Membership magic : building communities in the digital age

Membership-like structures can be traced back to ancient civilizations, where craftsmen and artisans formed guilds. These groups provided a sense of community to the members. Communities build relationships, and are a catalyst for building brand loyalty.

In a world of digital noise, people crave connection. Memberships are the secret sauce for keeping customers close — they’re exclusive and exciting because what else is a better way than locking users faith and trust while also sparking moments of joy.

Loyalty is a game changer because happy customers can’t help but spread the word - it’s marketing that money can't buy and statistics also show that an increase in customer retention by 5% can lead to a company’s profits growing by 25% to around 95% over a period of time. Acquiring a new customer is more expensive than to retain an existing one  and hence,  the prospect of creating a loyal following is fundamental to adding value.

How to unlock the potential of Memberships

Understanding the needs and expectations of users helps uncover actionable insights which drives user engagement. While exploring strategic approaches to designing a membership program, an important question to ask is - What value are we providing the user?

Customers are driven by their goals, and they’ll be loyal to the company which helps them achieve those. Basis our research, we've found that there are some tangible and effective ways to attract and engage users such as:

Advancing immediate benefits

Providing a compelling reason for users as soon as they sign up for the membership program motivates them to stay for the longer run. 

Imagine opening a treasure chest and finding it packed with instant delights, it takes the user's excitement from zero to hero. This could be in the form of an immediate discount on the items in the cart, free delivery on all purchases, or even exclusive member-only benefits and loyalty points.

Highlighting short-term gains

The delight when you know that you’ve hit gold - the satisfaction creates a positive feedback loop. One must ensure that the benefits are clearly defined with eye-catching visuals and action-oriented CTAs that will help establish trust in the brand.

Hyperbolic discounting is a cognitive bias where people tend to value the present more than the future, particularly in decisions involving rewards and benefits.

Offering progressive rewards.

What if each surprise in the treasure chest is better than the last? It is essential to consistently give value-driving offers to maintain long-term relationships. This could be a progressively increasing discount coupon with multiple bookings or even loyalty points that can be redeemed to avail cash benefits.

While these seem like rational and straightforward benefits, it is important to also focus on the emotional value by always highlighting the key propositions. One such example could be designing around emotional tenets—identity, community, and experience while also presenting different starting points and opportunities for membership offerings during the users flow. 

Starbucks is great example of a well designed membership model and innovative loyalty program - ‘Starbucks rewards’. 

Personalisation and rewards - 
This coffee brand has extended its program beyond purchases and uses customer data to provide personalised promotions and rewards, ensuring that each member feels recognised and valued.  It’s worth mentioning that the program operates different based on user patterns in each country they are present. 

Fostering a sense of belonging - 
All members are invited to exclusive events, have access to new products and exclusive deals. The coffee chain allows customers to earn stars through both Starbucks locations and non-Starbucks retailers by purchasing coffee beans and other products. 

Enhancing customer interactions - 
The Starbucks mobile app is highly rated for its user-friendly design, making it easy for customers to engage with the program. They have multiple touchpoint to join the program as well as multiple payment options to enhance convinience. 

Identifying and implementing the best benefits and rewards in your membership's secret sauce provides assurance and delight to users, reinforcing what we as a brand offer.

Types of memberships -

At Headout, we explored options to curate a membership program and we narrowed down to broadly 2 types of memberships — Paid and Non-Paid. To further classify them, they could be Tiered or Non-Tiered. Let's take a look at examples of how different brands leverage these membership models -

Paid and tiered membership

Paid-tiered membership is a model where users pay for access to different levels or tiers of benefits and privileges. It caters to a wide range of customer preferences and provides a scalable pricing structure allowing users to choose based on preference and budget.

Cult.fit has defined tiers that offer fixed benefits and users need to pay a fee to become a member for any tier.

Paid and non-tiered membership

The non-tiered, paid membership offers members to pay a single, consistent fee to access the same set of perks and benefits. There are no varying membership levels or tiers with different pricing or levels of access.

With Amazon, the user is required to pay a fixed fee to get access to multiple benefits. Here, there are no multiple types of tiers that they can choose from and opt in.

Free and tiered membership

Free-tiered membership is a model where users can sign up to be a part of the program for free but would have to spend to keep levelling up and unlock more benefits and rewards. Adidas is an interesting example where with each purchase the users collect points and levels up to unlock coupons that they could redeem with their next purchase. 

Free and non-tiered membership

The non-tiered, free membership has only one level of membership, and it is offered to users or customers without any fee. In this model, there are no premium or paid tiers with additional features or benefits.

Nike uses its membership model to build a community and offers the same discount to everyone who joins in.

After going through multiple brands and how they structure their membership program, we noticed a pattern very similar to the models discussed above. While building a program that aims to keep the audience engaged, it's essential to curate an experience driven by cost and convenience. Each company has its own requirements, limitations to what incentives they can offer along with the goal of why they require a membership program. 

Hence, one must carefully understand to define the purpose, aligned with company goals and then pick their membership model or curate one that specially caters to their needs.

Stay tuned to find out how we at Headout are curating the best selections of spices to build our perfect membership program!

This blog could not have crafted without some talented folks in the team. Special thanks to  Ajith Shaji for helping us with the illustrations that truly bring our words to life. A big shoutout to Palaq Ganatra and Amulya Chintaluri for proofreading the content and making sure it's clear and engaging. And, lastly heartfelt thanks to Mukul Chaturvedi and Ramakrishna V for their unwavering support and guidance.