Learn How To Let Go Discounting And Use Membership Models To Grow Your Business
Ecommerce brands have been increasingly incorporating memberships as a business model.
This should come as no surprise given the competitive landscape in which eCommerce businesses function. Customers, too, have taken a liking to the membership format.
At Appstle, we’ve noticed globally brands across industries are responding to the trend positively by offering memberships.
These shifts point to one thing—membership is the future of eCommerce and the hack to get out of the endless discounting loop.
In this article, we tell you why a membership model on Shopify stores can help you lead your business toward growth.
Recap: What are eCommerce memberships?
An eCommerce membership is a program customers sign up for (paid or free) to get access to exclusive services, offers, discounts, and other perks by the brand.
Some of the common perks that brands offer are:
- Gift vouchers
- Birthday surprise
- Special discounts
- Exclusive sneak peak and previews
- Priority access to new collections
- Members-only savings
A popular retail eCommerce membership example is Nike Membership. Customers can join it for free and get access to exclusive products, the brand’s fitness apps, Nike training and run clubs, and libraries of workouts, among other perks.
How discounting could hurt your eCommerce business?
Discounted prices help attract customers, increase sales and average order value, but what if we told you they’re hurting your business growth. Matter of fact, eating into your profits. Here’s what discounting can do to your Shopify business:
Decreases willingness to pay
While discount pricing helps attract customers, after a certain period, it can backfire. For example, when customers keep buying a product at a discounted price, their willingness to pay the actual price will go down. If they’ve bought a product for $10 over and over again during the discounts season, they will hesitate to pay $15 when the discount phase is over.
Discounting affects growth
Moreover, discounting makes everything unpredictable. You cannot get a sense of how many customers will remain loyal to you and for how long. In addition, you cannot predict how much revenue you’d earn, etc. These factors have an adverse effect on your business growth.
Higher customer churn
This can lead to customer churn. If customers no longer receive discounts from you, they’ll leave you for brands that are offering the same products at a lesser price.
Why do we think eCommerce memberships are the future?
If you have a membership model on your Shopify store, you’re in a much better position to grow your business in the future. Below are the reasons why we confidently say this:
1. Enables brands to have a flexible strategy
Today’s customers have become used to being served by brands. Whether it’s support while shopping, a problem with placing an order, or hand-holding to set up the app, proactive brands ensure they meet their customers’ needs.
And customers don’t like no for an answer. Something as simple as being able to change their membership plans easily can help shape their perception of a brand. In short, they love flexibility.
And the nature of membership models itself is built around flexibility. It can help eCommerce brands grow revenue as they strengthen their relationships with members. Moreover, help Shopify stores sell memberships faster.
Let’s look at what we mean by flexibility in memberships:
- Once customers sign up for membership plans, brands can offer them options of upgrades, add-ons, or choose plans based on perks
- Unlike subscription, where there are limited benefits, membership perks are applicable on anything and everything, across the store
2. Boosts customer loyalty and retention
As opposed to the usual one-off eCommerce transactions that allow short-term engagements, memberships are built to create long-term customer loyalty. And that is why, unlike subscription benefits, membership perks are meant to offer more value to customers.
Membership perks are designed to,
- Build great connections with customers
- Provide personalized experiences
- A feeling of community and exclusivity
All these factors help improve customer loyalty, reduce churn, and increase retention. The better the experiences you offer, the more customers will stay with your brand.
Here are some ways to boost customer loyalty through your eCommerce membership plans:
- Offer value via your membership perks
- Offer personalized experiences
- Make customization a part of your membership perks
- Create multiple opportunities to engage customers
3. Helps break out of discounting loop
Discounts have become the marketing strategy, no matter the industry or product type. But with every retail brand offering discounts, almost all around the year, for customers, the excitement is wearing off.
Moreover, brands have realized discount strategies can eat into business profits. Of course discounts help attract customers. But once they make the purchase, you’d need to keep engaging them for them to come back to your site. So what do you do? You offer more discounts. This can turn into a loop of lower revenue and eat into your profits.
