Member Upgrade Campaign: A Strategic Guide to Exploring User Potential and Scaling Up Average Customer Price

In the stock era, commercialization is particularly important. The monetization of services has brought the membership economy to a climax. This article will explore common strategies in the membership model, increase the average order value through membership upgrades, and ultimately achieve revenue growth goals. The author combines relevant cases to share the three-step method of membership upgrades, hoping to inspire you.

In March 2023, the number of monthly active mobile Internet users was 1.209 billion, a year-on-year increase of 2.3%. Looking at the entire first quarter, it has re-entered a steady growth trend of 2% to 3%.

In the stock era, the importance of commercialization is highlighted. There are two common business models at present. One is traffic monetization (advertising, application distribution), and the other is service monetization (content payment, service payment). The latter is gradually rising, and it has also brought a new monetization method into the spotlight - membership economy.

Today, we will continue to explore common strategies in the membership model: increasing the average order value through membership upgrades and ultimately achieving revenue growth goals. Whether you are an entrepreneur, product manager or marketer, you can get valuable insights.

Without further ado, let's go straight to the main text. Enjoy:

01 Issues that need to be determined before upgrading membership

1. Why do members need to upgrade?

Through the membership system, brands or companies can retain more users to a certain extent. However, as digital services gradually penetrate into all aspects of people's lives, people's requirements for services have also increased: they need to be more refined, customized, and high-end.

This brings certain challenges to brands or companies: the extensive buyout membership system cannot deliver value; but it also brings us a glimmer of opportunity: explore more value-added services that users love, upgrade memberships, find new growth points for the business, and leave no regrets.

2. What are the benefits of membership upgrade?

The importance of membership upgrade is self-evident.

First, membership upgrades can improve user loyalty and stickiness. By providing members with more privileges and benefits, companies can enhance users' sense of brand identity and encourage them to be more willing to use and support the company's products or services for a long time.

Secondly, membership upgrades can quickly increase the average order value. By recommending higher-level products or services to members, companies can guide users to consume higher-value items, thereby achieving revenue growth.

In addition, membership upgrades can also bring word-of-mouth and user guidance effects to the company, further expanding the user base and market share.

3. What are the risks of membership upgrade?

Although membership upgrade as a strategy has many advantages and potential benefits, it also has certain risks and challenges.

First, there is the risk of user churn: some users may not be interested in the upgrade fees or new service content and choose to leave.

Second, there is the risk of a decline in user experience: if the upgraded service quality or user experience is not as good as expected, users may be disappointed and have a negative impression of the company.

Finally, there is the risk of competitor counterattack: once a company successfully implements a membership upgrade strategy, other competitors may take similar measures to attract users. Competitors' counterattacks may include offering more competitive membership plans, lowering prices, increasing discounts, etc.

How to avoid and control risks and achieve a win-win situation for users and enterprises? Let's look at successful cases to boost confidence.

02 Analysis of successful cases of membership upgrade

1. Starbucks Odyssey Plan - Getting Ahead of the Future

In September 2022, Starbucks announced the launch of Project Odyssey: based on the existing "loyalty program Starbucks Rewards", it aims to extend Web3 and provide Starbucks members (customers) and partners (employees) with the opportunity to earn and purchase digital collectible assets (NFTs) to obtain new membership benefits.

Members can obtain exclusive points and rewards by completing interactive Q&A, game challenges, offline scene check-ins and other tasks in the Odyssey "Journey" series of activities.

What are the benefits of this membership brand upgrade? In my opinion, there are two points:

① Lock in new experiences of future technologies in advance

The Odyssey project based on Web3 will bring a new and more important user experience. Users will truly own the rewards (equity) and they can circulate.

You may think that this is a forced hype, and there is indeed such a risk. However, the emergence of each new technology will bring doubts and rejection, and in the subsequent development process, its importance will be gradually verified and the old model will be overturned.

For young users, those who will grow up in the future Web3 era, they are the important incremental users anchored by this brand upgrade.

