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Why membership subscriptions are easy, flexible and valuable

Grace Everitt, CEO and Creative Director @ Tako Agency

What's in this episode?

On this episode we’re talking about everything membership subscriptions with CEO and Creative Director of Tako Agency, Grace Everitt.

We chat about why memberships are the easiest subscription type to implement with your business, how to use them to provide rewards, perks or exclusive products, the importance of highlighting why a membership is worth the price of admission as well as running through some demo membership models for various business verticals.

Connect with Grace on LinkedIn. Check out Tako Agency.

Episode transcript

Chase Alderton: Grace, thank you so much for joining us.

Grace Everitt: Thanks for having me. Happy to be here.

Chase Alderton: So today's going to be a super exciting episode. I'm really excited for it. We're going to talk all things memberships. So before we hop in, Grace, please introduce yourself and introduce Tako Agency.

Grace Everitt: Happy to. I'm Grace, the CEO of Tako Agency. We're a Shopify focused design and development full service agency. We're fully remote. More of a team about 27 now, working with Shopify and Shopify Plus brands. My background is marketing, branding and kind of business development. So ecommerce are a natural extension of that for me.

Chase Alderton: Cool. So let's just hop in right away. Define memberships for us. I know that ReCharges has done a lot of content about memberships. Tako certainly has done a lot of content about memberships, but give us a overall definition before we hop in just so everyone's on the same page.

Grace Everitt: Absolutely. So the way that we look at memberships is a way for businesses who might not have a very obvious way of adding a subscription or recurring billing piece to their revenue model. It's a way for them to get their foot into the door with that. It's universally applicable to pretty much any vertical, assuming it's done right, which we'll talk about. It's a payment-gated benefits model, essentially, and everyone is familiar with memberships. We have gym memberships, we have Netflix memberships. Those are all what I would consider to fall under this "memberships model."

Chase Alderton: There's always a couple details on how the membership works. The Netflix is a digital membership. So it's a bit different if you're thinking traditional physical ecommerce. Same with like an Amazon Prime is a good example. So we'll definitely get into talking about those in a minute. What are a handful of pros and cons here? I don't even know if cons is the right word, but what are some benefits of using a membership model compared to a traditional Subscribe and Save subscription model?

Grace Everitt: Memberships models are more flexible, I think. Subscribe and Save is great and it's very straightforward and that was the first adaptation, a wider adaptation of the subscription model once we started to go and beyond curation and access and things like that.

Grace Everitt: Membership models are super easy to implement, and to start with, and then iterate on with more benefits and more perks as the program starts to grow, but it has some very low barriers to entry for the merchant and also for the customers. So I think, like I said, relatively, anyone can start with memberships program. There's little to no learning curve for the customer, the end user, because like I said, we're all familiar with this concept of paying a recurring fee for a set of benefits or access to something or whatever.

Grace Everitt: It's an excellent opportunity to tap into and reward your most loyal and engaged customer base. I feel like that's kind of ... It's not often talked about as a really great benefit for memberships, but it's a phenomenal opportunity to really try and build stronger bonds with this group of engaged customers and make them feel heard and seen and respected and rewarded.

Grace Everitt: In turn, you can gather a tremendous amount of valuable data and use them for beta testing new products and all kinds of stuff. A membership model opens up a phenomenal opportunity for data collection from a really valuable group of people, and depending on how you set up your program, you can create community, a sense of community. That's not important to every brand. And that doesn't have to be part of every membership program, but if you are going to try and leverage it for some data collection, beta testing and things like that, this kind of community building is going to be an important piece of that.

Chase Alderton: I love talking community. So that's something that's higher on my list, I think for a couple other people, but data is a great point. That's one of the pieces usually left out on this. It's more usually talked about in terms of inclusion, in terms of low barrier to entry, all those things you mentioned, but data collection is absolutely huge with memberships because they're always there. It's not just a monthly recurring subscription, where they maybe touch your brand once.

