If you want to make big money in your private domain, you must be wary of these "pitfalls" in membership operations!

For enterprises, the key to doing a good job in membership operation is to build an effective membership operation strategy and explore effective membership operation methods. In this article, the author summarizes the "pitfalls" of membership operation that enterprises need to avoid, which may be helpful for enterprises to build membership operation strategies.

Private domains will remain very popular in 2023, and along with their rise are membership systems launched by various industries.

Taobao’s “88VIP”, JD.com’s “PLUS Membership”, Oriental Selection’s “Selected Membership”... All industries are building a paid membership system, striving to attract the most loyal users in the private domain, hoping that they will continue to repurchase and bring stable profits to the company.

However, membership operation is also a challenge for enterprises. You need to accurately find the demands of different users and design an effective membership operation strategy for them.

Some companies have found effective ways of operation through continuous trial and error, while others have repeatedly run into obstacles and fallen into one pit after another.

So what are the common pitfalls that companies need to avoid in membership operations? This article will share with you some common misunderstandings in corporate membership operations.

Myth 1: Membership equals low prices

A company we once served fell into such a misunderstanding.

In the early stage of membership operation, the strategy of giving members low price discounts was implemented to attract a large number of users to join. Most of the time, the products were even sold at a discount of as low as 50%.

Although a large number of orders and sales were obtained in the early stage, and the number of members continued to increase, it became difficult to cancel these "membership benefits" over time. Users have formed the habit of waiting for discounts before buying, and the company is in a dilemma.

"Giving discounts" can certainly quickly increase the number of members in the short term, but in the long run it is easy to cause "aesthetic fatigue" and damage brand value, especially for brands positioned in the mid-to-high-end market.

Just think about it, the reason why we are willing to become a member of a certain company must be because of our trust in the brand and recognition of the products, not just because its products are sold cheaply.

Therefore, if an enterprise wants to truly win the hearts of its members, it must do a good job of "product + service" and never lose sight of the main goal!

Misconception 2: Only pursuing the number of members, not the quality

A catering company we served made this mistake. As early as 2018, the owner of this company realized the importance of membership and wanted to quickly increase the number of its members.

So he strongly recommended membership to every user who came to the store, and they could get free food if they joined. He even put a "small card" in each takeaway bag. The text on the card read: Scan the code to register as a member and receive a 5 yuan red envelope.

As expected, through vigorous publicity, he quickly accumulated 5,000 fans. However, these fans were basically induced by interests, and had no perception or recognition of the brand. They might only come to eat you once or twice at most.

In the end, these fans basically did not bring him the desired repurchases and conversions. Not only that, he did not think about how to retain these members in the future. Before long, more than half of these members were lost, and his investment was wasted.

Today, many companies that are engaged in private domain business still have this kind of thinking, which is to attract people first and then talk about it, without caring about the quality or how to retain them in the future.

According to statistics, the economic loss caused by the loss of one old member to the company generally requires the development of 12 new members to make up for it. Therefore, companies should abandon the "funnel thinking" and turn to the "retention thinking" and pay attention to user maintenance.

Today we will see that those companies that do well in membership must pay attention to the screening and retention of members. Because it is often a small number of users who contribute most of the profits to the company, members naturally have to be divided into levels.

Myth 3: Traditional membership and paid membership are strongly correlated

This is also a common misunderstanding in membership operations. In our communication with customers, we found that many people have a one-sided understanding of the membership system, believing that traditional members and paid members are strongly related and must be connected or have a direct relationship with each other.

But in fact, we can see that many companies including KFC, Cha Baidao and Heytea have split traditional memberships and paid memberships to meet the more refined needs of customers.

Traditional and paid can be two systems, which are not necessarily related and depend on the combination of enterprise resources and technology.

Let’s talk about traditional (growth) membership first. Because growth membership generally does not set a threshold (free), there is no source of income for the company, and the overall operating cost is high, so it is only suitable for medium and low frequency rewards. For example:

• Didi Chuxing: Premium members will have a higher probability of upgrade and more quick response privileges during peak hours.
• Starbucks: Gold-level members can redeem a custom drink for every 9 stars (or RMB 460 spent).
• Alipay: Diamond members can receive 3 quick registration coupons per month.

In most cases, growth membership is only used as a means for companies to match their points system and attract users to continue to repurchase through subsidies.

For paid membership, there is a certain threshold. For example, Taobao's 88VIP requires 888 yuan/year (88 yuan/year for users with a Taobao value of 1,000). Compared with growth membership, its membership rights are richer, and most of the rights are exclusive to paid users. For example:

• Subscription consumption (paid membership is an admission ticket). Example: annual membership of Sam's Club, Costco, and Hema.
• More traffic inclination. Example: Zhihu members’ pinning function.
• Obvious discounts in monetary terms. Examples: JD PLUS shipping coupons, Ele.me takeaway red envelopes.
• Exclusive VIP resources. For example: Youku zero-ad experience, QQ Music exclusive songs, VSCO member filters.

