While many people use the words membership and subscription interchangeably there is a subtle difference. This difference can make a huge impact on whether you succeed or fail if you decide to take this journey in your business. Let’s start with …
The Subscription Model …
has been around for years, an early and obvious example is insurance – vehicle insurance, health, business etc paid monthly or annually.
Other industries have adopted The Subscription Model too…
For example, many tech tools and apps, are available on a subscription basis e.g. Adobe Acrobat, Office 365, website hosting, eCommerce apps etc – the list goes on.
It wasn’t that long ago that you bought software on DVD/CD and you owned a licence to use that software until it was incompatible with everything else and became irrelevant. At some stage, these tech companies worked out they were leaving money on the table! They were missing a whole market (non-corporate) that wouldn’t/couldn’t pay hundreds of $$$ in one outlay for apps. Here’s a whole industry that saw an opportunity to provide a subscription model for their apps and expand their market while creating regular recurring revenue for their business and reduce software piracy at the same time.
Other industries were starting to see the light such as … food delivery, water delivery, wine delivery, clothes shopping, vitamins & supplements, education curriculum … just to name a few.
So while you continue to pay either monthly or annually you will continue to receive the benefits of the product or service and in some cases, the convenience of having the product delivered right to your door.
This model is best suited to: Business tools, software, apps, insurance, equipment leases and consumables.
The Membership Model …
has also been around for a while and was commonly used by gyms, sporting clubs, car and aero clubs, weight-loss programs etc.
But now, service-based industries are taking this model and running with it. Some examples include teachers, photographers, personal trainers, health and wellness, thought leaders, speakers, authors, coaches, mentors and consultants.
I mean, if you think about it, as a consultant (includes coaches, mentors, speakers, authors, professional services etc), you can often find yourself in a feast or famine cycle. You either have more work or engagements than you can physically handle or you discover you have holes in your calendar that you urgently need to fill.
So the major challenge that most service-based consultants face is …
How do you leverage your time, knowledge and experience, so that the results of your effort (time invested) will gain sustainable momentum that requires less of your input and effort over time?
In other words, how can you make more money, make a bigger impact all by spending less of your time doing so?
That may seem impossible even unrealistic, but I mean, isn’t that what it’s all about? It’s not about being the best while working yourself into the ground and only just surviving. Because you only have limited time and energy and when you constantly max out both – the end result is BURN OUT!
At the very core, you started your consulting business to thrive, be happy pursuing your passions and your purpose, a purpose where you can serve others to be the best that they can be. It’s not about running faster or working harder or longer. Because that isn’t sustainable.
This model is best suited to: Service-based industries where some form of personal or business transformation is offered.
The Benefits of both models…
Regular Recurring Revenue
Let’s clap it up for RRR! Both models if done right can give you this benefit.
I mean, isn’t that your dream – create something, watch it grow and have it pay you ongoing for as long as you maintain it? All with reduced effort on your part over time? And without having to constantly meet sales targets every day or every week?
This is the biggest drawcard and the most talked about benefit to both models is that the revenue comes into your business bank account every day, month or year (at regular intervals) for as long as you have people in your program.
Think of it like a “wage” that you can rely upon, budget for and plan for your business growth and payroll expenses. This income will come in regularly and totally independent of industry peaks and troughs.
Leverage of Time and Skills
This is the second most talked about benefit of both models. These models reduce the number of hours you spend working and supplying the service, and they also allow you to exponentially serve more people and move away from being totally dependent on the 1:1 model.
Basically it helps you to achieve more by doing less. Which is completely #backwards compared to most business models.
The Differential Benefit …
The benefit that sets these two models apart is – COMMUNITY and CONNECTION.
When you purchase insurance, water delivery or business software on subscription you are not looking for connection or community. You want access to something that will save you time and money while providing a tangible benefit that makes your life easier in some way.
On the other hand, when you purchase a gym membership or join a membership program for a PT or a membership to learn how to play the guitar – these services are transformational and require commitment from the person undertaking the transformation. The desired outcome will make the person’s life better but initially, it will take work to get there. Whether that be learning a new skill, thinking in a new way, losing weight – it requires work and often there are challenges that can easily discourage the person from continuing.
In a membership program, it is the support, experience and the knowledge provided by a like-minded and supportive community that makes a membership successful. It’s also the thing that distinguishes a subscription from a membership.
The Devil is in the Detail …
People will join a membership program because they want to experience the transformation sooner rather than later. They want to see results quickly. They usually don’t plan on staying for the long term – they want to get in, get their results and get out ASAP. Your challenge is to keep them engaged in the community and getting results so that they wouldn’t dream of leaving your membership! This can be harder to do than you think.
Where most new membership owners run into trouble is they create a subscription model but call it a membership. They focus too much on providing too much content and not enough on community, connection and engagement. They misguidedly believe that the value of their membership is only in providing tonnes of “how-to” content and they completely overlook the need for connection and support. So their members become overwhelmed. They feel confused and they don’t take the action required to get the results they want as quickly as they want. So ultimately, they cancel their membership feeling unfulfilled and unsupported. Which is not what you want!
This can also put the membership owner into a content production cycle where they spend more time producing content that is not being used by their members. They also fail to set boundaries and structure in the membership which again leads to overwork, burnout and frustration.
So what’s the answer? Can a membership program really work in a service-based business?
YES, IT CAN! But, you must understand …
- Your Ideal Client and what they want and what they need.
- You can design your membership the way that best suits you.
- How to balance content production with building community and connection.
Membership business models (and subscriptions models) are here to stay and they are growing in popularity. If anything, they are only going to increase and more service-based industries will be diving in and enjoying the time and financial freedom that a successful membership program can provide. You don’t want to get left behind by your competition because the flow-on effects of a successful membership program are mind-blowing!
This article is a summarised extract from my free resource The Definitive Guide to building a Million $ Membership.