Building a paid membership business

I was lucky enough to interview two Founders of growing paid membership businesses on stage at The Publishing Show in March, 2023.

Tim Whitehouse co-founded Risk Leadership Network (RLN) in 2019 and Richard Pope co-founded Data Leaders (DL) in 2020. Both businesses target a specific professional in a senior job function within a large organisation, and deliver crafted peer-to-peer networking and insight to help those members do their jobs better. Here are my learnings and highlights:

Richard had previously co-founded and successfully exited Procurement Leaders (PL). Over 15 years, PL started off in events, added information services and evolved into paid membership. With the domain expertise of his data analytics co-founder, Richard launched DL directly into the high-end enterprise market; “I felt there were obvious similarities with data, and I now had the experience from PL about how to position it and who to target”. Tim’s co-founder ran an information brand serving corporate risk managers (CROs). CROs told them conferences and publications weren’t doing enough to satisfy their need to share insights (“fed up with jumping on a plane, meeting people at the margins of events, having vendors take over the agenda, or having to resort to using expensive consultants”). A global extracting company CRO played a pivotal role saying ‘if you build it, I’ll support you’ and then using their network to help secure the first eight members as a proof of concept. Both Richard and Tim backed up their initial market feel with customer research, which Tim went on to use to help secure his initial launch investment.

Do these businesses consider themselves media, publishers, subscription, community or membership plays, and if the latter, what are the defining features ? Tim is conscious that he and his team describe the business as a ‘corporate membership network’; “we take an annual fee, so we’re subscription in that sense but we’re very different because of the very, very deep relationships we have; we’re helping solve problems and priorities, we’re not consultants, we’re not experts, but we facilitate collaboration; in contrast, in my experience, most of B2B has a very distant relationship with users”. A key watchword for Tim is ‘participation’; “we run 40 virtual member meetings a month and they span from two to three people up to ten but no more than ten because we find real participation and collaboration only comes from smaller groups”.

I wanted to understand how both businesses work with vendors, either as members or as sponsors. Both Founders have considered vendors, but remain highly cautious even if that has meant turning money down. “Vendors can dominate the narrative; we can work with partners but there has to be an iron wall between the services and the feedback from our members is that our positioning is better placed as a pure play.” “We’ve had no role for vendors from Day 1; it’s about where we get the greatest return from the effort we put in; and right now we’re focused entirely on building the membership base; it means we only have one customer focus”.

Both businesses employ senior journalists (“there are 14 of us and 7 are content and community managers; that’s where we put the most investment”). These roles organise, chair and write up virtual meetings for members (featuring priorities chosen by members); “we deliberately hire senior journalists as they need to be able to work with members, distil what those members want, join it up and deliver it, otherwise it’s just a talking shop”. A lot of effort and investment is placed on benchmarking because “everyone wants to know where they stand and what Good looks like”. The content mix is “probably 80% produced by members, 20% by us” and “we’re strategically turning to be more content heavy than we are sales and marketing”. An ongoing challenge for Richard is “striking the right balance between hiring talent with data expertise and journalistic skills”.

To give a sense of what the overall market might be worth, Tim noted that RLN’s typical annual account value is just under £30k and the launch investment plan identified over 3000 target organisations, suggesting a potential £90m market but “many of our competitors are deeply embedded with trend data for that client going back years”. Richard noted that in PL they thought about a market of 800 organisations but that data analytics feels a much bigger space, especially if verticalized. Richard noted multiple players in peer-to-peer memberships – CEB now part of Gartner, World 50 – and believes the market “is sizable enough to have multiple players in it”.

RLN has grown its average account value from circa £8.5k at launch to circa £30k today. Central to this has been adding additional services and then packaging those services into three tiered offerings, from basic content, case studies and benchmarking, to access to peer-to-peer meetings and the top end, ‘network assistance’ (a concierge-style service focussed on the specific needs of one member within a subscribing organisation). DL launched with higher starting fees, towards £30k. Average account values can now range from £30k to £60k. Launching ‘high’ was based on Richard’s experience with PL, “I’d spent a lot of time in my previous business understanding pricing models; it’s always a tricky thing but, if anything, I think we’re on the low side; it’s about landing a client at a certain value and then adding more services in a land and expand approach”.

Both businesses have built their own dashboards that track all aspects of how members interact (e.g. virtual meetings, content downloads) and what members’ priorities are (number of ‘tickets’ raised and addressed). Volume of usage is important in securing renewals but so is meeting an organisation’s specific needs. ““If we can deliver to the urgent need of a CRO at one point in time, that’s £30k of value right there. When a member joins we sit down with them and allocate a content and community manager to them. Managers will look after about 15 members each, it doesn’t sound like a lot, but it is if you’re really going to crawl all over that account, understand objectives, come up with an action plan and review it quarterly”. “Going forward we’re going to be much more sophisticated with personalization of the service, matching what they told us and what we deliver”.

The reason I think these businesses will be successful is that they combine great executional skills with very powerful propositions. I often think that much of media is about great execution, but these membership plays have powerful propositions too because they get extremely close to the ‘jobs-to-be-done’ by their members, closer than propositions based around industry news or unstructured networking at events. These ‘jobs-to-be-done’ might be anything a member can’t afford to get wrong – a meaty Board presentation, a weighty technology choice – and these membership plays are able to understand those crucial tasks and put the member directly in touch with expert peers who have faced similar challenges.