Chase Alderton: It's something they're constantly thinking about. So let's get into some of these actual benefits. I know you have a couple examples of merchants who are using membership model right now. Maybe give us a brand or two that is currently using it that you've worked with and a couple of these kind of unique benefits we've been talking in theory a lot. So let's throw out some concrete ideas.

Grace Everitt: Yeah, absolutely. So there's one brand in particular that I think has one of the better membership programs out there. It's a company called LitJoy and they're a bookish, curation and crates company. They're a client of ours, but they set up their membership program before they were a client of ours and they are doing a lot of things really well. So the first thing that we talked about is kind of store credit. That's the easiest benefit to offer.

Chase Alderton: That seems like the first one that everybody offers on every membership program.

Grace Everitt: Yeah, it really is. Because it's the lowest barrier to entry for you as a merchant, because you don't have to do any extra work. It's just converting what customers are already doing, which is spending money with you using dollars into some kind of point system or membership points, or whatever it is. You do need a third party app in order to make that system work. So there's three pieces at play. Typically, four.

Grace Everitt: We've got your web store, we've got recharge to process, the recurring billing, you'll want to use some kind of third party loyalty points app like Yotpo, or Smile, or stamp.io. Then you'll want obviously, some kind of email marketing communications piece there as well, because you're going to want to do some really cool segmenting based on your members, various tiers, things like that.

Grace Everitt: So in order to implement this, you do need to add one more player to what you're already doing, if you don't already have a loyalty app or something but yes, the store credit model is definitely the easiest thing to get started with.

Grace Everitt: Then exclusive products is kind of another level there. So if you already have physical products and inventory, you can just gate some of those and make them exclusive to your members, which is a very effective conversion tool for bringing onboard new members. LitJoy does a fantastic job of this, because they have a great public facing store that anyone can access. Anyone can access all of their crates and everything, but they do have a separate collection of items that's eligible only for their members, and is often created based on member feedback. So when they have the store that's on the site, and you can't see it, you can't see what's behind the door, unless you're a member, that's a great conversion technique right there.

Chase Alderton: So I was actually going to ask if there's a way to, or I was going to ask what LitJoy does, because I know that there are ways to gate entire sections of the website and not show anything, or there's ways to kind of tease that access and say, there is a section over here and we're not going to show you what it is, but we're going to tell you there is a section and here's how you get access to it. Depending on your model, I think both of those to be successful.

Grace Everitt: I would say it should always be somewhere in your mega menu, like members' store or members-only store for them. It's called the Lunacorn store. Their membership program is called the Lunacorns.

Chase Alderton: That's great.

Grace Everitt: It's a great brand name. I love the way that they did that. So when you're shopping around on the store, there's a lot of great merchandise and stuff there but there's stuff that's exclusive for Lunacorns, and they have a landing page on their site that has ... It's their Lunacorns membership conversion page and they have some blurred out photographs, three heavily blurred photographs of Lunacorn exclusive products.

Grace Everitt: It's just like this absolutely irresistible tease that you have to know what those products are. So superfans, and even casual fans are going to be very attracted to wanting to know what's behind that wall. So exclusive products is I would say like the second easiest benefit to offer, with a starter membership program.

Chase Alderton: Definitely playing into some psychology there on a little bit of FOMO of having people hit the store, see the landing page, see what's going on. Maybe there's something hidden and all of a sudden people think I want to get back there. I want to see what's going on.

Grace Everitt: Absolutely. Then the flip side of that on the merchant side is like, well, you have to make sure you're always doing new product drops then because you can't just have a subset of exclusive products and that's it and you're never adding to it because then you're going to deal with churn on the membership side. You want to keep coming back with monthly drops or special deals and LitJoy does that.

Grace Everitt: For their Lunacorns members, every Tuesday, there's some kind of discount that keeps users coming back. Then every month I think the Lunacorns get early access to a newly released or newly restocked product that was really popular in the past and is now out of stock. So all told, I think there's about four or five different opportunities every month for members to come back to the store and look in the exclusive Lunacorn Store to see what's available for them. So it's very robust in terms of engagement.

