Membership Business Models: What Are They?

Updated: Nov 27

Membership business models can help with customer loyalty
Membership Models Will Maximize Your Customers' Retention and Loyalty

Did you know that you don’t necessarily need a physical good to be a seller on Shopify? No? Well, spoiler alert: you’re gonna love hearing about membership business models!

You’ve probably heard about the membership business model while searching for the most efficient ways to run your business. Basically, membership business models are very similar to subscription models but focus more on customer retention by offering exceptional customer privileges, positioning in premium access, developing products, and building online communities to help retain customers.

If you're interested in learning even more about this model, this article is just what you need. Stay tuned, as we will provide you with examples and tips for developing a suitable membership model for your business.

What Are Different Types of Membership Models?

Membership models break down into a few different types. Let’s take a look at some examples of establishments that use a membership model:

  1. Clubs: Providing access to an offering over a specified period of time, for example, a day, a month, or a year. (swim club, tennis club, gym club, etc.)

  2. Trade Associations: Organizations or individuals seeking a specific goal or benefit. In most cases, these companies and individuals are involved in the same industry, which creates a common ground for them. (e.g., writing associations, engineering associations, nursing associations, etc.)

  3. Non-profit Organizations: It is a model in which members join an organization for a fee, and that fee is used to support a cause. It could be a church, an institution, a charity, or even a non-profit organization.

  4. Businesses: Your customers will be charged a fee in order to access your content. There are many options to choose from here, including online courses, e-books, and blog posts, to name a few. Take Netflix, Spotify, and Amazon, for instance; don't we love them all?

Spotify is a great example of a successful membership business model
One of the Biggest Companies to Benefit from a Membership Model is Spotify

Here Are 4 Reasons Why Membership Models Are Beneficial:

Now that you've been introduced to the membership business model, you may wonder if it's suitable for your business and what the potential benefits are. We’ve chosen 4 of them to share with you:

1. Regularly recurring earnings:

A recurring charge is typically used on a paid membership site. As soon as customers sign up, a monthly membership fee will be automatically charged. Even during unexpected lean periods or seasonal changes, paid membership models keep the money coming in.

2. Having an established audience for your brand-new business:

Imagine you operate a membership business for cars, and you have around 10,000 members. In the event that you start a business around car tools and essentials, you can expect to gain at least 50% of your previous clients from your previous business. This could be a valid calculation if you can devise a compelling and charismatic business plan. As a result of your authority, you will be able to build another business quickly.

3. A business that is growing exponentially:

You can grow your business tremendously by owning a membership business. Since your store does not limit how many people can join, you can gather as many members as you like. The more members there are, the bigger the community and the more opportunities are available. Moreover, your business structure can stay the same. Other online businesses require a lot of resources when they begin to grow. To succeed in the membership business, you must maintain a huge traffic volume and meet their needs.

4. Lower retention budgets:

Retention budgets could also be reduced through membership models. After a patron has become a member, it will usually take a pretty unpopular business move to get them to cancel their Membership proactively. Do what's supposed to be done, and you'll almost automatically have members buy from you. Keep in mind that if you offer long-term plans, such as those for one year or longer, you can also save money.

Membership business models allow sellers to provide members with special access
Build a Community and Offer Special Access to Loyal Members

How Will Membership Models look in the future?

Memberships could be the next big thing for e-commerce merchants. Members were immediately hooked when Amazon Prime began selling memberships. There were over 100 million Amazon Prime subscribers as of January 2019. Even though many people shop on Amazon, the kicker is that they do not subscribe to a product; they subscribe to a service. Many companies and businesses are turning to Membership business models to generate revenue due to the success of businesses like Fizzle, Variety Fun, Thrive Market, and NatureBox. There has been a tremendous impact on e-commerce due to the COVID-19 pandemic. As a result, the events of 2020 increased U.S. online revenue by $105 billion and accelerated e-commerce by two years. As the world shifted even further into the virtual realm, 22.5% of companies that provide membership services saw their membership rates increase over the past year.

Why Is Shopify a Great Platform for Setting Up Subscriptions/Memberships?

The Shopify ecosystem is one of the leading platforms for starting a membership-based business. Why is that? It's probably something you've been wondering about. Here's what you need to know:

1. Checkout: It has one of the most powerful checkouts. With over 5.5 billion orders processed, Shopify Checkout constantly optimizes speed, conversion, and customer experience.

2. Online Store: A drag-and-drop online store builder lets you build a beautiful shopping experience with over 70 ready-to-use, customizable themes.

3. Shopify Payments: Whether it's a one-time payment or recurring payment, knowing that you will get paid fast, securely, and reliably is crucial to us.

4. Insights: This feature enables you to track subscription revenue in one place and view analytics across key customer touchpoints using just one interface.

5. Fulfillment: Take advantage of simplified shipping tools that can scale with your business, and save time with an inventory that stays accurate across all the places where you sell your products.

Shopify is a great platform for trying out the membership business model
Shopify Is One of the Greatest Platforms for Offering Memberships

Subscribers can access their membership information through the Customer Portal, apply stored credit to purchases and review their membership history through the portal. With so many great features for maintaining and improving the status of your shop/company, setting up subscriptions on Shopify is an excellent choice for promoting your business more than ever.

Final Thoughts

Whether you're just starting your membership business model or have been doing so for some time, you need a solution that matches your needs and perspectives, as well as takes care of managing your members.

Subify, the subscription and membership management Shopify app, is an all-in-one platform. By building membership landing pages and providing marketing and analytics insights, as well as facilitating orders and logistics, we simplify the start-up and growth process of a long-term customer-focused company.

Interested in trying it out? Click here; now is the time to get started.

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