②Lower the user entry threshold

Different from the characteristics of Web3, Odyssey does not introduce the conventional Web3 wallet as a member login method, but uses Starbucks' existing login method.

Therefore, the NFT obtained or purchased by the user does not exist in the user's Web3 wallet, but is hosted in Starbucks. This familiar access method allows ordinary people to quickly experience the freshness brought by new technologies, while also reducing their aversion to new technologies.

2. Netflix’s battle to protect membership: a decrease in appearance but an increase in reality

In 2022, Netflix (hereinafter referred to as Netflix) had 231 million paying members worldwide. As Netflix's home base, North America's users have an average monthly income of $16. At the latest earnings conference, Netflix executives said that its original content continues to increase, and the language will be expanded to multiple languages ​​other than English. The production of series in local languages ​​will attract users around the world.

As a leader in the streaming media industry, Netflix's membership model has always been imitated and pursued by domestic "iQIYI, Youku, Tencent Video and Mango TV". However, under the impact of new streaming media platforms such as Disney, HBO, Amazon and Apple, Netflix's membership growth has stagnated. Therefore, Netflix started the "membership defense war".

On January 20, 2023, Netflix released its fourth quarter financial report for fiscal year 2022, with revenue of US$7.852 billion, a year-on-year increase of 3.9%. The successful strategy is summarized as follows:

① Attract new members with low prices

In November 2022, Netflix launched a low-priced membership package with advertisements in 12 countries: the monthly fee is US$6.99, which is US$3 cheaper than the current cheapest membership package.

Management predicts that this move will generate an additional $3-4 billion in revenue for the company, with advertising accounting for at least 10% of revenue.

②Price increase for high-level members

In January 2022, Netflix raised membership prices for users in the United States and Canada for the third time in three years.

Among them, the basic account fee in the United States has been raised from US$8.99/month to US$9.99/month. We will fully tap the potential of users and find a balance between corporate revenue and user experience within an acceptable payment space.

③Vigorously explore the game market of IP externalization

In 2021, Netflix decided to deepen its high-quality content IP to increase stickiness. It vigorously explored the game market and started the linkage between film and games. In June 2021, Netflix withdrew from the online e-commerce platform to sell peripherals of the popular web drama "Squid Game"; in November 2021, Netflix's game platform was officially launched, and games such as "Stranger Things" and "Asphalt" were released one after another, with considerable downloads.

3. Amazon Prime membership: benefits and prices go hand in hand

In April 2022, Amazon's market value was $172 million, second only to Apple, making it the world's largest e-commerce company. Since its listing in May 1997, Amazon's market value has soared from $400 million, an increase of nearly 4,000 times.

Its success is also inseparable from the launch of Prime membership, which not only brings heavy and high-frequency stickiness of core purchasing users to the e-commerce platform, becoming one of the platform's revenue-generating businesses, but also increases the transaction volume of single customers.

Since 2005, Prime membership benefits have been continuously upgraded from the initial "free shipping service", and have gradually increased: free video and audio privileges, free e-book privileges, free music privileges, free photo storage privileges, 2-hour express delivery privileges... along with these benefits, the membership price has also increased, from US$79, US$99, to US$119.

Therefore, the extremely attractive super benefits of Amazon Prime members have driven the rapid growth of the number of members. The increase in the number of paid members has also brought about the rapid growth of membership income, which has become the fastest growing pole in Amazon's pillar business. Highly active and highly loyal members have also brought higher transaction amounts.

This is the best case study in the membership upgrade campaign: a strategic guide to tapping user potential and increasing customer spending. How can our companies refer to it? The following strategies will hopefully help you implement them quickly.

03 Three steps to upgrade membership, with a rhythmic implementation

1. Provide personalized value-added services

When implementing a membership upgrade strategy, it is crucial to provide personalized value-added services. Raising prices without upgrading services will inevitably cause user disgust and even trigger public opinion, damaging the brand image and bringing long-term negative effects.

