Issue #5 - April 1st, 2025

In this Quarterly Edition:

  • Q1 Perspective: Is the membership economy becoming the relationship economy? The answer is hiding in two charts (included below).

  • Outlook: A question on the topic of your membership being irreplaceable

QUOTE OF THE WEEK

“We’ve seen monthly memberships fall out of favor, but it doesn’t seem to be related to pricing.”

What’s the biggest risk to a membership operator?

Reacting when no reaction is necessary.

It sounds simple, but it’s true. Operating a membership is a turbulent experience that’s full of noise.

Week-to-week and month-to-month changes in metrics are commonplace in this business, and knowing when to react isn’t an exact science.

But there’s one tool at our disposal when it comes to truly understanding what’s happening out there: Taking a quarterly view of what has happened to prepare for what can continue to happen.

Q1 of 2025 is officially over. So let’s make sense of it all and determine what’s worth reacting to.

PERSPECTIVE

The Multi-Quarter Membership Trend that was just Confirmed in Q1

Does membership equal relationship? The data says yes.

If your customers viewed your product as an integral component of their lives they would likely:

  • Demand a price that delivers the strongest value over time

  • Have no need for quick cancellation

  • Be highly engaged most of the time

Welcome to the new membership consumer: One that’s hungry for membership with the expectation of building a long-term relationship with your product.

Below is an inside look at membership metrics currently being seen by clients at Memberful.

Take a look at this chart:

Membership Share: Quarterly and Annual Plans

Demand for quarterly and annual membership plans has been rising significantly since 2023, but has exploded in recent months. On average, quarterly and annual membership plans currently account for 67% of all active memberships.

If there was ever a signal that membership consumers want (and expect) a product that serves them over the long term, this is it.

More value delivered over more time at a predictable cadence is what today’s membership consumer wants. And they’re willing to pay for it.

The Staying Power of Quarterly and Annual Plans

The second piece of the puzzle is quite telling when it comes to the long term viability of quarterly and annual plans.

The chart below tells an important story. You’ll notice that the average churn for monthly plans, in general, is now higher than that of quarterly and annual plans.

Average Quarterly Churn Rates

What does this mean?

Membership consumers are flocking to longer term offerings which are proving to be more stable, predictable and profitable over time than monthly-renewing offerings.

Longer term plans are seeing declining churn while short term plans are seeing rising churn. And it doesn’t seem to be related to be pricing.

I don’t say this often, but this is something worth reacting to.

The accelerating adoption of quarterly and annual plans is giving us a crystalized view of where the opportunity lies ahead for membership operators. It’s a market shift that I’ve seen take place consistently with clients at Memberful and one that’s likely here to stay for the long term.

Strategic Moves to Make Right Now

There are three core recommendations that I’ll leave you with that will help you take full advantage of the current dynamics in the membership market.

  1. Consider making the entry point of your membership a quarterly and/or annual plan rather than a monthly plan

  2. Structure and message your offering from a standpoint of exclusivity and scarcity to amplify the value of pricing for quarterly and annual plans

  3. Give current and prospective members a long-term view of how the value of your membership will compound over time

OUTLOOK

Are you irreplaceable?

So much in the game of membership hinges on the perspective from which you build and create value from. And at the end of the day, there’s only one way to ensure you’re able to stay in the game for the long term.

So I’ll leave you with this important question:

If your membership disappeared tomorrow, what irreplaceable void would it leave in the lives of your members?

Think about it.

IN CLOSING

  • Here’s a link to the interactive charts referenced in today’s email

  • Tell me: What new challenges or membership trends did you notice in Q1? Respond to this email and let me know (I always read every reply).

My goal is for this email to be the most valuable thing that comes across your inbox each Tuesday. If I’m hitting that mark, share this newsletter with your staff, a team member or friend (just copy and share this URL).

See you next week.

-Michael

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