ServiceFriday: Join Us! – How Customers Can Become Loyal Members

Memberships are the foundation of revenue for admission-based services such as gyms, cultural and nature centers, the performing arts, and more. In addition to direct membership deposits, memberships generate indirect revenues through ancillary purchases such as concessions, merchandise sales, and parking fees. Moreover, membership renewals generate advances revenue, providing service providers with forecasts of available inventory for memberships. Based on this, it is very important to understand the factors that lead customers toward purchasing memberships instead of opting for occasional engagements. Research in the Journal of Services Marketing by Morris George and Kirk L. Wakefield found three key issues for marketers to pay attention to when wanting to convert one-time customers to full fledged members.

First, as there are now typically more membership plan options available to customers, (full membership, partial membership, mini-plans, etc.) it is important to match the individual customer with the plan that he or she is most likely to accept. This avoids misalignment between what the customer really prefers versus what salespeople are incentivized to do, which quite often is to push to sell the highest priced memberships. The authors suggest using a predictive model to properly score the likelihood of purchase and renewal. This could alleviate such mismatches and avoid burning viable leads for half-membership and mini-plan purchases.

Second, marketing managers should be aware of their contact strategy as the study results show that e-mail contact alone has a negative effect on the likelihood for a customer to join a full-membership program. Moreover, the timing of contact is critical. Contacts made closer to the decision time for renewals and during heightened emotional periods (e.g. during the playoffs for sports) pay greater dividends for membership purchases and renewals.

Third, the results suggest that the service firm must recognize where the customer is on their journey toward becoming a committed buyer. To do this, they must make use of big data analysis in order to identify the needs of individual customers and to know exactly what their customer journey looks like. As an example, customers usually opt first for smaller bundled plans before moving on to bigger ticket memberships.

The findings suggest that by matching customer needs, making contact in the right way at the right time, and knowing your customers’ journey are key factors to help organizations increase memberships at all levels.

“This is the first study to map a customer journey for admission-based, membership services. The longitudinal approach across multiple years provides a deep understanding of how customers take steps toward loyal membership status, while also pinpointing potential drawbacks of current contact strategies.”

To access the Journal of Services Marketing article, visit Emerald Insight at this link: https://bit.ly/2TE4hcb (A fee may apply.)