There’s a ton of buzz out there about membership programs for publishers. Whenever a trend gets hot, we like to ask: What is the real problem we’re solving?

Doing so enables us to avoid the trap of focusing on a passing fad.

So in this case, the real problem memberships solve is that they create a direct and meaningful relationship with your best customers. These relationships lead to higher lifetime value, higher margins, and lower customer acquisition costs.

  • Higher lifetime value comes from the recurring revenue nature of a membership model. The burden is on us to make the membership so valuable that members renew year after year.
  • Higher margins come from cutting out the middleman. When you go direct to your end users, you don’t need to give distribution channels a chunk of your revenue.
  • Lower acquisition costs come from the positive buzz that members create and spread. Do a good job with your membership, and develop a free advertising base.

Not too shabby, eh?

Media: Overcoming Advertising Revenue Strife

For years, most media companies made their money off of their advertisers, not their audience (readers, viewers, listeners). By shifting strategy and focusing on delivering value to the most engaged portion of their audiences—their whales—media companies have found new revenue streams.

Think of websites like the New York Times, or over the top streaming services like CBS All Access. The New York Times now generates nearly two-thirds of its revenue from readers, with online subscriptions jumping by 20 percent between 2017 and 2018.

Warning: Subscription Does not Necessarily Equal Membership

Who doesn’t love recurring revenue? Subscriptions are just an example of a business model. By themselves, they do not necessarily constitute a membership. I’ve seen many companies claim to have a membership model, but in reality it was just a subscription to what they were already doing. Publishers are particularly guilty of this crime. They’re apt to say, “Hey, let’s throw up a paywall to gate what used to be free and call it a membership.” Sorry, that doesn’t work.

Focus on an engaged niche within your market.

You can’t be everything to everyone. Get started by focusing on your whales—your best customers.

Memberships must provide meaningful tangible and emotional benefits to your members. What problem are you solving, and how does that make members feel better—more entertained, more recognized, more appreciated, or more confident?

 

Editor’s note: This article is an edited version of the original, “The Real Problem Memberships Solve.”

 

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More about Rob: Rob Ristagno drives dramatic digital revenue growth for media companies. He is an award-winning speaker, author, and the CEO of The Sterling Woods Group, a firm that partners with publishers to refocus digital marketing efforts and to launch “start ups” from within.

Rob is the author of A Member is Worth a Thousand Visitors, which details the five forces proven to drive successful digital membership programs.
Prior to starting Sterling Woods, Rob was a senior executive at several niche media and e-commerce businesses, including America’s Test Kitchen, where he was COO. He started his career as a consultant at McKinsey. He lives outside Boston with his wife, Kate, daughter, Leni, and black lab, Royce.

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