Could a membership site be a good fit for your business? In The Automatic Customer, John Warrillow argues that yes, every business can benefit from a subscription arm.
I’m inclined to agree. Here’s why:
1. It takes you off the cashflow rollercoaster.
Having a baseline of predictable monthly payments coming in sure does create a nice cushion on which to build a business. Even if you have a “churn rate” of 20 percent — where a slice of your customers decide to quit, if you’re doing a good job of providing value, many will be with you for a long time.
2. It creates raving fans faster.
Building something where you provide a ridiculous amount of value for a very low fee makes people feel like they got a tremendous deal. They’ll then want to brag about it to friends and family, which means more business for you.
3. It speaks to people’s desires to rent or test rather than own.
Companies such as Netflix, iTunes, Birchbox, Dollar Shave Club, etc. have trained us to want easy access at low prices. You could look at it as low ticket or you could realize that technology has basically made it easy for you to charge people while you build a relationship with them. You can monetize the process much earlier than you could with a higher-ticket item.
4. It allows you to create a fertile community to test market ideas.
Not all membership sites have community built in, but when you do, it’s a brilliant place to run polls or ask for feedback on products either before or during the building process. It saves so much time and money to build exactly what your paying customers are telling you they’re willing to purchase. Staying deeply involved also helps you see gaps in your current offerings so you can quickly create paid (or free) solutions to further drive engagement.
5. It’s the foundation for an empire.
Costco and Amazon charge you a recurring subscription. Because you’ve paid them and are assured of certain benefits (free shipping, low prices, bulk packaging, etc.), you’re now much more resistant to purchase elsewhere. So while Amazon started with books, it has now taken over your life. Costco started with your kitchen and has crept into auto insurance!
Basically, the formula goes like this: Make it irresistible for a customer to join your subscription program. Build trust by offering amazing value. Widen your offerings and offer premium services that people will now purchase more willingly because they know, like and trust you.