What is a membership program, really?

It's the easiest way to add a recurring billing component (hello, predictable cash flow!) to your revenue model without totally overhauling your business operations.

Beyond recurring billing, memberships open the door to a TON of potential value to you as a merchant. If you've ever wanted to get in on the subscription action but weren't sure how...this is it.

What are the benefits of a membership program?

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Retention

Engaged members stick with your brand for longer and, assuming your membership model is designed well, will continue to come back again and again for more of what you have to offer.

Higher AOV

Membership programs offer more touchpoints with the consumer, which give you even more opportunities to cross-sell and upsell.

Predictable Cash Flow

Recurring billing gives you a relatively predictable cash flow, meaning you can plan more efficiently (and even fund future projects).

Data Collection

Because members are more likely to be more engaged than the average consumer, they'll be more likely to participate in surveys, polling, and focus groups. Find out what they want, straight from the horse's mouth!

Community

Create a place for members to hang out, bond, and share ideas. (Read: an opportunity for engagement.) Listen to what they talk about for ideas on becoming an even better merchant. Spot and solve problems before they even occur.

Testing

Engaged members create a unique opportunity for testing out new products and ideas, and even launches! (If something goes wrong, they're much more likely to be forgiving.)

What do you need to consider?

Target Audience

Which customer segment is going to be most receptive to a membership? How do you know? Is there a consumer segment in the market you don't currently engage with that would find membership with you appealing somehow? These are just a few questions you'll need to ask yourself when defining the parameters of your program.

Value

Now that you understand your target audience, you know what they want, too. So give it to them! Make your membership so high value that consumers can't help BUT to say yes! Remember that there's tremendous value for you as the merchant beyond just the price of the membership itself.

Perks

There are dozens of perks you can offer in exchange for the cost of membership: store credit that is of higher value than cash, early access to new products, exclusive products and content, member pricing, free shipping, extended returns windows, and so much more. What would excite your target audience the most?

Billing + Pricing

What you charge members (and how often) is an important consideration when strategizing your program. Give them a few options (but not too many!) and make sure the value scales with the price.

Promotion

Once your program is built out and ready for release, how are you going to promote it? Membership marketing is an ongoing process, so you'll need to bake it into everything else you do in addition to a big push at launch.

How do I decide what to do?

The answer isn't as complicated as you might think.

Know Thy Customer

Start the brainstorming process by focusing on what you should always be focusing on: the customer. You'll need to give them several very good reasons to hand over more moolah.

How would a membership program fit most seamlessly into my customer’s life? How can a membership enhance the existing value my customer expects from my products? What membership benefits and components are going to be most valuable to them? Think about what your most ardent fan would want.

Know Thy Self

Once you know what your customers want, you'll need to decide how much of that you're prepared to offer. Which options will make the most sense for your business?

What are your goals for this membership program -- engagement? Recurring revenue? Data collection?

How much of an investment do you want to make now, versus iterating the program as you go? Do you have the resources (personnel, time) to manage a Facebook Group or create content? Do you have enough SKUs in your store to offer members-only products?

Getting Started

If you're dying to hit the ground running, the leanest approach is the "store credit" method. It requires zero change in inventory or business approach and it's a concept that consumers are already familiar with: pay $X per period and in exchange receive $X+n in store credit to spend. Easy!

That said, if store credit is your only membership perk, some consumers may consider the program a bit lackluster. Spend a bit more time to build in additional perks that create a stronger value proposition.

The probability of selling to a current customer is 60 - 70% compared to 5 - 20% for a new customer.

Source: Invespcro

Want to dig deeper?

Check out our blog, the Tako Stand, for in-depth posts on adding a membership component to your Shopify store, how to decide on the right pricing and billing, and so much more.

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Apps We Use to Make It Happen

As we tend to mention every chance we get, ReCharge is far and away our favorite platform for recurring billing. We love them for their automated workflows, supremely customizable customer portal, killer API, and generous free trial. (More on what they can do for your subscription business here.)

If you'll be including any kind of "store credit" in your collection of member benefits, you'll need an app like Stamped to convert what members pay into "points" they can redeem in your store. Stamped also has a robust user generated content (UGC) curation tool to help you maximize the value of member created content.

If you want to implement rewards into your program, a platform like Smile.io is a life-saver. Smile allows you to set up a points system, as well as implement custom VIP and referral programs (because if you're doing it right, members are raving fans!) in about as much time as it takes your Keurig to brew a cup of coffee. (Ish.)

You'll need a way to communicate with your members, right? If you're not already using Klaviyo for email and SMS marketing, you're missing out, friend. Klaviyo's segmentation feature (and the way it clicks in oh-so-wonderfully to Shopify and ReCharge) will make sure members and non-members see only what they're supposed to in their inbox, and allows you to leverage this hyper-valuable customer group in your marketing.