Grace Everitt: Ultimately, that's not that hard to do. Four or five things, it doesn't have to be new things every month, but bringing back popular favorites and limited run-out-of stock stuff, stuff like that.

Chase Alderton: It's actually one of the benefits we've talked about in a couple written pieces that ReCharge has. I think you guys have as well, but recycling some older products and being able to use your inventory wisely at that point. Not talking about trying to get rid of things that never sold or something like that, but there are ways to recycle inventory and pull out old items and bring back some legacy or some retro items in a certain case. That's a great way to move inventory across is something that people are kind of falling off of, wanting to buy that older product, but if you bring it back in a limited capacity all of a sudden, people are interested in it again.

Grace Everitt: Or like a tiny iteration on it. Like a different variant on something that sold really well, but might be kind of stale and it just depends on how much time you have under your belt of your membership program too. Once the program grows to a certain level and it's a very engaged community, they'll be talking with each other about, this is my favorite thing, and they got it two years ago. So new members will be like, "Well, that was two years ago. I want this thing to."

Grace Everitt: So if you have a product that has nice margins for you or something else, you can just kind of resurrect it back from the dead for a limited time and capture that interest that old members have created for this product for all these new members. It's this living cycle that goes on and on and on and assuming you don't have any permanent inventory problems with getting that item again, it should work pretty well, ad infinitum.

Chase Alderton: There's some complexity here also that I want to double down on what you said that it's not terribly difficult to get this up and running, but I think you have the world of options at your fingertips here, when you do build a membership model. Even with you saying having an old item or someone's been on a membership program for two years, whatever it is, there are ways to even space those things out where let's say, you build a program that is not always the same product every month.

Chase Alderton: Maybe it's the same product for what month you are subscribed. So month one, if I'm January 2021, and you're April 2021, we'll get that same item, but in different months, and we progress down the path in different times. So there's a lot of ways you can play around with this on longevity of people being subscribed, on quality of content people are being subscribed, on, like you said, variants, playing with colors, playing with products, all these different things. There's a lot of opportunity here.

Grace Everitt: It depends what your brand approach is as well. LitJoy in particular has become well known for doing very high quality items in relatively low numbers, because they're working with really small artists and artisans and things like that. So just by virtue of that, they're limited on how much they can produce. So they operate a lot on this limited quantity sort of FOMO approach.

Grace Everitt: The next benefit that I want to talk about is something that slots right into that which is early access to new products or to new drops. So Lunacorns get access to everything a day early than the regular public, knowing that there are limited quantities of things. So Lunacorns get first right of refusal and as far as I know, nothing has ever sold out only to the Lunacorns and never made it to the public, but the Lunacorns group is growing at such a fast rate that I think that maybe there's a chance that that's going to happen with some of their offerings. That's also a huge driver is wanting first access to these limited run products.

Chase Alderton: I'm even just thinking out loud here. I've certainly been a part of music groups and bands and DJs of their fan clubs and every time they go on tour, and they start to release tickets, those early access ones, those are the ones that usually get sold out and those are the great tickets. That's an example of a membership model, but it's kind of one of those non traditional things that people don't usually think about.

Chase Alderton: So again, reiterating your earlier point, these things are everywhere. It's not a surprising new thing. It's just people taking advantage of them for physical ecommerce.

Grace Everitt: Absolutely, and early access is a great inventory planning tool. If you've got a group of, let's say, 4,000 members, and your historical data will tell you 80% of them are going to buy in that members-only window. You know, okay, well, this is how much inventory I need to have to serve that and then extrapolate that out for the rest of the public. It'll help you make much more intelligent buying decisions in terms of volume, and it allows you to be a little bit more effective on that side, I think.

Chase Alderton: 100%. Couldn't agree more.

