How to build a sustainable membership program

Learn how you can build a membership program that puts your business or organization on the path to sustainability.

When most people think about membership programs, they think about nonprofits. Every year, usually in December, they hear a radio pitch, or they get an “urgent request” in their email inbox or — yes, even in 2020 — they find an actual real-life letter asking them to “renew their membership,” or for their “continued support.” These drives are make-or-break moments for many organizations.

But look outside of the nonprofit world, and you’ll find membership programs that take far less work, while making up the vast majority of revenue in certain sectors. CSAs are like membership programs for sustainable agriculture from local farms. Locking yourself into a 6-month gym membership is one way to ensure you’ll take the time to get in shape.

Pricing your memberships: the 20-70-140 rule

The first question people will have about your membership program is: How much does it cost?

We’ve found that the most successful pricing is based on your business’s Average Order Value (AOV), which is the average amount that any customer spends per visit to your business, whether online or in-person. We keep it simple with three tiers, following the “20-70-140 rule,” which we call Fan, Friend, and Family:

• Fan: 20% of the AOV is like a “tip,” showing they like what you do.
• Friend: 70% of the AOV is pretty close to what they probably just spent, and means they’re a dedicated customer.
• Family: 140% of the AOV is something special. These are your biggest fans, and will not only become monthly members but will also probably increase their purchasing based on their membership.

Most members on Withfriends stay members for two years. This means that even a “Fan” membership is worth 350% of your AOV!

How to entice your customers to the higher tiers

When we ask members why they sign up for their memberships, they overwhelmingly respond, “I want to support the business.” But while supporting your business might them to sign up at the “Fan” level, a well-crafted set of higher-priced benefits can tip the scales toward those premium tiers.

Remember: a member at the “Friend” level is supporting your business at 350% of the price of the “Fan” level.

Your “Friend” and “Family” tiers should have exclusive gifts and benefits that remind your fans why they’re members. This means early access to your best merch, discounts on package deals, and even quarterly or monthly deliveries of products. (Consumable products like specialty foods and beverages are great for these tiers.) Discounts are a huge motivator, but they don’t have to break the bank to be enticing.

If you’re worried about bad actors taking advantage of your membership program, Withfriends provides a dashboard showing detailed discount usage reports to ensure that you’re making a profit on your memberships.

Announcing, asking, and communicating

Once you’ve built your membership program, it’s time to tell the world. But while it can be exciting at first, lots of membership programs fail because they require too much upkeep. We’ve found that making it easy for a busy small business owner to run a successful membership program requires three key components: announcing, asking, and communicating.

Announcing to all your members

A big announcement can mean a huge bump in your first-month’s revenue. Because of that it’s important to consolidate all of your customer data, especially email addresses, and send an announcement to your full mailing list. You might want to also remind customers of something they recently purchased at your business, especially if it has been a while, to ensure that they feel connected to your product or organization.

We’ve found that a well-crafted announcement with a clear call-to-action can convert anywhere from 2-7% of your past customers into members. That means that if you have 1,000 customers over the last year, you could have 70 members instantly, adding approximately $1,500 monthly revenue for your business.

Consolidating all your customer data can be complicated. Withfriends can announce your new membership program to all your past customers from your Shopify, Square, or Eventbrite store, automatically, with one click. (If you don’t have one of our supported platforms you can always upload a spreadsheet, and we’re adding new platforms all the time.)

Asking with an upsell

Membership programs that rely on real-life humans to do all the work are extraordinarily difficult to maintain — let alone get off the ground. Yet, the alternative that most websites reach for is often just a button or, worse, a pop-up ad that interrupts an entirely different user flow.

It often seems like there are only two options: either sink a ton of time and energy into your membership program, or passively wait for people to notice you.

Our solution is simple. Catch the customer when their wallet is already open, automatically.

Our solution is simple. Catch the customer when their wallet is already open, automatically. It’s important to tell your customers about your membership program every time they make a purchase, and to reach them however you can. The most effective way to do this is by setting a custom “Thank You” page on your online store, and redirecting to a membership upsell.

Finally, we’ve found that adding a rebate, even if it’s just $2, can be highly motivating.

At Withfriends, we’ve dedicated many hours to perfecting our Shopify, Square, Eventbrite, and custom ticketing upsells, so that the customer sees a pitch for a membership as soon as they complete checkout. We automatically calculate a rebate based on a percentage of their most recent purchase, so that there’s never a rebate larger than the order itself.

Communicating with your members

Your members are not just passive — they’re also your most dedicated customers! Communicating with your members is important not just to reduce “churn,” but also to give you insights into what your most dedicated customers think about your business.

You have your very own focus group that allows you to stay in touch with those who care the most about your business and product.

Curious what new line of herbal tea blends to sell? Ask your members! With your new membership program, you have your very own focus group that allows you to stay in touch with those who care the most about your business and product. This connection not only encourages your members to stick around, but it also allows you to make your membership program and business as a whole more attractive to future customers.

Withfriends makes it easy to message members by tier, individually, or all at once, to announce new products or remind them of benefits that they haven’t taken advantage of. We also automate this communication when you change certain membership benefits, so you don’t have to worry about ensuring your members know about their latest membership program perks.

How the right membership software can help

Most people think of membership software as something that’s in the background, and that is only ever seen by the business or organization employees. We believe that’s misguided. As your most dedicated customers, your members are actively invested in your business, and it’s important to choose membership software that’s easy to use, not just for you but for your members as well!

We’ve found that, with our checkout upsell, an average of 5-7% of people purchasing from your e-commerce site will become regular members. If you have 100 customers a month, that means you’ll have, on average, 60 members by the end of the year paying an average of $22 every month. With this formula, businesses can increase their revenue by 60% just by turning on memberships.

Withfriends never charges you a monthly fee, so you’ll never see a bill from us. Instead, we receive 10% of your total membership revenue. This means that our goal is to make you the most revenue possible — when you succeed, we succeed.

Questions? Let’s get started!

If you have any questions about this article, we’d love to hear from you! Drop us a line at team@withfriends.co, and while you’re at it get started setting up your own membership program. We’d love to hear what you think.