Retention strategies for a sustainable, profitable membership business

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Membership sites are the envy of many business owners, because they create long-term, loyal relationships and consistent revenue. 

After successfully launching a membership site, many owners begin to obsess with membership retention. Keeping members for the long term is the best way to make this offer profitable. 

Strong memberships have baked in retention before they launch. 

A lot of business owners quickly throw up membership sites, without thinking about program design – how to deliver out-of-this-world value to members by setting a clear purpose for the group and getting clear on members ultimate goals. 

This lack of long-term thinking will decrease member retention. 

Setting one year as a goal for keeping each member makes planning our content or training easier. It’s also a healthy length of time for them to implement what they’ve learned from since joining. 

How member retention is evaluated

There are two ways to track the ongoing health of a membership program. One is the lifetime value (LTV) of our members. LTV can helps us understand how much revenue each member brings into the business. 

If you take the average of this amount, you’ll be able to track how much you earn in revenue from each member. That will help you evaluate how much you’re willing to spend to acquire each sale. 

We can compare the cost of getting a new person to join vs. keeping a current one.

On average, it costs 7-10 times more to win a new member than it does to hold on to an existing one. Client acquisition can be costly (especially when you use affiliates or advertising to drive sales) and constant churn can make your membership site cost as much to run as you get from those sales. 

Zero profit is certainly not the goal. 

So the next metric used to track retention is the churn rate.

A good churn rate is 5% and the highest you’ll get away with is 20%. That means 1 in 20 and 1 in 5 members leaving every month, respectively.

If you want to grow your membership, having to replace 20% with new ones every month just to maintain your current numbers isn’t sustainable.

All this makes membership retention strategies critical.

In this blog, we’ll teach you 5 long-term strategies and 5 tactics you can implement to reduce churn and grow your membership site.

Subscription models are #trending 

Despite this challenge, membership programs are more appealing than ever as they serve buyers who have been burned by buying high ticket programs that didn’t give them a big return and for those who realize learning at their own pace works much better for them. 

Memberships give participants three important benefits:

  1. Connection – people are craving community more and more in this fragile, disconnected world. Creating an inclusive and safe space for them to retreat from the masses is a huge benefit to many. 
  2. Low barrier to entry – paying lower monthly fees for access to support is much less intimidating than joining high-ticket, time-bound programs especially in economic uncertainty. 
  3. Marketable skills – many individuals are looking outside of their current job for added income and security and using memberships to learn new skills and find out which ones they need to stay relevant in their field. 

Every single day a large number of business owners are making the decision to launch membership sites, and they are doing it either in addition to what their current offers or replacing other program formats altogether. 

Technology businesses are very aware of this growing trend: 

  • In a 2020 survey of senior finance executives, more than 50% of respondents said at least 40% of their organizations’ revenues were recurring, sold via a subscription model (CFO).
  • According to the IDC, by 2022, 53% of all software revenue will be purchased with a subscription model (Digitalist).

In other words, consumers are getting used to subscription models – so it makes sense to incorporate this option into our own businesses. 

Now that you’re convinced of the value of serving clients through a membership model, let’s talk about how to keep them. 

Five membership retention strategies to ensure longevity

A well thought through membership retention strategy will outperform any kind of tactical moves any day, and mapping out your strategy will help guide your tactical moves. Let’s look at how to ensure your program will become more self-sustaining from its very foundation.

1) Provide the transformation they need (and remind them of it)

Every product or service in the world needs to meet its buyer’s goal. Whether it’s to look good, feel good, have more, spend less – it must be clear what a purchaser ultimately gets when they buy. 

Harvard Business Review calls these Elements of Value. The value proposition of your offer gets stronger as it meets people higher up the hierarchy of value.  

When offering customized services one-to-one, it’s easy to track customer satisfaction. You can always alter the offer to make sure they get what they want at the end of your contract. 

With a group offer, like a membership site, participants may have come from a number of different sources and all have different expectations about the benefits they receive from joining. 

To effectively increase membership you need to be clear on the main objective for the group. 

Here are a few common types of monthly recurring membership programs with different purposes: 

  1. Education – Increasing skills & capabilities through knowledge
  2. Coaching – Provides access to in-time mentorship
  3. Community – A space for like-minded people with common interests

Each one of these emphasizes the core benefit a member will receive. It’s a bonus when all three of these are present but they don’t have to be to make a membership site successful. 

Being clear on the outcomes your top members achieve will help you facilitate more of those results.

In addition, knowing the transformation your ideal members desire will prevent you from going down the rabbit hole of adding features that are “nice-to-haves” instead of continuing to deliver on benefits your customers can’t live without. 

Whatever this is for your community, it needs to be clearly articulated in the messaging before people buy on the membership sales page. This will save you the costly mistake of bringing in people who’d never be satisfied with your program in the first place. 

2) Niche harder than you thought you could  

Whether or not your membership site started out as broad or very niched from the start, the more narrow it becomes the more relevant it will stay. 

What people are looking for and will continue to pay for is hyper-relevancy, because almost everything is available online for free if you’re willing to put the time into finding it.

This is why having the type of content that subscribers can’t conveniently find or create, the coaching support they can get exactly when they need it, or a sounding board from their peers who are in the same boat is invaluable. 

The more watered down this focus, the less relevant it will be to your audience. If a month or two goes by and they haven’t found the information or support useful, they’ll question the value of it – and may go looking for another solution that focuses more on their specific needs. 

Since there are a lot of places and people who can serve your audience, consider narrowing the focus of your program to be more relevant to your top engagers. The people who are getting the most out of your program now are the ones who you’ll want to continue to attract in the future (as they’ll likely stay). 

