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The following is a marketing article about membership
programs and marketing. As you will read, programs vary from business to
business, but it's the plastic membership card remains the center "image" of
the membership and, the object which creates the sense of belonging and
loyalty.
Membership marketing
By
David Frey
Not long ago my wife and I closed down a bank account that we had not
used in many years. I had tried to persuade my wife for many years that we
needed to close the account because we just weren’t using it and I didn’t
want to keep paying fees. But she insisted that we keep it open because
she was a “charter member” of the bank and didn’t want to lose her
privileges.
My wife is very frugal yet she was willing to continue to pay for
membership in something that she received no services or benefits from. It
was then that I realized just how powerful it is to “belong” to something.
It satisfies our deepest needs as human beings to be wanted, loved, and
appreciated.
Does Your Company Need to Establish a Membership Program?
I am often asked by businesses if a membership program would be
“right” for their company. In response, I offer the following “yes” or
“no” membership qualification test. Take the test and see if your company
needs a membership program.
Does your company…
- have to conserve its limited resources when providing service to its
customers?
- want to decrease customer turnover and dramatically improve customer
loyalty?
- need a constant, predictable stream of revenue?
- desire to sell its full suite of services with less effort?
- wish to get the more revenue out of its existing customers?
- aspire to significantly improve its referral business?
If you answered yes to one or more of the above questions, your company
could benefit from establishing a membership program. Okay, you’re
probably saying, “There isn’t a company in existence that wouldn’t say yes
to one of the above questions.” and that is exactly my point. Every
business can benefit from a membership program and should establish some
form of membership marketing.
Take a Closer Look at the Benefits
Membership programs provide powerful benefits that will improve your
company’s performance. Let’s take a closer look at the benefits that were
just mentioned.
- Conserves limited company resources – Resources are allocated
according to the customers’ level of membership (i.e. lower membership
level = less resources, higher membership level = more resources).
- Increases customer loyalty – Membership provides a sense of
belonging to an organization, which breeds loyalty.
- Provides a predictable stream of revenue – Instead of
sporadically selling products and services, membership programs provide
a steady stream of customers providing a steady stream of cash flow.
- Sells more services and products with less effort – Because
slow moving or less desirable products and services are included in
membership packages people are more likely to take advantage of them.
- More revenue from existing customers – Multi-level membership
programs incentivize customers to spend more by moving up to higher
levels of the program.
- Improves referral business – People like to tell their
friends about a company to which they feel a sense of loyalty.
Types of Membership Programs
When you think of being a “member” of a business most people think of
Sam’s Club or country clubs but membership programs can take on many
forms. The following is an example of different types of membership
programs, which include a business selling, (a) hard good products, (b) a
company selling service, and lastly, (c) a company selling knowledge.
Every business on the planet will fall under one of these business
categories so there is something to learn for every businessperson from
the following three membership program examples:
Costco – Business and consumer supplies superstore.
Gold Star Membership - Allows consumers to purchase products
for personal use at any Costco throughout the world.
Business Membership - Allows businesses to purchase products
for business, personal and resale* use.
Executive Membership - Allows consumers and businesses to save
money by offering exclusive services such as a 2% reward, business
loans, and credit card processing, larger gift certificates for mortgage
or real estate transactions, travel benefits and lower prices on check
printing.
Hertz – Car rental company
Hertz #1 Club – Private club number automatically fills out
your information form, this speeding the rental process.
Hertz #1 Club Express – Available only to Hertz #1 Club
members and provides an exclusive checkout counter for express members
only.
Hertz #1 Awards - Available only to Hertz #1 Club members and
allows you to earn points for every qualifying dollar you spend on
business and leisure rentals that can be redeemed for prizes and air
travel mileage.
Kennedy Inner Circle, Inc. – Marketing consulting services company
Silver Inner Circle – Receives monthly newsletter, periodic
free tele-consulting calls, invitations to “marketing roundtables”, and
discounts on information products.
Gold – Includes Silver membership benefits plus monthly taped
interviews with marketing experts, exclusive additions to monthly
newsletter, longer call in times, access to special member’s area of
website containing newsletter past issues and articles, and receipt of
three marketing books during the year.
Gold+ - Includes Silver and Gold membership benefits plus
one-on-one and group based tele-coaching, printed materials, additional
coaching call-in days, and weekly success-stimulator faxes.
Gold + VIP – Includes Silver, Gold, and Gold+ membership
benefits plus three “mastermind group meetings” two days each with
personal coaching.
Platinum – Includes Silver, Gold, Gold+, and Gold+ VIP
membership benefits plus four mastermind group meetings. This level is
by invitation only.
The following are several elements from these examples that are
important to a successful membership program. Each company provides
different membership levels with more offerings of service, discounts,
speed, and accessibility at each higher level.
