The Membership Economy shows us that the world around us is changing on a daily basis. From electric cars, the swipe left or right concept, to the return of fascist ideology in the mainstream. We are constantly having to adapt and change our daily practices to survive in the world we live in.
One of the present days biggest changes in the business world is the acceptance and popularity of the ‘membership based economy model’ or the ‘shared economy’. Essentially, this means that a business has members that subscribe to a service. In exchange for a monthly or an annual membership they gain access to services that are not available to the public or entitle them to ‘extra’ benefits.
In order to examine this type of business model, we need to look at the different types of membership economy businesses that currently exist and how they are categorised. Businesses who are membership organisations can have six different models:
- Digital subscriptions – Netflix, Amazon Prime, Bidroom.com
- Online communities – Match.com, LinkedIn, Facebook
- Loyalty programmes – Starbucks, Tesco
- Traditional membership economy companies – Weight Watchers, Amex
- Small businesses and consultancies – Local cafes, beauty salons
- Trade associations, nonprofits and professional societies – Greenpeace
Modern day businesses enjoy the benefits of having their customers as members; they help answer queries, produce solutions to problems and maintain engagement. Having members also gives a business a massive opportunity for growth and helps maintain a consistent source of income.
Businesses can gain new members through various methods such as social media, email marketing and online advertising. It isn’t easy obtaining members, it requires a lot of commitment above and beyond the usual customer – business relationship. The reason businesses bend over backwards to ensure their members are happy, is because in return they receive valuable commodities such as email addresses, money and content.
Businesses such as Netflix and Spotify are entirely built on the membership model, offering beneficial relationships to its members, whereas SurveyMonkey and bidroom.com are entirely subscription-based models.
The Membership Economy?
The bidroom.com approach to subscription-based services is a perfect example of how the membership approach is both different and works. Bidroom members pay to have access to lower prices than they can find on other similar sites. A key feature of this site is that they offer a discount on the price you can find on other OTA’s. They get around the rate parity agreement by being a subscription service and a private platform which offers them more options when it comes to how they present themselves to the hotel industry.
The service that Netflix offers its subscribers is a similar approach, just taking things a little further. They are similar in that its members have to pay a subscription to have access to a multitude of films and TV shows, however, customers also get a chance to review content with other customers. Through this interaction, the company collects valuable data about their users while making them feel part of a family.
One key aspect of the membership economy is the convenience it offers to members willing to sign up. The constant growth of mobile technology means it is now even easier for members to access their services. The whole process related costs are low while at the same time giving customers the chance to build relationships with businesses and fellow users easily.
What does the future hold?
As more and more businesses start to take advantage of The Membership Economy model, it leads to thinking about the future of the model and even if there is a future for it at all. The simple answer to this is that yes, there is a future, based on the knowledge that there are so many businesses that are now based entirely on The Membership Economy. Netflix, Amazon Prime, Bidroom.com, SurveyMonkey and many others have all embraced this business model and it only seems to be getting more and more popular.
As the idea of The Membership Economy grows, so does the definition of what it entails. Companies such as bidroom are rumoured to be moving to a combination of two or three. They are currently a subscription model and have plans to move into the Online Community model by increasing the number of facilities available to their subscribers. Their plans are to build a travelling community, a community along the lines of Facebook or LinkedIn for instance.
What does this mean for you and me?
For the average traveller, this new approach gives us the opportunity to be part of something special. Look at it as a new kind of family. As society drifts from the traditional values of clubs, churches, and family gatherings of the past, we as a society yearn for a sense of belonging. This is realised through the Membership Economy business model. Using this “customer-centric” focus, businesses can now offer you the chance to ‘belong’ to something exclusive that is focused on your needs and wants. This creates a more “future-proof” revenue stream for all businesses and gives them the chance to create something that appeals to a certain group of people.
In part 2 of this article, I will look deeper into exactly what it means to build a Membership Economy business and how you, as hoteliers, can transition over to it. This will allow you to not only increase your revenue in more ways but allow you to also build a loyal ‘future proof’ customer base. This can give you some peace of mind in terms of revenue and security of your business for years to come. It is time to be a part of the future economy, it is time to be a part of the Membership Economy.