Membership vs Subscription: Which One Is Right for Your Business?
Are you thinking of offering a subscription or membership service but do not know the membership vs subscription difference? Both terms are used interchangeably, but they are different, and understanding these differences will help you choose the best option for your needs. This article will help you make your decision between a membership and a subscription.
Difference Between Membership vs Subscription
Memberships and subscriptions are both quite popular. In the U.S. alone, 205 million people use at least one subscription service, an increase of 23 million since 2020. Meanwhile, thousands of adults worldwide are part of some club or organization through membership websites.
Regardless of the popularity, you need to be aware of which option of membership vs subscription would be better for your business. Here are some of the differences you should keep in mind:
Different Purposes
When you think of membership vs subscription from a business point of view, their purposes are quite different. A membership model is more about creating a community around your brand. Through this model, you can offer your customers special privileges and exclusive rights to special content that is not freely available, which will then help you start a customer loyalty program.
On the other hand, a subscription model is more focused on providing value through regular access to your product or service. It is perfect if you are looking for constant revenue and want customers to keep coming back for more.
Customer Engagement
Membership provides more personal and interactive customer engagement. Members pay to join a community, attend events, interact with like-minded people, and receive special perks. If your business focuses on building relationships, like a coaching club, a membership would be more suitable for you.
A subscription model will not require much interaction. Customers will pay regularly for ongoing access like Netflix or even any monthly product delivery. If you want your business to provide steady income without constant engagement, then you should favor subscriptions over membership.
Cost Difference
A membership usually comes with a one-time, yearly, or tiered fee, depending on the benefits you offer. Your business might even generate high profits if the product or service you offer is of good value to your members.
On the other hand, a subscription is a recurring payment that makes your profit more predictable. It can potentially give you more benefits if you have a constant product or service offering for your customers. On average, a customer spends around $133 per month on subscriptions.
So, when deciding between membership vs subscription think of what you can offer to your visitors and what model would be more suitable in terms of cost.
Customer Retention
Keeping customers for the long term is also crucial for any business, and you should not select your model without considering this aspect. A membership will keep your members engaged if you offer long-term benefits and special packages.
A subscription can increase your customer retention if the users feel they are constantly getting what they pay for. Based on your type of business, you should select either a membership model or a subscription by analyzing which would fit best in your customer retention strategy.
Flexibility
One important factor to consider before choosing a model is flexibility. A membership is a one-time fee or an annual payment, which is less flexible for customers. They might lose interest if they are not given good benefits throughout the year.
A subscription is more flexible as the customers can cancel their membership. The good thing is that they can also change their plan, which would benefit your business.
Conclusion
Choosing between membership vs subscription all depends on your business goals. Now that you know the difference between both, you should think critically and make a decision on what would be more suitable for your business needs and future goals.