- In the case of Costco, programs are targeted toward different
demographic groups with an increasing number of discount options.
- In the case of Hertz, the express level increases accessibility and
thus, speeds the fulfillment process. Also awards are given based on
purchase volume motivating buyers to purchase more.
- In the case of Kennedy Inner Circle, each membership program offers
a higher level of accessibility to more in depth information.
Not every membership program has to be multi-level like those in the
examples but they do need to provide an exclusive set of benefits that
aren’t available to regular customers.
Let’s examine some membership benefit possibilities for various small
businesses.
Dry Cleaner
Basic Membership – 10 % discount on all cleaning
Premium Membership – 10 % discount plus express counter service,
pickup and delivery, free alterations
Certified Public Accountant
Basic Membership – Monthly tax saving teleconference calls, free
newsletter
Premium Membership – Teleconference calls and newsletter plus express
call-in question and answer service, monthly one-on-one consulting, and
monthly mastermind networking meeting.
Oil and Lube Franchise
Basic Membership – Reminder email service, free complete car
cleaning, premium grade motor oil.
Premium Membership – Email service, car cleaning, motor oil, plus
free automatic transmission fluid changing, engine cleaning, tire
rotation, and one oil change a month.
Movie Theatre
Basic Membership – 5 movies monthly for the price of three.
Premium Membership – 8 movies monthly for the price of five, monthly
movie review newsletter, express window, web-based ticket buying
In every business there are products and services that you can package
to provide as premium services in your membership program. It just takes a
little creativity. If you only offer one service or product, create more
services and package them up to offer in a membership program.
Pricing of Membership Programs
Membership programs have many pricing models and must be tested to
determine the right price for your business and clientele. However,
pricing your lower membership levels inexpensively is a smart tactic. Your
goal should be to convert your customers into members so that they’ll
begin to feel an affinity to your business.
After your customers have joined, then you can begin to start the
upsell process by providing tempting offers to move up the membership
ladder. Look at your first membership level as a “loss-leader.”
For example, it only costs $10 a year to be a member of Sam’s Club.
It’s free to be a member of Hollywood Video (video chain store). It costs
$25 annually to be a member of my local library. The low membership fees
serve to attract people into the program, but because it’s not completely
free, customers will place a value on their membership and use it.
Renewals: The Key to Membership Program Success
It’s one thing to package your services into a membership program and
sell it, but sustaining your subscribership by getting customers to renew
is another. If you don’t provide value and keep your promises during your
customer’s membership, it will be difficult to get them to renew.
To be honest, even if you have kept your promise and provided value it
can be difficult to get people to renew. Magazines consistently have this
problem. In fact, companies have been established with the sole purpose to
help other companies to maintain a high renewal rate.
The key to getting your members to renew is to provide value beyond
what was promised and to offer incentives to renew. The incentives should
have a low cost to you and a high perceived value from your member. For
instance, suppose you offer a paid newsletter service. Your renewal offer
might include several free teleseminars or a free discount coupons from a
popular vendor that advertises in your newsletter.
Another option to improve your renewal rate is to sell renewals upfront
by offering multiple period memberships at a discounted price. For
instance, when you offer a one-year VIP membership at your restaurant,
upsell the offer with a second year at a 35% discount.
Locking your customers into multiple period membership programs should
be an important goal. Because your customer was willing to buy the first
period, they’ll be inclined to consider multiple years…if the offer is
right. A powerful hidden benefit of locking your customer into a long-term
membership program is that you’ll also be locking out your competition!
Use Membership Cards
Open you wallet right now and you’ll probably see several membership
cards. That’s how I came up with the membership prices for Sam’s Club,
Hollywood Video, and the local library. I also have a membership card from
my local grocer, health club, and airlines (Continental and Southwest).
Membership cards serve several purposes beyond just holding my personal
and transaction information. It serves as a gentle reminder for your
customer to take advantage of their membership. You can also use it as
physical evidence for proof of membership. In addition, you can use it to
mark off visits or purchases of specific product much like a subway
sandwich card.
You might even consider establishing your own charge card. According to
stats from GE Card Services, store credit cardholders will spend at least
50% more each year with that retailer than a customer not carrying the
retailer’s card. Offering a credit card also makes it easier for your
members to buy your products by providing installment payments.
Conclusion
Membership programs help to properly allocated company resources,
increase customer loyalty, provide predictable revenue streams, sells more
products and services, generates higher revenue per customer, and improve
referrals. Every business has products and services they can package into
a membership program.
Make it easy to enter your membership program and once you have a good
membership base, focus on renewing your members to keep them in the
program. Use a physical membership indicator to not only improve data
tracking, but to remind your member to use their privileges.
Andreonicards.com offers you superior plastic membership cards that will give you
everything needed to make your card one that your clients will keep. Award winning designs,
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