The early 2010s brought consumers an onslaught of subscription services. Birchbox gave more consumers access to luxury beauty products at a fraction of the price, while BarkBox promised dog parents (and their furry counterparts) a new toy and treat combo every month. And as the popularity of these services surged, similar new businesses seemed to emerge in a different category every day. Apparel. Jewelry. Even meat.
As time passed, though, the novelty of some of these subscriptions faded. And a volatile economic climate motivated consumers to think more critically about the programs they subscribed to. Increasingly, consumers are gravitating toward higher-value membership programs that offer far more than a slight discount for a recurring delivery cadence. These programs, according to a survey of 1,000+ consumers, offer benefits like exclusive content and products, high-value service and even access to an engaged community of like-minded peers and influencers.
In the report, Building a Membership Model That Resonates, CI&T and Retail TouchPoints revealed that the majority of consumers (64%) understand the distinctions between subscription programs and memberships. For example, many consumers associated memberships with access, either through unique benefits, physical locations or even product drops. “A membership is like being a part of a group,” said one respondent. “Membership is the key to friendship, and [with a] subscription, you’re just a user,” said another. This idea of authentic connection and belonging is something that brands across categories can leverage as they develop their membership strategies.
“A lot of times, brands think it’s all about their relationship with the customer; but they forget that it’s also about the relationship that their customers have with each other,” said Melissa Minkow, Director of Retail Strategy for CI&T in an episode of the Retail Remix podcast. “There’s this sense of belonging and community that really matters in the membership model. It’s not necessarily just about the product, but about the person, too. What level of access does that membership give? Is it exclusive? What environment does it offer?”
Engaging Through the Membership Lifecycle
When asked which categories they would be most open to having memberships in, consumers favored those with products that are part of a more habitual purchase journey, such as grocery (52%), pet supplies (38%), personal care (37%) and household goods (37%). Unsurprisingly, these categories also tend to be very price-driven, which means brands can leverage exclusive prices and promotions as key program benefits, especially in the early stages of the membership lifecycle.
To that end, CI&T and Retail TouchPoints were able to dissect the key stages of a consumers’ lifecycle with a membership program and, most importantly, what would inspire them to start, stay, end or restart their accounts. Within each stage, there are clear value drivers that can support program structure and marketing:
Sign Up
- Discounts on relevant products
- Free shipping
- Convenient product delivery cadence
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Stay
- Access to exclusive deals and/or pricing
- Introduction to new brands/products
- Convenience
End
- Poor product quality
- Higher membership fee
- Poor customer service
Restart
- Better prices and value
- Early access to products
- Lifestyle change or milestone
“It was fascinating to see the changes happen throughout the lifecycle — it’s almost like Maslow’s Hierarchy of Needs,” Minkow said. “And these needs change based on the stage that consumers are in. Interestingly, as consumers moved throughout the membership lifecycle, they became more focused on the exploratory and discovery aspects of the product, whereas when they started, they were really thinking about the price piece of it.”
The key takeaway for retailers is that they should “prioritize different motivations based on what your data tells you as far as where in the journey your consumer is,” Minkow explained.
How the Economy Influences Membership Engagement
Although the promise of these perks undoubtedly drives initial membership program registrations and engagement, the economy still plays a crucial role in whether consumers stick with these programs long-term. Nearly three quarters of consumers (74%) said the state of the economy impacts how interested they are in retail memberships. In fact, “saving money” was the top reason why consumers were motivated to have more and less memberships in the future.
“In our Connected Retail report, we also found that consumers largely agreed the economy slightly or significantly impacted their shopping decisions — so this isn’t just happening in subscriptions and memberships, and it isn’t just a mindset for this area; it’s happening in the rest of the retail space too,” Minkow explained. “So if you’re a brand or retailer and you don’t have a subscription or membership program, this research is still extremely relevant to you to understand how consumers are approaching your brand when they’re shopping.”
The good news is that consumer sentiment toward membership services is relatively stable, with just under half of consumers (46%) saying they expect to maintain their current membership count.
You Can’t Ignore the Fundamentals
Community-focused perks are a big value add for brands, but they cannot ignore how top-of-mind fundamental benefits — such as free and seamless delivery — are for consumers.
Despite defining memberships as “paying once or more time(s) per year in order to receive benefits such as discounted products, unique services, new/exclusive items, or a personalized assortment of items based on taste,” 72% of consumers indicated that they would consider Amazon Prime to be in the “membership” category alongside brands like Ipsy, Stitch Fix and FabFitFun.
“What’s tricky about Amazon is that you simply can’t ignore them,” Minkow said. “They are a best practice in so many ways, and although we tried to provide a definition for memberships that didn’t steer consumers toward Amazon — mainly to see if they still went there — they did. The company has ‘Subscribe to Save’ and it has Prime; and although the Amazon Prime model doesn’t really suit the open-ended definitions consumers shared in the survey, you can’t get away from that association.”
Listen to the full conversation to get deep-dive analysis from the report.