Grace Everitt: So another benefit that's also really easy to implement, perhaps almost easier than some of the product related things is site wide discounts. That's sort of the Subscribe and Save piece that you were talking about. Member versus non member pricing. It's very easy to do. We can do it with customer tags on the Shopify side. It's not that hard and that is a great subtle marketing technique for a membership program. Because everywhere, on every product page, it should say member price and non member price and that is a phenomenal way of advertising the membership and it's very straightforward and easy to do.

Chase Alderton: I think discounts has become standard on all subscription practices, and while it's not required, I think most customers have been accustomed to receiving that sort of benefit. So I think if you just continue playing off that psychology, you put, it costs this amount if you're not a member, it costs this amount if you are a member. It's even more enticing to get you right back in the club.

Grace Everitt: Yeah, absolutely. Then we can talk about other benefits too, like free shipping. If that's not something that you offer standard, you can offer free shipping to your members. An extended returns window or a warranty window is helpful as well. Giving members this extra layer of perks. Maybe they get another 30 days for returns or something like that. Depending on what your product is, you may offer a higher level of support as well. Like higher tiered support to members, that's not available to non members.

Grace Everitt: Then beta testing new products also, it's not necessarily the biggest benefit, but I think it's kind of a mutual benefit on both sides. Because the merchant gets to work with a group of highly engaged, very loyal customers, get their feedback on potential new product releases, and those customers feel heard and seen and like they're having an impact on what is going on with the store, and they feel really respected. So if beta testing is part of your model, a membership program is the perfect way to curate the perfect audience for that.

Chase Alderton: It's a good time to bring in user generated content as well. We're not talking about single reasons why someone would join a membership club. It's usually not someone who's going to join because of free shipping or because of a discount, but these benefits in tandem with all the other things we've talked about, start to drive some real ROI. If you're a brand that has a really big Instagram following, social following anywhere, being able to reward those super loyal customers, they will in turn then produce your UGC for you, you have new content all over the place, you're pushing brands and products that are not released yet. That starts to be really powerful over the course of time.

Grace Everitt: Yeah, and it becomes easier to get influencers on board as well, if social media is part of a big part of that is just getting more content around fan content. The Lunacorns are, I think, very well known for that. They post a ton of fan related content and that makes it really easy for the company to just harvest great user generated content that way.

Chase Alderton: Absolutely, you're spot on.

Grace Everitt: Gated content, while we're on the subject of content. Gated content is also a possibility. That one can be a little bit trickier depending on what the business is, but if there is some level of content creation, as part of the model gated content to members only is another idea for fleshing out a memberships program.

Chase Alderton: I know of a brand ... I forget exactly what the brand is, but they do makeup in some capacity and feminine beauty products and their membership model is only content. So you can buy the products, you can buy the eyeliner, the lip gloss, whatever it ends up being, but their membership model is professional artists who show you how to use the products and there's gated YouTube videos and all that type of content, other written articles, things like that.

Chase Alderton: So potentially difficult to do that one if you're really just trying to get content because a lot of that content is valuable, and it's visible in a lot of other places on the internet, but it's a way to go as well.

Grace Everitt: Content is a lot of work. If gated content is going to be part of your membership model, you have to really commit to doing that and doing it well. Because otherwise, it's going to be this ... I don't know if I'm allowed to swear on this podcast. It's half assed if you don't really make a concerted effort for it.

Chase Alderton: We'll accept the swear on the podcast. I think we can roll with that one for sure.

Grace Everitt: Then the last piece is a unique reward, catch all. Like a unique perks thing. So think about, what would your most loyal and most excited fan, your raving fan, what do they want the most? Is it a one on one? Is it a video appointment with a stylist? If it's a fashion apparel makeup sort of related brand, is it access to members-only contests? For example, as you said, tickets to something. Shout outs on a stream if you're sort of an apparel brand extension of a YouTube or TikTok personality.