Nowadays, the "paid membership" model has gradually become a trend.

Myth 4: Only products with low customer orders and high repurchase rates can become paid members

Some students and customers often ask me: Our product has a high average order value and a low repurchase rate. Is it necessary to become a paid member?

In fact, products with high average order value are more suitable for paid memberships because the customer group has greater demand for services and rights.

Here, we can cite some cases of paid membership in high-customer-order industries as examples to illustrate our point.

Chow Tai Fook, a gold brand with a customer unit price of up to 100,000 yuan, has launched its own paid membership. The price is 88 yuan a year, limited to the first 10,000 people. After purchasing a paid membership, users can enjoy K+ coupons, exclusive gifts, birthday coupons, points coupons, and free return shipping.

In addition, home appliance giant Midea also has PRO membership with an annual fee of 299 yuan, which includes 7 benefits including PRO coupons, PRO price discounts, 10 times the points, 0 yuan extended warranty, 30-day price guarantee, 12% off on package purchases and wine privileges.

In the aerospace industry, many airlines provide VIPs with privileges such as VIP lounges and fast lanes without queuing.

Therefore, it is obvious that high-customer-unit products can have paid memberships, and can even perform better than ordinary products.

Misconception 5: Making membership points too simple

Shopping points can be exchanged for goods. This is a marketing strategy commonly used in today's retail industry, which reflects a consumption incentive for members.

However, the current status of membership points in most companies on the market is that they are tasteless and a pity to throw away. Companies have to consider issues such as cost and operation, and they have sloppily made a points system, but users will find it very useless.

Either the value of the points is too low, and the points accumulated over several months can only be redeemed for a small gift, or you need to purchase it with points + cash, so it may be more cost-effective to buy it directly from Taobao.

Or the points are too useless, there are very few products in the mall, and they can only be exchanged for some unnecessary coupons. In addition, the various complicated exchange rules are hard to understand, and the points you have worked hard to accumulate will be cleared if you are not careful.

In fact, the points system is also an important part of membership operations. If the points system can be managed and operated well, merchants can obtain a relatively stable customer base and a high repurchase rate.

For example, in order to activate interaction with users and enhance user stickiness, Huazhu has broken the relatively isolated and outdated model of the traditional "points system".

The monetization of points was first proposed in the industry. Points earned from hotel stays can be spent as money and directly deducted from room charges. Users can even use points for charity. The ways to obtain points are also relatively diversified.

Today, Huazhu has more than 200 million members, becoming a model for membership operations in the hotel industry and even the entire industry.

Myth 6: Treating all members equally

This is also one of the most common mistakes made by companies. A customer we served before shared his experience with us.

He is a jewelry company with a high average customer spending. Therefore, there are huge differences between customers, some may spend only a few thousand yuan a year, while others may spend tens of thousands or even hundreds of thousands of yuan a year.

However, he chose to treat all members equally in terms of serving users and providing benefits. This made those high-value users feel that they were not "treated preferentially" and were no different from ordinary users, so they turned to other competing brands.

So, under our advice, he adjusted his operating strategy and used 10% of his profit income to purchase gifts for major customers during holidays. He also launched super VIP benefits, clearly stipulating that if a single consumption reaches XXX yuan, he will receive gifts such as peace buckles, bracelets, pendants, etc.

After some adjustments, his revenue increased by 200% in the following year, and nearly 80% of the revenue was contributed by several major customers.

"Customer-centric" does not mean that all customers are centric. The human and material resources of an enterprise are always limited. If you want to get the maximum output from limited resources, you must invest resources in customers who can generate the most value.

Misconception 7: Blindly copying successful cases

There are many successful membership operation cases on the market at present, but these excellent companies have gone through a long period of exploration and experimentation before summarizing the operation methods that suit them and establishing a mature membership system.

However, some companies are eager for quick success and want to see results in the short term, so they quickly copy the membership systems of these successful companies.

As a result, the results of this approach are often unsatisfactory. Not only does the money get wasted, but users are not interested in this forced "membership system", so no profit is generated.

Due to differences in products across industries, user needs and touchpoints can vary greatly.

Therefore, when companies learn from cases, they must start from the characteristics of their own users and develop operation plans around user needs. Only by making users feel identified can they bring repeat purchases to the company.

In addition, the membership operation of an enterprise is not a "once and for all" thing. Even if the membership system is built, we still need to observe the actions of competitors and customer needs and make real-time adjustments to capture the hearts of customers.

Final Thoughts

Whether it is the extension and change of the scene or seizing the user's life cycle, what is revealed behind it is the company's idea of ​​"intercepting traffic marketing".

Membership operation is a long-term and continuous process. Enterprises need to constantly try and summarize in practice until they find a path that suits them best and practice it firmly.

Author: Yan Tao WeChat public account: Yan Tao Sanshou