Membership programs: why and how to invest in this business model

Membership programs: why and how to invest in this business model

Learn more about how this business model works and the benefits it offers to digital producers and members.

Ever since e-commerce got popular, it’s not hard to find someone who would rather shop online. You, yourself may have done it many times!

Besides the obvious comfort, those who choose online shopping are looking for exclusive products and, usually, prices below normal market conditions. That’s also true for digital products.

Even with the booming market, companies are investing in reinventing e-commerce and offering the best experience possible to users.

The flavor of the month? Membership programs.

Below we explain how this business model works and why it could be interesting to you.

Membership program: what is it?

In practice, being a part of a membership program is much like getting cable TV. You get a package of services, pay a fixed value for it and you get the product in the comfort of your own home, without the need to repeat the purchase process.

In the case of digital products, our target, the user has unlimited access to your product. That includes exclusive features he wouldn’t have access if he was a regular user.

Think about Spotify, for example. It’s a streaming service, in which the user downloads the app to her cell phone and has immediate access to an almost unlimited music collection, at any time of day.

The service is free, but it also has monthly membership plans going from US$ 4.99 to US$ 14.99.  

But why would someone subscribe to a streaming service they can use for free? The answer is exclusive features.

Premium Spotify users can do several things a regular user can’t. They don’t have to listen to ads, they may skip tracks, and even listen to music offline.

Our golden tip comes here: before starting a membership service, you must think about the benefits you will offer to your buyer persona.

What can I do to improve my member’s experience? How can I carry it out to my business in a sustainable way?

Another question you must always ask yourself: does this feature add value to my product? If the answer is negative, analyze options that better fit your brand.

Advantages of a Membership Program  

1- Customer loyalty

One of the main advantages of starting a membership program is being able to build your customer’s loyalty for a longer period of time.

Membership ensures that the lead will recurringly access your page, which gives you more time to show your product’s differentials, nourish your base and increase your company’s Lifetime Value.

Lifetime Value is a marketing metric that measures the value each client has to the company.

To get to this variable every purchase made by the user from the moment of acquisition is taken into consideration.

In the case of membership clubs, LV = monthly fee X client’s life span.

This metric may change according to the number of people who cancel the service or migrate to other plans.

It goes without saying that, the higher your Lifetime Value, the higher your average ticket, and the higher your return on investment (ROI) is.

2- Recurring revenue

Because they have fixed monthly payments, membership programs generate recurring revenue, once they suffer less with the effect of market oscillations and seasonality.

It’s a simple equation: if you have control over the number of active members and the payment information for each of them, you will know exactly how much you will make that month. Therefore, you won’t depend on the performance of single sales, in case you also use that model.

If the revenue is linear, consequently you have more freedom to invest, which may attract more users to your membership club, starting a positive cycle for your business.

3- Improvements in operational routine   

In a membership program, payment is processed only once a month. And why is that interesting for you as a digital producer?

Because the bulk of requests concentrates on a specific day, which will give you an advantage when it’s time to organize your routine and optimize services, such as payment forms.

Another not so obvious advantage, is that unique payments help avoid a chargeback. Those happen when the client does not recognize a purchase and dispute the payment.    

4- Product Feedback

Imagine the following setting: you’re a digital Producer and sells language courses. All of a sudden you decide to diversify the format of your product.

Now, instead of only selling traditional video lessons, you also want to talk a little bit about each country’s culture.

You can do this in different ways, but you’re still unsure about what the best format will be. In this case, the membership club may be used as sampling to test your ideas.

A good way of doing this is making the first version of the new product available only for members.

You’ll do that based on the exclusivity principle like Spotify does, as we mentioned above.

The next step is to follow the number of accesses and comments made on the video. In doing so you’ll know what can be improved in that product.

If you would like to have more specific results, you can have an opinion pool with your members, using tools such as email marketing and Google forms.

Gerenciar continuamente a sua comunidade, te ajudará a entender o que o seu público espera, para sempre trazer novidades que vão te diferenciar da sua concorrência.

Continually manage your community to help you understand what your audience expects, so you can always bring new ideas that will set you apart from the competition.

5- Options of Features

Taking part in a membership program is, indeed, just like being part of a community.  

For online course members, having a space to share their improvements and clarifying doubts is precisely what makes the experience richer.

As a digital producer you can [and must] use all resources available to keep the relevance of your page.

But don’t you think that’s an easy task. You will need to create content that is useful to it at the moment it needs.

Producers who choose Hotmart Club, Hotmart’s distance learning platform, can make their products available in different formats, such as ebook, audio, video lessons, apps or even combine more than one digital product.

The platform also allows sharing the course into sections, where students have access to new content as they move forward in their studies. And all members will be notified whenever a new content is added.

In every section, there are also evaluation tools available. They can be used to evaluate students’ level of knowledge and know if they are able to move on to the next stage.

And, in the end, you can make the certificate of completion available to all course participants, attesting they have finished every section successfully.

What’s interesting when choosing a platform to host your digital product is that you do not need advanced knowledge in design and programming to do so.

At Hotmart, the sales page is generated at the moment you create your account, with design and features totally optimized for conversion.

Producers’ effort consists of creating the content, setting the price, promoting and distributing. And, meanwhile, figuring out what she can improve.

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