Membership Programs Build Loyalty, Profits

How do CompUSA, Ziff-Davis and a growing number of marketers online and offline get consumers to hand over $40 or more per year for the privilege of being a customer? Membership clubs are the answer, and many companies use them to build recurring revenue and long-lasting relationships with customers. But does membership marketing make sense for your company and what can you learn from the experience of others?

The CompUSA Dial-A-Tech service has a similar theme to emergency road services. Computer owners can call the CompUSA technical support hotline for help 24 hours a day, 7 days a week.

According to Clark Hausmann, national manager of the Dial-A-Tech service, while CompUSA may charge more on a per-incident basis, the perceived value to the customer is worth it.

“Memberships give customers unlimited use vs. having to nickel-and-dime them to death,” he said. “When we sold packs that included five to 10 calls, customers would stop and think whether or not the problem was worth it.”

When customers pay in advance for technical support, CompUSA increases revenues, reduces the likelihood of returns and cuts the cost of employee time spent with confused consumers. In the CompUSA model, some customers are frequent users and others hardly use the service at all.

ZDNet, a subsidiary of Ziff-Davis and a leading online provider of technology news and information, created the ZDRewards membership/loyalty program to help users gain access to its vast knowledge base.

ZDRewards aggregates the best online and offline offerings of Ziff-Davis into one package, encouraging trial of all of the information, education and print products in the Ziff-Davis family. ZDRewards builds loyalty by offering a $100+ package for only $49 and from recurring revenue from a growing membership base. Program benefits include free software, research, online education and a subscription to any Ziff-Davis magazine.

If ZDRewards visitors look to ZDNet as their single source for technology resources and information, then ZDNet will have a winner and its fast growing number of members will renew.

To develop a winning membership program, consider what value you can offer your customers when you ask them to pay in advance for your package of benefits.

CompUSA recognized it was painful for consumers to pay for each call, and Ziff-Davis felt customers might get lost in its sea of offerings. While CompUSA might earn less on a per-call basis and the total revenue from the package of Ziff-Davis benefits is far less than if each service was sold separately, their customers will be more satisfied and the incremental sales will increase their bottom lines.

Even if you don’t have the breadth of products and services available to Ziff-Davis, consider partnering with other companies.

But before racing to use all of the latest technologies to build and deliver a membership program, step back and carefully examine the needs of your customers.

Analyze how well your technology supports your existing business systems and marketing strategies. Then identify and bring together key team members to refine your processes and define an action plan. Aim to effectively use new technology to execute programs that meet and exceed customer expectations.

To develop a successful membership marketing program, think creatively and consider what your customers need by putting yourself in their shoes. Analyze what your competitors offer and study successful membership marketers in other industries. If you can’t meet your customers’ needs with your existing resources, team up with others who can. Develop a plan within the context of well-conceived systems and strategies, and you will be on your way toward providing a comprehensive, high-value offering.

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