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//Tuesday d. 9.01.18

Turn your customers into members

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Written by Morten Suhr Hansen

We all know the stories about the successful companies that takes all headlines and large investments – companies such as Facebook, Uber, Netflix, Airbnb and LinkedIn. But what do these fast-growing companies have in common?

According to the American writer, Robbie Kellman Baxter, who has written the book ”The Membership Economy”, they are all part of a new trend that involves successful companies turning their customers into members. This trend establishes a framework for what we call the new membership economy.

Obviously, we have been aware of memberships in all kinds of organisations for many years. But the new thing is that commercial companies think of their customers as members – and that customers also consider themselves as members of the companies that they choose to deal with.

Baxter’s point is based on human nature: We turn towards communities. And as many of the established communities disappear or change, we increasingly seek grounds to find places to ”belong to”. That is why we, as customers, like to do something extra and why we are often willing to pay for these connections. That is the essence of the membership economy.

In many ways, there is a strong connection between the new membership economy and the strong subscription wave that we have experienced for the past couple of years. For example, many membership companies use the subscription model as their business model. But not everyone – so there are some differences. Subscription is basically about a business model with a series of recurring payments, while membership is the feeling and the belonging that exists between a company and its members.

The value that many membership companies get out of this association to its members is indisputable. Membership is the ultimate way of loyalty and a membership company can convert this loyalty into long-term customer lifecycles and recurring revenue.

In recent years, the sharing economy has experienced a great focus and interest and draws upon the logic behind memberships. The same goes for many of the social, digital services such as Linkedin, Facebook, Twitter and Instagram. This is quite interesting in a time, where social media has experienced a solid progress, while the traditional media has been struggling. Is this caused by the fact that social media offers its customers a membership, where they become a part of a community with other members, while the traditional media ”only” offers its customers a subscription?

It is not that black and white. Some traditional media – especially newspapers – also build communities. Hence, the crisis of the traditional media is more likely about the transition from old to new technology and an increased competition of time and attention. Nevertheless, I think that the traditional media could learn from the new membership companies and their approach to their members. They have a special ability to create engagement and value and get members to interact both with the company and other members.

Is this critical point unique to media companies? No. Every company across industries should ask itself the general question: Do those who pay for our products see themselves as customers or members?