The Operator Pulse | Q1 2024
The Operator Pulse provides quarterly commentary on the membership industry through the lens of major economic forces to give you the broader context and insight needed to be the smartest membership operator in the room.
New summaries will be added quarterly.
The Landscape
During Q1 2024, we saw overall membership performance continue to stabilize, with pockets of strong performance in key areas. Consumers remain cautious, however, they are showing a strong appetite for membership products that are anchored to independent points of view and content that facilitates learning.
Certain economic headwinds remain, as consumer confidence is rangebound. Factors contributing to stagnant consumer confidence include high interest rates and general uncertainty about household income, leading to more scrutiny of subscription products and their overall necessity in the current moment.
Membership Performance
Consumers are dialed into their current spending on subscription products. But we see membership as a category showing signs of resilience. The factors that are driving this include:
Closer relationships with founding figures/thought leaders
Member content that solves major pain points
Members being willing to retain and discounted rates
Global Membership Metrics
Acquisition: The average membership saw a slight uptick in acquisition to the tune of 9% Year-over-year (YoY)
Churn: The average membership saw an average churn decrease of 5% YoY. Notably, quarterly memberships are currently seeing the lowest YoY churn rates.
Revenue Growth: The average membership saw moderated revenue growth during Q1 of 6% as membership operators aggressively sought to retain members at discounted rates through Retention Discounts.
Member Tendencies
Members cancelling subscriptions during Q1 were very receptive to retention discounts. Membership proves to be lower on the list of cost cutting for the average paying member, as these members highly value the relationship/experience that exists within such products.
Membership operators recovered 18% of revenue churn using retention discounts in Q1.
The strongest-performing membership products during Q1 were quarterly and annual plans. Notably, these are the types of plans that responded best to retention discounts, as the total savings to members was realized up front, providing a more tangible financial incentive for members to retain.
Collectively, members are hesitant to cancel, and only doing so when it’s absolutely necessary - a datapoint that’s entirely shaped by current economic conditions.
Outlook
We see the stabilization of membership metrics that took place in Q1 translating to more meaningful growth in Q2. Looking beyond Q2, we see the possibility of tight economic conditions easing. This is based on current projections of the timing of interest rate reductions paired with a slight easing of inflation, both of which significantly impact consumer spending trends and overall confidence that trickles down into membership products over time.
