Why Manage Memberships?
For businesses, managing memberships is a way to increase revenue.
Basically, the goal is to turn new customers into regulars, and encourage existing customers to purchase more frequently. By understanding members’ consumption behaviors and cycles, businesses aim to maximize customer lifetime value.
The more mature a brand is, the more it observes the 80/20 rule[1]: the top 20% of members by spending contribute about 80% of a brand’s revenue. These 20% of members are the main source of income.
How to Manage Memberships?
We can manage memberships through the following methods:
Build a Membership List
The first step in membership management is to collect member information, and ideally have members identified during transactions to enable subsequent recording and analysis.
Record Member Purchases
With member data, we can track their purchase history. This helps us understand individual preferences, purchase frequency, spending power, and other relevant information.
Establish a Membership System
This usually includes tiers, points, and rewards. The idea is to offer greater benefits to members who spend more, encouraging them to visit more frequently.
Provide Different Incentives Based on Member Attributes (Membership Marketing)
By understanding different members’ purchasing behaviors, we can classify them into groups such as new members, regular customers, and inactive members. Since these groups have different concerns and interests, we can design targeted marketing campaigns for each category. This allows for more precise marketing and helps reduce marketing costs.
Starting to Build a Membership Base
There are many services available on the market to help build a membership list, such as Facebook Fan Pages, Line Official Accounts, etc. However, using these third-party platforms comes with certain limitations. Detailed member data is often difficult to obtain since the information mainly resides on the platform, making it hard to perform more precise analysis or further segmentation.
Moreover, in today’s environment where personal data protection is highly valued, it is quite challenging to get customers to provide their personal information and become your members without offering any additional incentives.
When starting to build your membership, it is recommended to increase customers’ willingness to join by understanding their purchasing behaviors and offering incentives—such as bonus points, special discounts, or requiring membership registration before using specific services. You can also integrate with third-party platforms to allow customers to quickly join from those platforms, reducing the barriers to membership registration.
Membership management is an indispensable step for brand growth. If you are interested, you may also want to learn about our membership management services: CDP (Customer Data Platform). Through effective membership management, we hope to help you increase your revenue and design better marketing strategies.
Note 1: Pareto Principle (https://reurl.cc/LmvAA9)