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Our Guide To Paid Membership Programs: The Benefits & Building Blocks

Our Guide To Paid Membership Programs: The Benefits & Building Blocks

Our latest guide on launching a paid membership program includes everything you need to know to start your program and enhance it—with real-life inspiration from Recharge merchants. As customer acquisition costs have risen 222% since 2013, loyalty and customer retention have become even more important for ecommerce stores.

In this post, we’ll cover the benefits explored in the guide of offering a paid membership program, as well as the building blocks that can help merchants start their program on the right foot. With proper iteration and refining, your brand can offer a successful and enticing membership program that will increase loyalty and customer lifetime value (LTV). 

Key takeaways

  • Paid membership programs can help ecommerce brands increase customer LTV and drive additional revenue.
  • Gain valuable insights into your customers’ preferences and needs through a membership program.
  • There are many different benefits that merchants can offer to attract and retain their customers.

Why should my brand offer a paid membership program?

The business case and the benefits of paid membership programs go hand-in-hand. Paid membership programs give your store the opportunity to reward your most loyal customers, while also providing an incentive for them to continue shopping with you. Below, we’ll highlight three of the main benefits of paid membership programs.

Increase customer LTV: Studies have shown that paying members are worth several times more than non-paying customers—making paid membership programs a powerful way to increase LTV. They encourage repeat purchases and keep customers engaged, thanks to the valuable benefits they offer.

Gain valuable insights from members: The value of members goes beyond just their worth in dollars, they can also provide very meaningful information for your brand about your customer base. When shoppers make a purchase through a store or a large DTC online marketplace, your brand misses out on valuable data. Memberships instead encourage direct purchases—allowing you to get to know your customers on a much deeper level.

Drive additional revenue: With a membership program and the insights gained from members, ecommerce brands can transform their brand and their program to better reflect what their customers want. The longer your brand has a paid membership program, the more valuable it will become, especially as marketing costs rise and customer data becomes harder to access. 

Creating a membership program that will attract & retain customers

In our guide, we also cover the essential building blocks of paid membership programs. Here we’ll discuss both the tactics that brands can use to reward their members and add value to their program, plus the crucial pricing strategies to consider.

Of course, with different brands come different benefits and pricing, depending on their mission and their customer base. It’s important for brands to compare with others in their industry and even with indirect competitors that have successful membership programs, to get an idea of what works well and how they can create their own valuable program. 

Merchants need to consider memberships as a balance: The value to customers must outweigh the cost. At the same time, the revenue it brings in has to exceed the cost of the program. 

Benefit tactics

One of the most important aspects of building your membership program will be determining which benefits are included for members. To get started, here are some of the most popular benefits that paid memberships typically offer:

  • Storewide discounts or special member pricing
  • Free, discounted, and/or premium shipping options
  • Store credit or cash back
  • Exclusive or early access to new products or sales
  • Exclusive access to content
  • Exclusive access to community spaces
  • Members-only events
  • Free gifts

In order to offer the most enticing benefits for your customers, your brand will need to do some research and gain insights from current customers—through surveys and analyzing customer preferences, you can create strong benefit tactics for your paid membership.

Pricing strategies

As mentioned above, your membership’s value must exceed the cost to join. Customers are making a financial commitment to your brand with their membership, so the benefits must correlate with their membership fee. Brands can go one of two ways with their membership cost, either:

  • The volume of product or discounts and other benefits must pay for the price of the membership
  • Or the membership must grant access to valuable benefits that would otherwise be unavailable

There are a number of factors to consider beyond these two options when considering pricing. What is the monetary value of each of your benefits to your customers? How frequently will members pay their fees? How frequently are they shopping with you?

Each of these questions—along with determining whether or not you plan to offer different levels of membership with different benefits and pricing—will help you determine the right fees for your program. It’s also crucial to consider average order value (AOV) and LTV in comparison to your fee. Your monthly membership cost shouldn’t exceed your AOV.

Paving the way for a successful paid membership program

With the right tactics and strategies, your ecommerce business can create a successful paid membership program and start reaping the rewards, along with your members. 

The value of a successful paid membership program will just increase with time, as you hone your offerings to give customers exactly what they’re looking for. For more information and inspiration, check out our guide, The ecommerce membership advantage.

At Recharge, we value privacy and handle personal information accordingly. Learn more about how we handle personal information by reviewing our Trust Center.

Special thanks to our friends at ReCharge Payments for their insights on this topic.
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