First, a multi-tiered membership system can be established. Users can be divided according to their spending amount or activity level. Different membership levels should provide unique privileges and benefits to motivate users to upgrade and maintain their engagement.

For example, iQiyi's premium members can enjoy more terminal playback and exclusive benefits, thereby increasing their loyalty and willingness to consume.

Secondly, using user data for personalized recommendations is an effective way to provide value-added services. By analyzing users' historical purchase records, browsing behaviors, and preferences, companies can provide customized product recommendations to meet users' personalized needs. This can not only improve users' purchase satisfaction, but also increase cross-selling and repurchase rates.

For example, in addition to VIP membership, iQiyi has launched student-exclusive membership, animation membership, novel membership, and sports membership, which are only promoted comprehensively in exclusive segmented channels, or targeted when interest tags are triggered.

2. Comprehensive promotion to encourage users to participate in consumption

In the battle to upgrade membership, motivating users to participate and consume is one of the key strategies. By offering preferential promotions and exclusive discounts, as well as establishing a level reward or points system, companies can effectively stimulate users' willingness to buy and participation, thereby tapping into user potential and achieving a surge in average order value.

First, providing exclusive offers and discounts can effectively attract users to participate and consume. Companies can provide unique offers and discounts to different members. Such exclusive offers can not only increase users' purchase frequency and consumption amount, but also enhance users' recognition and loyalty to the brand.

For example, iQiyi offers limited-time discounts for new members, exclusive discount upgrades for old members, and first-year special offers for consecutive annual packages, gradually allowing users to migrate to membership with higher average order value.

Secondly, establishing a level or points system can further motivate users to participate and consume. By setting up a level reward mechanism, companies can give members certain gifts or rewards to stimulate their participation. This can be free samples, customized gifts or exclusive experiences, etc.

At the same time, it can encourage users to continue consuming and provide them with a real sense of value.

For example, NetEase Cloud Music has set up levels for its members, and users who continue to sign up can obtain more privileges beyond membership rights and benefits; iQiyi also has set up levels for its members, and junior members who continue to sign up can upgrade to premium membership for a certain number of days for free, providing the opportunity to try out the membership and then pay to upgrade.

3. Continue to appease users and improve user experience and care

Personalized communication and interaction are important means to establish close ties with members. Through personalized communication methods, such as regularly sending personalized recommendations, birthday wishes or holiday greetings, you can enhance member participation and loyalty.

At the same time, paying attention to member feedback and responding to questions and needs in a timely manner is also the key to improving user experience. By establishing a feedback mechanism and a dedicated customer service team, members can receive more personalized services and support, thereby improving satisfaction and loyalty.

For example, common questions that may be encountered when upgrading membership can be preset on the customer service page to answer users' doubts and soothe their negative emotions of questioning whether the price increase for new memberships is a scam.

Finally, setting up exclusive senior membership days and holding member-only events are also effective ways to enhance user experience.

For example, Sam's Club Premium Membership is different from ordinary members in that it offers points redemption, free shipping coupons, and offline experience activities, which can increase member participation and loyalty and enhance their upgraded purchase experience and satisfaction.

04 Conclusion

Is membership upgrade a “price increase to clear inventory”?

NO, is to meet more user needs and leave no regrets.

In the battle to upgrade membership, in addition to marketing skills, data analysis is equally important. By monitoring member activity and purchasing behavior, we can gain a deep understanding of members’ preferences and behavior patterns, identify user churn and purchasing bottlenecks, and take targeted optimization measures in a timely manner.

In the long run, it is more important to continue to tap the potential of users. Every member is a potential value creator, and their needs and purchasing power have huge potential.

Through personalized value-added services, incentives and improved user experience, we can stimulate members' purchasing intention and loyalty, further tap their potential and achieve continuous increase in average order value.

The above is all the content of this issue of "Member Upgrade Campaign". Next time, I would like to talk to you about how to build a growth system for mini programs from 0 to 1. Stay tuned!