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June 20, 2024
by
Surbhi Dubey

Inveterate memberships: Recurring revenue with memberships and subscriptions

We are seeing a surge of membership business models in the business world. Instead of just a single transaction, this model helps you build a community. The membership model generally offers exclusive access to a service or product for a recurring fee. This can be anything from a supplement membership to a streaming platform membership. These Inveterate memberships provide benefits like early access, member-only discounts and special offers or sales that non-members don’t usually get. 

Now, eCommerce memberships take these concepts online. E-commerce stores can offer special discounts or early access to sales to their members. These memberships are a good way to create a community with a loyal customer base and provide recurring revenue to the store. 

The rise of recurring revenue model in the eCommerce space

Inveterate memberships serve as a good example of the recurring revenue model. This model generates a constant income stream by charging the customer regularly for ongoing access to a product or service. Unlike one-time purchases, these recurring revenue streams ensure a predictable cash flow for businesses, allowing them to focus on customer retention and experience. 

As this Forbes article suggests by including these recurring revenue streams in your business, you can foster a long-term relationship with your customers, eventually reducing the churn rate. 

Similarly, this McKinsey & Company article explores the growing trend of recurring revenue models and includes key insights on increased customer lifetime value through subscription pricing and significant demand for subscription or membership services. 

Inveterate Memberships: Exploring Membership Models

The membership model is powerful, fosters a loyal customer base, and provides a recurring revenue stream in exchange for service, product or community. Let’s understand some of the membership models and how they work. 

  1. Paid membership: Allows customers to pay a recurring fee only for specific services they want to access. This eliminates the need for long-term commitment. Consists of Monthly/Annual memberships for ongoing services such as Netflix, Amazon Prime or a product. The One-time memberships offer lifetime access to the service for a single upfront payment like Duolingo. 
  1. Tiered membership: Offers multiple levels, with increasing benefits and features at different price ranges. This model is best for providing services to a wider customer base with various budgets. Businesses like Gym and cloud services are good examples of tiered memberships offering access to different facilities at different costs according to customers' needs and budgets. 
  1. Usage-Based Memberships: These memberships charge customers according to their consumption. The best examples of these memberships are Mobile data plans or Cloud storage services like Amazon Web Services where users are charged based on their consumption. 
  1. Corporate/group memberships: Tailored for organisations or large groups offering bulk discounts. It’s a great way to reach a large group of people and generate a higher recurring revenue. Employee wellness program or professional associations offers discounted memberships allowing companies/groups to register multiple members/employees. 
  1. Loyalty Memberships: This model rewards the customers based on their purchases, engagement and long-term loyalty towards the brand. Loyalty programs can be found in various industries such as airlines where frequent flyers are rewarded with points they can use for upgrades and other benefits, or beauty stores like Sephora offer points for purchases that are redeemable for purchases or other discounts.
  1. Invite-only memberships: It’s a highly selective model and requires an invitation from the company or an existing member. It’s a good model to create a sense of exclusivity, attracting a customer base who value limited access. One example of this model is Amex’s Centurion Membership which is an invite-only credit card that offers a wide range of benefits and services. Another example is GoodSomm's invite-only membership, which focuses on curated wines and wine education for its members. This membership is very exclusive, however, there is a waitlist for future notification.
Invite Only Memberships
Invite Only Memberships

Understanding subscriptions and memberships

Subscriptions and Inveterate memberships both have become popular to acquire and retain customers. While there are some similar characteristics they also have some distinct differences. 

Common ground between subscriptions and memberships

  1. Customer Loyalty: Both models focus on building long-term customer relationships. 
  2. Exclusive Access: Members or subscribers get access to special features, special discounts and content that are not available to general customers. 
  3. Recurring Revenue: Both models provide a predictable stream of income. This allows for better planning and resource allocation. 

Dividing the Line between Subscriptions and Memberships

  1. Flexibility:  Memberships involve longer commitment and upfront fees while the subscription model offers more flexibility in terms of signing up, cancelling, pausing and updating their subscriptions according to their needs. 
  2. Focus: Memberships focus on a sense of community, belonging and additional benefits while subscriptions revolve around access to specific products for a recurring payment. 

Understanding each model in action

  1. Memberships: Catholic Membership offers educational resources on the catholic faith. Their material and videos are focused on explaining the bible and Sunday mass readings. They also give a deeper understanding of specific parts of the Bible. They have a membership program called ‘The Mass Reading Explained’ where people can access new Videos, Audio, Transcripts, and Study guides weekly. 

Membership example
  1. Subscriptions: High-tech air purifiers from Jasper aim to optimize indoor air quality. The purifiers require a filter change every 6 months. Jasper offers a filter subscription for $199, providing a replacement filter every 6 months.

