#online membership program

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Renovation Golf

Renovation Golf is an online membership program offering comprehensive video instruction and easy to understand tutorials created by golf pr

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Should You Launch an Online Membership Program For Your Business?

Article by Neil Patel, co-founder of Crazy Egg and KISSmetrics

With myriad retailers offering products at varying levels of price and quality, it’s no wonder that online shoppers continue to make piecemeal purchases from a variety of firms. But your business depends on continuing revenue to stay in business, and currying repeat business can be a challenge in a market of this nature. Fortunately, online membership programs offer a real opportunity to breed loyalty and deliver value in return, provided your business model accommodates this sort of consumer activity. Here’s what to ask yourself when determining if a loyalty club is right for your site.

Does your business model accommodate repeat purchases?

Before building a list of member benefits and pricing, it’s important to identify whether your business model is the kind that breeds repeat purchases. Online membership programs are built on the idea that returning customers, and those who may become returning customers, will benefit from consistent usage. For shops that facilitate large, one-time purchases, an online membership is unlikely to build consistent revenue, simply because the nature of the purchase is limited to particular occasions.

For online retailers and suppliers, however, the model makes perfect sense. For example, if your shop sells dog food to veterinarians or shelters that require a steady stream of fresh food in order to keep animals happy and healthy, then offering a membership program would allow them to receive a bulk discount in exchange for continuing business. Another instance would be an online clothing retailer who regularly circulates seasonal fashions. By offering a club discount and exclusive access to style experts, the temporary cost is offset by a steady stream of revenue.

What can you offer members?

In either of the examples mentioned above, the business involved has examined what they have to offer and made that available to members to sweeten the deal. The two offerings are also completely unique to the nature of the business involved.

Identifying what you could give to members of your program is key in shaping your efforts. If you’re a tractor supply company, you could distribute a publication that updates members about developments in farming technology. If you’re a video game retailer, you could provide early access to pre-orders for highly anticipated games. Examine your business and determine what you can provide that would make membership in your program worth the price of admission. If you’re at a loss for ideas, free shipping or discount expedited shipping is always an attractive option, regardless of your specific business model.

Regardless of the specifics of your member benefits, keep in mind that delivering value is the goal. The reason that early-access to video games is attractive lies in the fact that gamers wish to be ahead of the curve on developing trends and upcoming titles. Exclusivity, beta-testing, and early demos all help satisfy their need to be a part of the cultural narrative, and therefore constitute real value in their eyes. 

How much will it cost?

Of course, providing these services will not come without cost. Online discussions with stylists represent time your staff could use to accomplish other tasks. However, the sacrifice of time and resources is rewarded when done successfully, so evaluating what cost your firm can absorb is essential to offering an attractive deal. 

Once you’ve evaluated the internal cost of your program, evaluating its perceived value is the next step. Pricing an online membership program is tricky. The cost must be sufficiently high as to offset your costs and create an air of exclusivity, but sufficiently low as to facilitate entry. In addition, the services provided must be fairly priced based on the perceived value they deliver.

Marketing research can help shed light on the discussion. Closed surveys solicited to high-volume customers are a great way to tap your target market for their choice of benefits and idea of fair valuation. You may also find it worth the investment to conduct focus groups, both in order to gauge reactions to potential member benefits and pricing and drum up ideas regarding what repeat customers consider worth their money.

Does it breed additional business?

If your business model accommodates repeat purchases, your member benefits are attractive, and your pricing is fair as confirmed by your market research, then a membership program may be right for your business. The next step lies in implementing the program and gauging the response to determine whether the endeavor is worth it.

Membership programs work because the initial cost of providing additional service is offset by repeat revenue. This occurs both through regular customers increasing their purchase volume, and through tepid customers seeing value in the program and increasing their purchase volume. If, according to your analytics, either event isn’t occurring, then it may be necessary to make adjustments to your pricing or offerings. Continue to monitor progress and evolve your program so that it delivers consistent, worthwhile value and your customers will return the favor with additional business.

It’s true that online membership programs are not for everyone, but those who combine an appropriate business model with proper implementation will see attractive results. Determine whether your business facilitates repeat purchases and, if so, evaluate what you can give your members. Determine the cost of such offerings and leverage market research to determine a fair price. Continually monitor the program, making adjustments as necessary, and you’ll find that the added value, engagement, and incentive can make hay for your business for a long time to come.