Memberships have many benefits for eCommerce businesses:
- Recurring revenue
- Predictable revenue
- Better customer engagement opportunities
- Improves customer loyalty
- Reduces churn rate
- Makes it easy to launch new products/services
- Makes it easy to get customers to try new products/services
- Build stronger relationships with customers
- Turn customers into brand advocates
All these above factors help you grow your business without having to cut prices and lure customers via discounts.
4. Provides exclusivity to customers
A study shows 94% of Americans would choose an exclusive offer than other retail offers such as price-match guarantee.
Exclusivity is valuable—it boosts customer loyalty, helps differentiate your brand from the others, and increases revenue. That’s because customers want to feel they’re special and are a part of something unique.
Take the example of recreational clubs. Members get to enjoy special privileges and access and hence they feel good about the experiences.
Ecommerce memberships make it easy for you to provide exclusive experiences. Here’s how:
- Customers who’ve signed up for memberships feel a sense of exclusivity, being part of a special group of customers
- Memberships also enable brands to build communities of customers leading to deeper connections with customers
- Since it’s a smaller segment of customers, it’s possible for brands to build emotional connections with members
5. Memberships boost customer relationship-building
Ecommerce memberships create many opportunities to enhance the brand-customer relationship. For example, since the member segment is a small group, it’s easy to give individual attention or create personalized experiences.
Say you want to introduce a new product in your store and want an opinion from your customers. You reach out to your members and ask them to fill a survey. You hear what they have to say. You incorporate their feedback. All these factors help build stronger relationships with customers.
Here’s how you can use your eCommerce memberships for relationship-building:
- Make members a part of your decision-making process, for example, when you’re planning to introduce a new service or product
- Give members first access to things such as sales, new collections, etc.
- Organize online and offline events exclusively for members
- A good memberships app on your Shopify store will also enable customization for customers, which leads to better customer experience
If you’re looking for an efficient memberships app for Shopify, explore Appstle Memberships and Loyalty app. Here’s what a Shopify customer says about the app:
6. Helps differentiate your brand from competition
Every other eCommerce business is using discounting strategies to attract customers. So it’s nothing new or exciting for customers. In such a scenario, how do you stand out? By not falling for the discounting trap.
But then, what’s the other way to attract customers? That’s where eCommerce memberships come in.
Memberships on Shopify stores can help your business stand out. Here’s how:
- It depends on what kind of personalized experience you offer to members—take personalization to the next level and stand out from the crowd
- You can win customer loyalty with customization and build deeper connections—not all brands do this
- Offer valuable perks that are unique and no other brand offers. One of the best ways to differentiate your membership plans and brand from the crowd
- Memberships also help you understand customers better and provide relevant experiences
Also read our masterclass: How To Measure The Success Of Your Ecommerce Membership Business
7. Ecommerce memberships help you understand customers
One of the most important aspects of running any online business is knowing your customers well. And not meeting your customers face-to-face makes it difficult.
Brands adopt a lot of different strategies to get to know their customers. For example, request feedback or fill surveys or organize in-person events. But that may not be enough.
Even when you run discounts, there’s little you can know about your customers. For example, you might know their spending capacity or how much you can increase their average order value, but apart from that, nothing much.
And this is where membership models help. When you run a membership business, you’ll be able to collect different kinds of information and data about your customers. For example, their spending capacity based on the plan they choose, their needs and requirements, their purchase intentions based on how much they engage, etc.
All this data, when used strategically, can help you grow your business.
How to get started with your eCommerce membership?
Whether a no-discounts strategy is good or bad for your business depends on many other factors. For example, the frequency of discounts, percentage of discounts, etc. And if you don’t have a discount strategy, you’ll have to plan other strategies to grow your business.
As we discussed, eCommerce membership is the way to lead your business into the future. But to create a seamless memberships experience, you’ll need to install the best eCommerce memberships app on Shopify.
Meet Appstle Memberships and Loyalty app—designed for Shopify stores, the app provides a comprehensive set of features that make it easy to set up and run memberships, as well as boost your business growth.