Who is the author of The Membership Economy?

The author of The Membership Economy is Robbie Kellman Baxter.

Marketing & Sales

The Membership Economy Book Summary - The Membership Economy Book explained in key points

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The Membership Economy summary

Name: The Membership Economy
Rating: 4.3 (40 reviews)
Author: Robbie Kellman Baxter

Robbie Kellman Baxter

Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue

4.3 (40 ratings)

18 mins

Brief summary

The Membership Economy by Robbie Kellman Baxter is a business book that explores the rise of subscription-based business models and offers guidance on how to build long-term customer relationships through membership and community building.

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Strategy Growth Hacking Marketing

Table of Contents

The Membership Economy
Summary of 8 key ideas

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Key idea 1 of 8

What’s in it for me? Get in on the membership economy.

Imagine always having access to a new, clean car, without worrying about having a garage or paying taxes for it. Doesn’t sound bad, right? In our modern, networked world, this is the reality for an increasing number of people who simply want access to a product, rather than ownership of it. The result is that more and more companies are changing their business model from a customer-based to a membership-orientated one.

These blinks explain the membership business model and outline the workings of modern membership organizations. Based on real-world examples of companies that successfully use the membership business model, you’ll be provided with handy tips on how to transform a traditional ownership-oriented company into one oriented around membership.

You’ll also learn

how Facebook started small and then focused;
why Adobe is suitable for access; and
how the “free” membership option ruined Napster.

Internet-powered businesses offering customers “access” rather than “ownership” are on the rise.

Just 15 years ago, pretty much everyone had their own collection of CDs and movies. Today, that’s no longer the case. Obviated by services like Amazon Prime, Netflix and iTunes, such collections now seem slightly decadent. With the unprecedented global access to media provided by the internet, a new business model, that of access-oriented streaming services, now dominates the market.

The advantage of this model is that it allows us to bypass all the responsibilities and costs associated with ownership. But it’s a big shift, because the traditional economy is built around the principle of ownership; when customers buy things under the standard system, they can do whatever they want with them.

Just think of owning a car. You can paint flames on the side or adjust the chassis. But, of course, there are also costs. If the car breaks down, you have to fix it. You also have to pay taxes and secure a parking spot.

But what if you only need a car once or twice a month? Renting might be the best solution. That way, you’d have access to a car when necessary, but not have to bear the responsibility or pay the costs of ownership.

Fortunately, the internet makes this kind of access easier than ever before. And over the past few years, new web-powered companies have emerged, giving their customers convenient alternatives to ownership in almost every sector.

For instance, Zipcar members have access to a fleet of company-owned cars. Using a slightly different approach, RelayRides pairs car owners with those who want to rent a vehicle. Similarly, you can rent movies on Netflix or book a temporary room through Airbnb.

Crucially for companies specializing in access, the focus changes from products (the traditional economic model) to customer. More specifically, the customer is no longer merely a client, but a member, as we’ll see in the upcoming blink.

Membership-oriented businesses create an ongoing relationship between company and customer.

Imagine going to a store to buy a hammer. After you’ve paid for it, your relationship with the shop is over. This is the classic model of customer interaction. The membership model, on the other hand, is different. When customers commit to a company, they get all the benefits and responsibilities of an ongoing relationship.

This relationship could be determined by a subscription (as with Netflix) or a user ID (think of Facebook), or with a simple membership card, like what you’d get at the gym. What’s important is this: in the membership economy, the relationship between customer and company changes. Unlike traditional “customers,” members have a stake in the company.

Attract new members by setting up and refining an effective acquisition strategy.

As we’ve discussed, members are the meat and potatoes of any membership-oriented business model. But how does a company attract members? Well, you just need the right acquisition strategy, and soon enough members might start recruiting new ones, all on their own!

An optimal acquisition funnel will follow four phases. We call it a funnel because the first (or top) phase tries to include as many people as possible. In each successive phase, some people will drop out. Then, in the last phase (when we’ve reached the bottom of the funnel), a relatively small amount of potentials will actually become loyal members.

Implement the right onboarding strategy to retain new members and transform them into superusers.

Imagine if Facebook and Pinterest had zero members. If no one posted or pinned content, the platforms would basically be worthless! And that’s the thing about membership organizations – if members don’t regularly participate, the companies fall apart.

That’s why you need a good onboarding strategy that kicks in right after sign up. Typically, onboarding should progress through the following three phases:

Use a simple pricing model and be aware of the downsides of a “free” membership option.

When buying a car, you factor the price of repairs into your purchasing decision, to understand the long-term cost. But how do you calculate the cost of membership?

Subscriptions are one of the most common pricing models in the membership economy – and for good reason. A company offering subscription-based pricing can provide ongoing value for the duration of a user’s membership. Plus, tiered pricing offers greater flexibility because it’s based on the value provided to each member.

Boost loyalty by personalizing the user experience and tracking member behavior.

As we’ve discussed, members are the foundation of any membership organization. And thus, keeping them content is the core task of any successful membership organization.

To do so, keep your service simple and personalize the user experience to build loyalty. In addition to the onboarding strategy we introduced earlier, there are a few easy ways to promote member loyalty.

Start-ups need to establish a membership-oriented culture from the beginning to ensure members gain value right away.

When first launching, start-ups often encounter the “chicken and egg” problem: they need a critical mass of members to gain any members. Because remember, without members creating content, there’s little value to attract new users.

To overcome this problem, the company needs to follow the membership principle from day one. Meaning, if you truly want your new venture to be part of the membership economy, you have to start with the right team and company culture.

To transition to a membership-oriented model, analyze your company’s eligibility and prioritize transparency.

Technology has made it possible for people to get access to products and services via the cloud. But in the process, it has narrowed the market for ownership. This transition, from ownership to access, hasn’t been easy. But for some companies, it’s necessary to make the shift.

Still, before you plunge into the membership economy, make sure your company is eligible for the membership model. Not every company is suited to this style of doing business, so if you’re thinking of making the transition, consider these points:

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What is The Membership Economy about?

Today, ownership is out. Consumer trends show that more and more consumers want temporary access, not permanent ownership. And within this changing landscape, membership-oriented businesses are king. The Membership Economy (2015) outlines key strategies and tactics based on real-world examples for successfully building a membership organization.

The Membership Economy Review

The Membership Economy (2015) is a thought-provoking exploration of how organizations can thrive by building long-term relationships with their customers. Here's why this book is worth reading:

It offers a fresh perspective on the shift from ownership to membership, providing valuable insights on how businesses can adapt to the changing landscape.
Through in-depth case studies and practical examples, it illustrates the benefits of focusing on building a loyal customer base, fostering engagement and recurring revenue.
The book's emphasis on personalization and community highlights the importance of creating meaningful experiences that keep customers invested and coming back for more.

Who should read The Membership Economy?

Business-owners of all stripes
Leaders and managers who want to attract more members to their company
Entrepreneurs interested in successfully building a membership-oriented business

About the Author

Robbie Kellman Baxter is a leading consultant and speaker. Her past clients include Netflix, Yahoo and eBay.

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