Membership enterprises are becoming more and more a “norm” in the business world. This membership phenomenon has become a part of most everything we do. Consider social media, how many people are members of LinkedIn or Twitter? Many of us belong to a civic or fraternal group such as Rotary or the Chamber of Commerce. We shop at a membership based store such as Costco and have a membership in a gym. Membership in Netflix is a good example of a large membership organization.
In my opinion, the membership model can work for any size business, but like any other business discipline it requires an understanding of how it works and a willingness to focus on people instead of products and services.
For most businesses looking at becoming membership based, I strongly recommend that the first effort is “off-line” instead of attempting an “online” start. Off-line allows you to have a personal and more controlled beginning with an opportunity to better identify the needs of your target market.
With a target market in mind, the development of a Value Proposition is the most critical component for a successful membership business. It is not only the initial search for your Value Proposition but also the ongoing development of your Value Proposition to keep it relevant to customers.
Unfortunately, the development of a value proposition that will entice membership is not an immediate, short term process. By only talking about having a value proposition when a business plan is developed usually results in no tangible and useable results.
The creation of a Value Proposition has two parts: first, the development of your target market customer profile and second, a plan of how you intend to create value for that customer. The customer profile has to be detailed to include, among other things, what the target market is trying to do in their work lives. This should include a study of their “gains and pains.”
Robbie Baxter lists three major benefits of a membership economy:
- It creates recurring revenue and removes lumpiness.
- It builds a more direct relationship with customers
- It generates an ongoing data stream which can be used to improve services and to identify opportunities.
The purpose of this article is to give you a taste of what a membership organization can do and hopefully get you to consider adopting such a strategy. Please contact me for more information on how to turn your business into a membership business.
Out of the box thinking is necessary for ongoing business growth.