The membership economy, Baxter said, is about four things:
- A move from ownership to access.
- A move from one time payments to recurring payments.
- Anonymous to known transactions.
- One-way communication to feedback and community.
“When you put these four things together, you create a palette to paint new business models,” Baxter said.
While it is the base of a business model, membership is not just about subscription pricing, she said: “Subscription is a pricing decision. It is a tactic. Not a strategy. Membership is a mindset. It’s about how the organisation feels about the people it serves.”
It is easy to understand why publishers want to be part of the membership economy. Recurring revenue creates a sustainable structure for news business models. Baxter said when she meets with companies who want to create subscription models, she asks “What’s in it for the customers?” She is usually met with blank stares.
“Amazon has a policy a philosophy where at key meetings they keep an empty chair for the customer,” she said. With this symbolic gesture, the company constantly asks: “What would the customer say if they saw us making this decision?”
At the heart of the membership economy is something Baxter calls a “forever transaction.”
“The ‘forever transaction’ is the heart of the membership economy,” she said. It’s when a person takes off the consumer hat, puts on the member hat, and considers their problem solved.”
With a “forever transaction,” the first transaction is the starting line, not the finish line, she added.
To set up a membership economy, every aspect of an organisation needs to become customer-first. This helps a company start every relationship at the bottom of the funnel, which is also the point of the “forever transaction.” Trust is at the heart of this transaction. Complex pricing inherently destroys this trust.
“The more complicated your pricing, the less your customer is going to trust you,” Baxter said. “The more they’re going to feel like they have to become experts on your pricing structure.”
The onboarding process is the moment when someone subscribes, and immediately decides when to unsubscribe. Companies must use this moment to reassure customers that they made the right decision. Customer success is more than solving a problem when a customer complains, Baxter said.
“Customer success proactively makes sure that people are getting value for what they’re already getting,” she said. “This is not upselling.”
Meeting customer needs is about helping them live their best lives, Baxter said. Referring to Maslow’s Hierarchy of Needs, she said that after fulfilling basic needs like food, WiFi, and shelter, customers look to achieve social and self-actualisation goals.
To enter the membership economy, companies must strive to become a positive part of customers’ lives. Organisations that tap into these needs will build relationships with the people they serve.
News media companies can ask three questions in their journey to create a membership economy, Baxter said.
What is that ongoing forever benefit that your organisation provides? “Is it about helping them be their best professional self? It is about helping them look smart,” Baxter said.
- What does it mean for your organisation if you have members not customers? “What products, processes, people would have to change?” Baxter asked.
- What could that mean for your members? What is it that they’re really trying to do? “Think about it from the perspective of one of your customers,” Baxter said. “How would it improve their lives?”
Answering these questions may prompt change at a news media organisation, which is never simple, Baxter said.
“Change is hard,” she said. “The strategy part is not super easy, but it’s a lot easier than changing the culture of an organisation, changing the DNA.”
What does this mean for news organisations? By looking through the lens of membership, news media companies can leverage existing assets, Baxter said: “I think this means that there is huge potential to take what you already have — strong brands trusted relationships some experience in most cases in subscription pricing — and use that as a starting point to build hook that really bond your customers to you forever.”