and you might make money if you keep them.

1. Experience and engagement are the key, these need to be backed up by realistic revenue modeling and pricing.

1. You have to be good at creating reasons for customers to stay, not just relying on reasons for them not to leave.

Reframe the metrics - KPIs!

Membership EconomicsTM

download @ manifestogrowth.com

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