Grace Everitt: Wat can you think of that your most loyal fan would be most excited to get, and how can you offer that as a perk, and that doesn't necessarily have to apply to your entire membership program, but maybe winners of a members-only contest or like your highest tier. Your most expensive, most engaged, most valuable members, what do they want? See what they want and then give it to them.

Chase Alderton: You mentioned that earlier too, but it was super quick. I want to just double tap on that for a second. You could do multiple tiers with membership models as well. It doesn't necessarily just need to be binary. It's not a, you're in the club or you're out of the club. You can do a tier one, a tier two or tier three, call it gold, silver, bronze, whatever it is, but there's a lot of ways to then increase value for your most loyal but also still provide value for people who want to be in the club, maybe not commit to a price or commit to time, whatever the values are. What are ways to continue to grow opportunities for this?

Grace Everitt: When we're talking about setting up a membership program, just within tiers, there's kind of two main approaches to that. One is having three clearly define different membership plans that the way that they're structured is sort of tiered. You could have starter, standard and premium, for example and each one has higher levels of benefits or whatever. Or you can have a membership program that also has tiers, but their reward activity-based tiers.

Grace Everitt: So you earn them, you gamify it and like attaining a new level, and with each level comes with more perks or unlocking more perks. So deciding how you want to approach that is one of the decisions you'll have to make when you're starting a membership program.

Chase Alderton: One of those really difficult fun decisions all the time to be able to continue to figure out what value you can provide to your customers. Gamifying seems super interesting, though. I don't know of a brand off the top of my head that does something like that, even though gamifying across ecommerce is getting really popular, but that's a super cool idea of, you can't just buy your way into the top tier. You have to continue to engage, you have to post on social, you have to make purchases, you have to refer friends, things like that. That seems like a interesting way to go.

Grace Everitt: Once you actually start unlocking the possibilities for genuine fun, like not necessarily, we're going to gamify this because it's going to give us higher ROI or whatever. When you start thinking about, how can we make this actually really genuinely fun for our customers, I think the opportunities for how you can gamify your experience, the doors are blown open, and there's so many things that you can do that will actually make it genuinely fun for them.

Grace Everitt: I'm talking stuff like and again, it depends on your brand, but we're talking things like Easter egg hunt, scavenger hunts online, gameplay, actual gameplay, interactive maps, all kinds of really fun stuff. The sky's the limit, if you come at it creatively.

Chase Alderton: You could even start talking ... I know it may be a little taboo right now in COVID times, but in-person meetups and winners of contests get to do XYZ on this, a certain company retreat or whatever it is. Lot of ways you can take this even outside of just online.

Grace Everitt: When we're talking like new product drops, and things like that as well, if you're, for example, an apparel or accessories brand that has an online component, and you have physical stores or a boutique or something like that, we're talking about having a members-only exclusive launch party at the store with champagne and snacks and entertainment and all kinds of stuff. Maybe you have a members-only raffle or contest or something there.

Grace Everitt: Maybe you run a two month contest and fly out a winner from your top tier membership to come to your store to celebrate this new product drop or opening or something like that. So I think Tako is like totally remote. So I think I often think what can we do only in this online environment, and also just because the audience for that is huge.

Grace Everitt: That can work anywhere in the world, but there are tons of opportunities where you can extrapolate these membership benefits that exist only in the online world into physical brick and mortar retail stores.

Chase Alderton: So I want to hop to something slightly different with membership models are relatively new in terms of physical ecommerce. So it may not be the easiest sell for customers who just hit the site the first time and trying to figure out, I'm just here to buy XYZ product. What is this membership model? What am I trying to do here? I just want the actual physical thing. What are some problems you've seen in conversions, and maybe ways to overcome a couple of those things? Like putting a landing page, explaining some of these things. What do you think?

