Operating a paid membership business

We recently brought together 8 Founders / CEOs of independent businesses operating paid-membership models, including B2B Marketing, Data Leaders, Faversham House, GRI, Risk Leadership Network, Simply Communicate, Stylus, and The Payments Association.

The purpose of the roundtable was simply to share learnings in this very rapidly evolving space. The roundtable was held under Chatham House rules, so we are not attributing specific statements to any one individual, but my top learnings and highlights were:

Some of the roundtable participants call their paying users ‘members’. Others actively avoid this phrase, and for their market prefer more of a consultancy-type tone, using descriptors such as ‘clients’ and ‘service’. The word ‘community’ resonated with all participants. One called their business model a ‘community intelligence business’, another called it a ‘premium membership’ and a third called it a ‘peer advisory’ business. Does it matter? My take-away is that while there isn’t one universal phrase, language really does matter; it matters that you find a way to describe yourself that resonates with your customer base and it matters that you consistently train into your organisation the way you want staff to describe your business.

Some of the plays lent heavily on in-house journalistic content, or the response of external, third-party experts on specific problems raised by members. In others, 80% or more of content came from the peer-to-peer interaction of paying members themselves. Some models relied heavily on account managers to help clients find the insight or data they wanted for an immediate, pressing task, or delivering meaty quarterly presentations at clients of latest macro trends and industry insights. Others had a value proposition centred on networking and deal-making, but informed by match-making technology, rather than relying on the more random networking generated at a conference. Again, I don’t think it matters that there isn’t a universal value prop; what matters is that the businesses spend enough time understanding the jobs-to-be-done and FOMO of paying users to create a membership proposition that is a ‘must-have’.

For one very well-established, conference-orientated business, COVID was a very real existential threat. In response the business asked its more senior users what they wanted; and the answer was the peer-to-peer networking, learning and inspiration that the users gained from large-scale events but delivered year-round. That led to the launch of a membership play that is now very comfortably into seven-figure revenues from recurring memberships and is transforming the revenue mix and investment priorities of the business. Another Founder said he launched his membership after hearing dissatisfaction from very senior, C-suite level users about the randomness of networking, over-influence of vendors and travel costs associated with large conferences. That doesn’t mean all membership plays reject events as part of the proposition; one Founder actively uses flagship events (for members and non-members) to be the launch pad of content worked up pre-event within the community. If event attendance is part of your membership proposition I think it’s critical that paying members get a differentiated experience to non-members and there are plenty of ways to achieve this that aren’t about discounts (e.g. access to speakers and editors, launch of exclusive content, VIP networking).

Many of the membership plays have or are exploring index data as a core of their proposition. This might, for example, survey members on:

• Their budget and staffing levels and ratio to their business’ revenue
• The performance metrics of their activities, on culture and governance
• Their sentiment towards different industry trends.

There was some debate about operational pros and cons (e.g. whether such data, once aggregated, should only be provided back to members who had contributed their data in the first place, or whether data collection can be held as a ‘hostage’ to a client renewing), but there was strong agreement on the power of indexes to deliver value. There was also agreement that it is generally better to describe index data as a ‘community index’ rather than an ‘industry index’, so that the ‘product promise’ is that you can index against other paying members, rather than a comprehensive industry view.

Customer Success is a term typically used for roles that are not directly revenue-targeted staff, but drive client-facing activities such as onboarding and initial diagnostic, expectation management, and usage promotion. The roundtable participants shared the proportion of their staff in these roles and it ranged from low teens to over 40% (albeit on small overall staff numbers, typically 15-25, but still indicative of the importance given to these roles by these Founders / CEOs). One participant commenting on the client diagnostic that their Customer Success team runs at the start, and towards the end of the first year of membership, said; “It doesn’t always work perfectly but when it does, it really does, and it shows what we offer is more of a programme, not a passive subscription”. Another participant fiercely protects the number of accounts each Customer Success person is allocated to ensure they have the time to navigate each client. In Community Management, one participant described how at the heart of his proposition is a community team delivering 40 small-scale peer-to-peer virtual meetings per month. Another Founder / CEO commented: “Community doesn’t just happen; it takes careful curation, community insight and management, and the gentle prodding and encouragement of members to participate and answer other members’ questions.”

While there were many differences in the language and propositions between the membership plays at the roundtable, the Founders / CEOs consistently cited Community Management and Customer Success as two areas that are absolutely critical to the success of paid membership models, and these strike me the most significant areas of investment that mark these business models out from more traditional publishers.