The Operator Pulse | Q3 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 Q3 2024, we saw a significant rebound in member acquisition, especially among memberships that observed slower growth during the first half of the year.
Overall economic and market conditions remain relatively tight, however, we’re seeing signs of a resilient consumer as interest rates begin to decline and consumers begin to feel slightly better about their financial positions. While sentiment certainly isn't where it was in prior years, we feel that digital product sales are a leading indicator of the average membership consumer.
We’re moving into Q4, which is historically the strongest quarter for membership sales. Holiday promotions, gifting, and consumer mindset is typically very positive, which provides membership operators with the perfect environment to drive growth.
Membership Performance.
Acquisition was the clear bright spot during Q3 as membership operators observed lower acquisition costs and broad enthusiasm for their products. Notably, memberships that introduced new benefit mediums such as podcasts and video content saw the strongest rebound in member acquisition.
Notable trends observed during Q3 were:
An increase in 3-Month and 12-Month retention, signaling that existing members place high value on their subscriptions
Sharp declines in the percentage of members who chose to disable auto-renew, signaling long-term loyalty
Global member churn decreased by 9.9% during Q3
Global Membership Metrics.
Acquisition: The average membership saw an uptick in acquisition to the tune of 19% Year-over-year (YoY)
Churn: The average membership saw an average churn increase of 9.9% YoY.
Revenue Growth: The average membership saw stable revenue growth during Q3 10.2% YoY.
Member Tendencies.
Coming off a “quiet” summer season for digital products, members were more engaged during Q3. The average membership operator saw member-only email open rates of 59% compared to 42% in Q2. This renewed engagement is driving higher retention as members make more use of their existing benefits.
Annual renewal rates continued their upward trend from Q2 and ended Q3 at 66% (a 10% increase from Q2 2024). Plans with longer renewal frequencies continue to perform well, however, we saw unusually strong performance with monthly-renewing plans. We think this signals a renewed “willing to try” mindset among membership consumers not yet ready to “take the plunge” into quarterly or annual products. Historically, strong monthly membership performance precedes stronger quarterly and annual membership performance.
Personalization inside memberships was a major winner during Q3. Members who experienced personalized follow-ups from member-only events and personalized email communications gave positive feedback to operators. This proves to be a great retention tactic.
Creating personalized experiences (in any way) for members will be a winning strategy for years to come.
Outlook.
We see strong membership growth from current levels unfolding during Q4. The environment is right for membership operators to be aggressive with their sales, promotions and incentivization tactics during Q4. We think Q4 will bring an exceptionally strong promotional quarter as consumers are proving to be highly receptive to discounting and even gifting.
Moves to Make Right Now.
Membership operators must look to be aggressive throughout Q4. Consumers are bombarded by ads and other competing promotions during this time of year. We recommend that direct, personalized messaging be utilized during Q4 membership marketing initiatives.
Your Q4 sales process should already be in motion. Go ahead and start conversations with your audience about your offering and work to create deeper conversations with them as you guide them toward your paid membership offering.
