What businesses need to thrive in a membership economy
As businesses transform to become digital organisations, they are also becoming better equipped for the membership economy.
The term “membership economy”, coined by consultant and author Robbie Baxtor, describes connected, concerned and committed customers who demand more but are also willing to be involved in improving a product or service.
In other words, customers are not just one-off transactions but long-term “members” of a company’s growth story. They are part of an ongoing conversation on how products and services can be conceptualised and delivered.
How does an organisation thrive in a membership economy? Though many in Asia-Pacific say they have digital transformation plans, or are already on a transformation journey, most are still lacking the strategies or capabilities to effect impactful change.
To get ahead in the membership economy, here are five suggested strategies:
1. Plan to go fully digital
Many digital transformation plans today are unfortunately limited to improving processes for gains in productivity or cost cutting. While important, these areas may not radically prepare a company for the disruption that may be on the way.
For example, the same cost-cutting and productivity gains may have already been enjoyed from Day 1 by a digital-native company that is entering the market as a new competitor. How can a company with years of goodwill from existing customers leap forward?
It has to digitise fully its operations not just to improve processes, but to discover insights that can reveal new business opportunities. For example, customers’ preferences may signal the viability of a new product segment or even a new business focus that may not have been apparent before.
2. Get connected first
The first thing to do is get connected, of course. Over many years, companies often have fragmented data on its customers, for example, through mail-in coupons or warranty registrations. Rather than start from zero, they can locate, cross-check and “clean up” the data so it can be used to provide a holistic picture.
Some data may need to be updated. While personal e-mail addresses and mobile phone numbers do not change so often, home addresses or office numbers often do, so they have to be re-confirmed periodically. To encourage users to provide this information, they should enjoy benefits of this 'membership' relationship. Longer warranty periods or discount codes are a good start.
3. Encourage employee buy-in
Employees have to believe in the cause as well, if they are meant to be stewards to help accelerate the transformation in the right direction, rather than become the handbrake that stops things from moving forward. This extends beyond customer service, which deals directly with customers, to all aspects of product development, marketing and sales, for example.
If a competitor is taking customer feedback directly and seeing how to improve next year’s products, you need to know the market and determine how to compete effectively. Without employees acting as customer advocates within a company, what are the chances of it succeeding in making long-term “members” of customers?
4. Understand what the data says
If not well utilised, too much data can sometimes be a hindrance in the membership economy. When much of it is unstructured, it is hard for humans to find a pattern through it. However, artificial intelligence (AI) is becoming advanced enough to “learn” by digesting huge amounts of raw information that humans would struggle with.
In other words, useful data – not just the sheer amount of it – will be key to companies looking to understand their customers better. AI and machine learning could be the crucial tools to streamline and analyse the data, unlocking insights that have always been in plain sight but beyond comprehension to the naked eye.
5. Make the data useful for customers
Though consumers are sharing data more openly today, many do so with the understanding that it will be used to improve their situation. This means businesses have to treat the data not only with care but show that it is being put to good use in coming up with better products and services.
Gaming gear maker, Razer, for example, uses its software to understand how gamers make use of its computer mice. With all the data collected, it gains insights on which products are more popular and how well certain features are used. In designing future products, it is able to produce something closer to what users like.
In the past, companies would run focus groups or give out feedback forms. Today, the data comes directly from thousands of real customers. Using that to improve products or services is building a strong bond with customers that will withstand disruption and competition for the long term.
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A membership economy changes everything
The shift towards an even more customer-centric business model is changing the way companies operate. Should your company get in on membership economy?