Tiffany Aliche from the The Budgetnista is a great example of a hyper-niche membership site:  she teaches personal finance, specifically to women (mostly women of color).

“I want to help women, especially black women, live richer lives. Because we have been left out of the financial conversation for so long.”
~ TIFFANY ALICHE

Not only is her niche specific and clear, it’s highly compelling.

3) Make a great first impression when onboarding

As with anything, first impressions do matter. The first experience your customer has as a paid member will set the stage for ongoing engagement. 

How they perceive the value of the program doesn’t stop after the sale; they’ll be evaluating it for a lot longer. 

Make sure you greet them warmly and get them engaged. This may include a welcome video from you personally and clear instructions on how to use the material or group right away. 

This is not the time to have a complex or convoluted technical path to signing up. A smooth platform like Thinkific will make onboarding many people at once as simple and seamless as doing it one at a time. 

If your program is group-oriented, make sure either you introduce them or ask them to introduce themselves to get them active immediately. 

4) Map your customer’s journey

A person who joined your membership program a year ago does not have the same challenges, opportunities or even desires that they had when they joined. 

Staying keenly aware of their evolving needs allows you to create content or features that will meet their objectives throughout their customer journey, if it still makes sense for them to stay at that point. 

Once you understand their journey, you can figure out what you need to facilitate for them at each point, and from there create pieces of the experience for them more tactically. 

This is community mapping. Sophie Bujold has been a community strategist for many years. She primarily helps her clients map out the core components they need to deliver to their community. 

“By having these components mapped out you can have tracks in the membership which doesn’t bombard them with everything you’ve got at once.”

~ SOPHIE BUJOLD, CLIQUEWORTHY

Community mapping also prevents the mistake that many membership community leaders make – over-planning events and over-delivering content, only to find out that members aren’t using the majority of it. 

5) Continue to show up as the leader

One of the biggest mistakes business owners make with paid membership sites do is attempt to set it and forget it. Meaning they want it to work without them in the first few years of its inception.

Many members join originally because they are fans of the founder and when that founder fails to show up to lead regularly, their connection to the entire program dissipates. 

Part of this commitment to showing up includes creating connection consistently. Monthly themes and weekly prompts keep the group connected and engaged and continues to lead members towards their transformation.

Five membership retention tactics to incentivize members to stay

Tackling those big strategies above are going to improve subscription retention for the long term. But there are still a few immediate tactics you can activate to secure fence-sitting members right now. 

1) Highlight member success with case studies

When business owners think of testimonials, they relate it to how they can encourage a sale. But case studies can be equally powerful for inspiration and to ignite action within a community long after purchase.

Some participants don’t get the full benefit of the programs they join because they don’t know how to apply what they learn to their unique situation. 

Because people often connect through stories, when they see how other members have grown, succeeded, or overcome challenges during their time in the group, they’re more likely to see the possibility for themselves. 

Membership retention without member success is only a short-term solution. At the end of the day, people will only stay as long as they see it as a means to their end goal. 

As you begin to raise the prices of your membership site, you might be nervous about losing loyal founders. 

2) Reward early adopters with grandfathered rates

Many membership site owners grandfather the rates of current members. This not only rewards them for their long-term support, but it also discourages them from leaving. 

When they become aware that they won’t be able to re-join at the same price, they’ll hesitate to cancel their subscription on a whim or knee-jerk response to a change in their interests. 

This reminder can be sent out every time you make a price increase or at the time where they initiate a cancellation process, or both! 

3) Create an annual buy-in or minimum commitment

If you don’t already have annual membership options, create them. It’s always worth asking for a longer commitment. 

We all know that real change doesn’t happen overnight so if members want real growth, they’ll have to commit the time that it takes to achieve results.

Your subscription retention will also increase if you only offer a minimum period to join, like 3 or 6 months. This gives them more time and space to get involved in the community and content without putting pressure on them to use it right away. 

30 days goes by quickly – and for some members, it’s not enough room to dive in.

Whether you have a one-month minimum or more, after a set period of time, offer up a one-year buy-in where they can lock into a lower monthly rate with a full year commitment. The easiest way to increase membership so to incentivize the current ones to stay. 

4) Prioritize customer service

Make sure anyone who’s feeling lost, disgruntled or thinking about leaving (and really doesn’t want to) has a clear method to communicate their concerns. 

Have a system that gives them a swift response and message that someone really does care about their satisfaction. 

Even better, incorporate an annual survey into your group communications so you can stay ahead of any service gaps before members start the process of giving constructive feedback. 

5) Contact each member when they cancel

Since the lifetime value of a member can be high, on the flip side member churn is expensive. So if someone does cancel, it’s definitely worth it to contact them with a phone or a personalized email to ask them why they left.  

From this you’ll be able to:

1) Find out what wasn’t working for them anymore, address that and get them to stay.

2) Gain valuable information that can be used for improving the program for other members. 

Think this is costly? If your members pay anywhere from $350 – $5000 per year, it’s certainly worth a 15-20 minute phone call from you or a member of your team to find out why they want to go. 

Ready to start your own profitable membership program?

Check out the Profitable Membership Club designed to help you create a rewarding membership that will attract the right members to it. 

Enrollment opens every 3 months so get on the waitlist and be the first to know!

lisa-hero-on-grey-mobile

Meet Lisa Princic

Membership Growth Strategist

Lisa Princic is a business coach & strategist that helps thought leaders first grow to $100k, then to $1m sustainably & profitably with membership programs. She's dedicated to helping impact-driven entrepreneurs scale their businesses with powerful positioning and profitable membership groups designed around their zone of genius.

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