Memberships surely offer predictability via recurring revenue. But if designed poorly, it can lead to a low brand value perception.
Many eCommerce merchants go heavy on offering discounts in order to attract members. But that strategy can backfire.
Successful membership programs have the knack of balancing profitability and brand integrity, and exclusivity with perks.
In this blog, we explore how to strategically monetize memberships on your Shopify store.
Curious?
Read on!
TL; DR
- Over discounting in membership programs leads to customers expecting low prices, damages brand positioning, and ruins profit margins.
- Build membership value through non-discount perks that create exclusivity, emotional connection, community, etc.
- Membership perks and benefits beyond discounts include free shipping, exclusive product drops, early access to collections, VIP members-only events, exclusive content and courses, tiered membership levels, minimal and conditional discounts only.
- Successful membership programs balance profitability with brand positioning by offering exclusivity and value beyond discounts. Appstle Memberships App enables Shopify merchants to build successful membership programs.
What are the risks of devaluing products with membership?
Designing your Shopify paid membership strategy without proper thought can backfire. It can lead to devaluing your products without you realizing it. Here are the risks of devaluing products with memberships:
1. Over-discounting as the primary perk
When you offer a big discount every time to members, you’re conditioning them to perceive your regular prices as inflated. That discount will not hold too much meaning. Moreover, customers will then buy products only when on discount. They will stop buying at non-discounted prices.
This means you will always be selling products at reduced prices, which will decrease your profit margins. The discounting strategy might work for the short term but in the long run, it creates dependency. You do not want to turn your membership into a bulk discount club.
2. Making exclusivity feel like a discount club
Members want to feel special and have exclusive experiences. If you narrow down the experiences to simply getting discounts, members will stop feeling like they belong to something special. Because discounts are mostly a priority for price-sensitive customers. Discounts do not build any emotional attachment.
Membership programs that only focus on discounts become transactional. This can limit your opportunity to sell high-value, premium products to members. Moreover, it makes the brand feel commoditized.
3. Failing to align membership with brand identity
Another mistake merchants tend to make is a mismatch in brand positioning and membership perks. For instance, if you position your brand as premium but offer discounts on bulk orders, it contradicts your brand positioning.
When membership offers and brand positioning differ from each other, customers perceive the brand as profit-driven and transactional rather than customer-centric. This harms customer trust and brand identity.
Shopify membership models that drive value
Apart from discounts as perks, your eCommerce membership ROI can be generated through various other non-transactional strategies. Let’s look at some membership models that can increase the value perception of your brand and program:
1. Design perks beyond discounts
The most effective memberships offer a mix of perks that helps enhance the perceived value of the membership plans. Moreover, it is designed in such a way that it doesn’t eat into profits.
Here are some perks to offer:
- Free shipping is a favorite perk of customers. Besides, it enables predictable cost management for your business
- Offering free shipping often offsets the annual membership fee, encouraging customers to sign up
- Exclusive product drops create urgency and belonging
- Early access to limited edition collections, seasonal products, etc. This can also help you test demand and manage inventory efficiently
- VIP events exclusively for members provide experiential value
- Offer members-only live shopping events, Q & A sessions, workshops, etc.
- Exclusive experiential offers enhance the perceived value of the membership
2. Provide content access
Depending on your industry and product type, you can offer exclusive content access. It helps members gain knowledge that increases product satisfaction and stickiness. Here are some tips:
- Exclusive courses about product care, styling, etc. This helps position your brand as an authority in the industry
- Facilitate private community spaces on online channels to increase engagement between members
- Members can also create content by sharing tips, product uses, reviews, etc.
- Offer behind-the-scenes content to humanize the brand
3. Early access to collections
Offering early access is another way to allow members to feel exclusive. Members get to be the first ones to buy new products, thus increasing your eCommerce membership ROI. Here’s what to do:
- Offering early access creates a natural funnel for inventory management and demand forecasting
- By offering early access, you can generate revenue at optimal margins as members feel more encouraged to pay full price for early access
- It has a psychological effect on members as they get to discover new products before others
Balancing membership pricing and perks to increase ROI
An effective way to generate high eCommerce membership ROI is to balance membership pricing with perks. When planned strategically, it can boost returns.
1. Pricing tiers that reflect value
Designing a tiered membership program has many benefits. So rather than offering just one standard plan, create tiers. For example:
- Basic tier: Free shipping, early access, $50 annually
- Premium tier: Basic tier perks + exclusive content, VIP event invitations, personalized shopping experiences, $100 annually
- Elite tier: Basic + Premium tier perks + personal shopping consultations, priority customer service, exclusive products, $ 200
Tiered paid membership strategy can help generate more value from customers who are willing to pay for premium experiences. Entry-level members may be attracted with price-sensitive offers. The benefits for each tier should be different from other tiers.
2. Bundling membership perks strategically
Another way to balance pricing and perks is to bundle perks strategically instead of offering them individually. For example, offering multiple perks in one tier (VIP access, free shipping, exclusive content) is more appealing than offering just VIP access.
List all the perks along with their hypothetical values assigned. For example, $10 for free shipping, $20 exclusive content, etc.
However, offering too many perks can make members take the perks for granted. Therefore, curating bundles of multiple perks is more effective.
3. Avoiding ‘always-on’ discounts that erode margins
One of the most important decisions to make is whether you should give any discount at all. And if yes, how much. This is a critical factor in monetizing your Shopify memberships. Here are some factors to consider:
- Avoid offering discounts completely
- Offer only early and VIP access and exclusivity
- Offer limited discount, such as 5% or 10%
- When offering discounts, make it conditional, for example, order value threshold
- Offer discounts on low-value products so that it doesn’t eat into your margins
How to successfully monetize Shopify memberships
When your paid membership strategy is designed strategically, you can monetize membership programs, maintain brand positioning, and enhance customer relationships. Here’s how:
- Use Shopify’s features to build VIP programs focusing on exclusivity and access
- Build private shopping experiences for members
- Use Shopify features to build community and provide education to members
- Install Shopify membership apps to complement Shopify capabilities
How Appstle Memberships App enables perks beyond discounts
With Appstle, you can design and customize a membership program to match your specific goals and brand positioning. The app allows you to choose perks, discounting structures, etc. to make it truly tailored to your brand needs.
Here are some capabilities of Appstle Memberships:
- Create customer segments by membership tiers
- Customize benefits bundles
- Offer personalized content and early access experiences to members
- Combine loyalty program and membership perks
- Set up conditional perks, such as free shipping based on order value, discounts on specific products only, etc.
- Appstle app integrates well with Shopify’s backend, allows automated fulfillment of benefits, etc.
Wrapping up: monetize your Shopify membership program
Incorporating a membership program in your Shopify store can offer many opportunities for you to build recurring revenue, customer engagement, and long-term customer relationships.
However, if designed poorly, and relying too much on discounts, it can damage your brand positioning. A balance of other perks with discounts and membership pricing can help drive long-term success.
To create effective membership programs, integrate Appstle Memberships App in your Shopify store today!