Subscription example

Combining Inveterate memberships with subscriptions

Combining Inveterate memberships and subscriptions can create an extensive approach that maximizes revenue, and increases customer loyalty and satisfaction. By leveraging the below-mentioned strengths of both models, DTC brands can cater to a wider audience and create a committed customer base.

  1. Increased revenue and Customer Lifetime value: Proving tiered options can help DTC brands cater to a wider range of customers providing varying levels of access and subscriptions. This can boost revenue and overall value to the customers.
  1. Enhanced customer engagement: Well-designed subscriptions and memberships can provide exclusive benefits and create a sense of community, keeping subscribers engaged with the brand. This can lead to increased subscriptions and membership services and higher loyalty. 
  1. Valuable Customer Insights: Having subscriptions and inveterate memberships can help brands collect valuable customer data. Brands can analyze customer behaviours and preferences with the data and create strategies for business growth by tailoring product offerings to improve customer experience. 
  1. Flexibility and Choice: The hybrid approach gives the customers flexibility to choose a model that suits their budget and needs.

Introduction to Subscription-based Models

This model has revolutionized how consumers access products and services, shifting their mentality to focus on access and convenience from traditional product ownership. It started with gym and magazine subscriptions, and it's now exploded in the DTC space. This shift towards a recurring revenue stream enables businesses to foster strong customer relationships. 

Some of the examples of successful subscription models include:

Lilac St, a brand known for its DIY eyelash extensions have a monthly subscription box. 

The customer portal allows customers to modify their purchased bundle, as the customers add more lashes to their box, they unlock progressively greater discounts. This gamification program resulted in a 72.7% increase in subscription revenue in 11 months. 

Subscription Model Example by Loop

Check Lilac's DIY Build a Box on Loop

TruHeight®, a nutritional supplement brand aims to provide convenient nutrition to kids wanting to grow to their full height potential. Offering a combination of chocolate protein shakes, sleep-aiding supplements and growth gummies at a combined discount of 15%. These supplements are offered as a subscription, and to incentivize the customers there is a 10% additional discount on the second order and a free T-shirt on the third order. As a result of this subscription gamification strategy, TruHeight grew its subscriber base to 314% in 12 months. 

Successful Subscription Example

Start your subscription journey with Loop Subscriptions

Loop Subscriptions helps DTC brands grow, manage and retain their subscribers. With features like a seamless bundle builder, loop flows for personalised journeys and rewards, a smart dunning system to recover failed payments and a dedicated account manager, Loop Subscriptions is an all-inclusive Shopify subscription app for any DTC brand looking to effortlessly handle their subscription model. 

Some of the key features of Loop Subscriptions include: 

  1. Gamified reward system for subscribers' engagement

Loop flows allow DTC brands to set automated actions on certain triggers. Merchants can automate discounts at X orders, product swaps at Y orders or add gifts at Z orders. 

  1. Personalised retention campaign inside the customer portal

Cancellation flows by Loop Subscriptions empower merchants to increase the number of successful orders and reduce cancellations by incentivising customers to continue their subscriptions.

  1. Smart dunning management to recover failed payments and reduce churn

Loop Subscriptions provides powerful features that allow merchants to use smart logic to reduce failed subscriptions by predicting them ahead of time.

  1. Simplified subscription management and operations

Loop Subscriptions empowers merchants to adjunct every aspect of the existing subscriptions from billing setups, product specifications, payment methods and shipping preferences.

  1. Integrated with 35+ top Shopify apps

Loop Subscriptions helps you integrate with 35+ tech partners to help merchants with all their business requirements.

  1. Best white glove migration service 

Loop Subscriptions migration team converts the platform-specific data into the standard format at Loop’s end. 

The future of the DTC industry is all about building meaningful and lasting relationships with customers. Along with Inveterate memberships, Subscriptions can be a powerful tool to achieve this goal by offering flexibility and benefits that build loyalty. While both models have their advantages, combining both memberships and subscriptions can be beneficial.

Don’t miss out on this opportunity to connect with your customers. Explore the benefits of subscriptions by scheduling a Demo with Loop Subscriptions.

Key Takeaways

  1. DTC businesses are using Inveterate memberships to build community and recurring revenue. 
  2. Recurring revenue models like Inveterate memberships generate a steady revenue stream for DTC brands.
  3. The membership models offer various options providing exclusive benefits and access in exchange for a recurring fee.
  4. While both subscriptions and memberships focus on customer loyalty, exclusive access and recurring revenue, subscriptions offer more flexibility for pausing, cancelling and modifying subscriptions.
  5. By combining subscriptions with Inveterate memberships DTC brands can create a comprehensive strategy for increasing revenue, customer loyalty and satisfaction. 
  6. Loop subscriptions is an all-in-one Shopify app that helps DTC brands grow, manage and retain their subscriber base.

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