For our industry to thrive, we need to diversify our revenue. We have to reduce our reliance on advertising and look for ways to generate reader revenue. And in 2018, there’s no better model than the membership program.

But you can’t just slap up a paywall and say “Presto! We’re a membership business now!”  

A membership will only work if you take it to the next level and give your paying customers a truly unique, customized, valuable experience.

Perhaps you’re asking, what can you do to stand out from the myriad of other content creators online? To get your creative juices flowing, let’s step outside our industry and look at how a couple of non-media companies created a lucrative membership model.

Restoration Hardware (RH)

Over the years, furniture retailer Restoration Hardware expanded their offerings and reach, but they encountered financial troubles around the time of the housing market collapse in 2008. On the verge of bankruptcy, the CEO decided It was time to re-focus.

As part of the new strategy, CEO Gary Friedman announced a membership option. For a $100 annual fee, members receive benefits including free shipping, discounts, and advanced access to sales.

Those “standard” membership benefits are nice, but RH takes it further, offering perks that feel highly personalized: a complimentary one-on-one consultation with RH’s in-house interior designers and a concierge to manage your orders.

RH understands the wants and needs of their best customers. The type of client who is spending $6,000 on a couch likely has a large home with lots of rooms to furnish, or perhaps even has multiple residences. This client is also likely busy with work and would benefit from services like a concierge to manage orders, or an interior designer to take some of the guesswork out of selecting, say, a dining room chandelier from a number of options. Plus it makes the member feel important!

This shift from traditional retailer to membership-based furnishing club has been wildly successful. Their stock price had risen to its highest levels in five and a half years.

REI

With REI’s co-op, a one-time $20 fee gets you a lifetime membership. The membership comes with a number of perks, including access to exclusive deals and discounts on products and programs.

Similar to what we see at RH, even greater than the money-saving benefits that come with membership is the access to the REI community. Through their programming—with classes in everything from rock climbing to paddleboarding, plus group trips to amazing locations around the world—REI brings together like-minded individuals who are excited about experiencing the great outdoors.

In addition to the community they create for their co-op members, they’re also passionate about giving back to the environment. Of course, people who enjoy outdoor activities are interested in conservation and stewardship, so REI’s co-op is committed to partnering with nonprofits in the environmental sector. In fact, they invested $8.8 million across 400 different nonprofits just last year.

It’s obvious that they’ve talked to their best customers and understand that community-building is an important part of what keeps them coming back to REI. That’s why they’re experiencing record growth, while competitor L.L. Bean struggles.

Why the RH and REI Memberships Work

It is all about understanding what you best customers want – tangibly and emotionally – and then creating a shared-values community around the benefits. I call this “focusing on your whales.” RH and REI didn’t just model off someone else’s membership program – they took the time to create a unique set of benefits that their best clients actually wanted!

At RH, while the discounts were the “rational” reasons for enrolling, the emotional benefits – feeling special and important by getting this personalized attention – were the real keys to success.

Any old store can sell you gear and offer you coupons. REI, however, helps you get you out into the wild where you can put that gear to good use, and fosters new friendships with people who share your interests and values. Saving money is a nice plus, but the real value is in the community.

So how do you distinguish yourself from your competitors?

The first step to monetizing your content and audience through a membership is creating a unique program, and you can only do that with research. Talk to your current users, analyze what your competitors are doing, and find your sweet spot. Don’t just copy and paste what worked for someone else.

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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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