Grace Everitt: Oh, man. Honestly, the biggest problem that we see is a weak value proposition. I mentioned earlier that memberships are easy for a lot of merchants to start adding to their revenue model, but they only work if they're done well. If it's a weak value proposition or it's not sold well, it comes across as a cash grab, and that is dead in the water if you start going down that road. So make the value proposition really awesome. Get it as close to completely irresistible as you can.

Grace Everitt: Make it as easy as possible for the user to say yes. Perhaps consider a lower monthly membership cost because you know you're going to get so much more revenue on the backside from these people with these exclusive products and limited editions and things like that, instead of going for maybe like a real high membership fee that's harder to say yes to for the customer and just trying to get all the cash right up front.

Grace Everitt: So having a weak value proposition and not a very compelling set of benefits is like the number one problem that I see with membership programs getting started.

Chase Alderton: Where's the balance between quality versus quantity? So I think the first urge for a lot of people listening to this may be, I'm just going to pick 10 of those benefits you listed and those are going to be the benefits. There's got to be somewhere between, you're offering things that are genuinely related to your brand and your product versus, we'll give you free shipping, we'll give you a discount, we'll give you early access, we'll give you all these kind of things.

Grace Everitt: I would start slow in terms of benefits for the most part. Start slow, choose two or three really, really compelling pieces, and then maybe add something complimentary, like the free shipping or an extended returns window or something like that. I would just start with two or three really compelling ones and make them really compelling. Make people want to say yes to that, and I think you'll have a higher conversion rate, ultimately, and have at least one tier or one membership option that's on the lower end of the price spectrum.

Grace Everitt: Just kind of se. You can test over time. Although there are some cases where A/B testing can get a little tough, because if you have a community piece to this, and you start A/B testing membership level tiers and things like that, they're going to talk and if I got a gold tier for 50 bucks, and someone else got a gold tier for $5, that's going to be a problem for you. So A/B testing can be a little bit tricky when it comes to some of the pricing stuff.

Grace Everitt: I think having at least something that's on the lower end of the pricing spectrum just to get people in the door, and then either they're earning their way up, or they can upgrade later on, I think that's a good way to get started.

Chase Alderton: Let's talk price for a second because you brought it up. I know that you just said that the value is really what is a make or break on the person joining the membership model. Is price number two? It seems like price has to be probably somewhere up there of a reason to join or not to join.

Grace Everitt: Well, price and value are inextricably linked. They have to be related to each other. So it doesn't matter what the price is. Ultimately, price has nothing to do with it. It's just, does this price make sense for what I'm getting for it, which is the value. So if the answer is yes, if your core group says yes, then whether you charge $10 a month, or $80 a month or $500 a month for a membership, it doesn't matter as long as the customer perceives that value to really be there.

Grace Everitt: I would err on the side of having a slightly lower price related to a higher value ratio. So it's like a no brainer, it's a no brainer for the customers to say yes to this and get enrolled, and then you're going to get all of this other revenue opportunities from them on the back end with exclusive products, and they're so much more engaged, and they're so much more likely to buy and share with their friends and refer and they become your raving fans that are your organic marketing team. So in some ways, you can almost possibly consider a membership to be almost like a loss leader, for you.

Chase Alderton: That's exactly where I was going to go next. This brings in the idea of lifetime value and to an extent average order value as well. That if you start to do up front initially, and really understand all the metrics without testing, like you said, but at a certain point, if you're okay breaking even, or even losing a little bit of money on this first sale, on this first membership, if you know that everyone's going to stick around for eight months, and that's your average based on your analytics, it almost makes sense to take a loss on the first one and know that you're just going to recoup that money over the next eight months.

Grace Everitt: Oh, absolutely. 100%. I think another hurdle that hearkens back to the value proposition is communicating that. I think a landing page is critical. I think if you have any kind of member pricing related thing, that should be on every single product page everywhere.

Grace Everitt: If free shipping is one of your benefits, for example, for one client, we designed a pop up that showed up after a user who was verified did not already have a member tag on their customer account on the Shopify admin. When they added a product to their cart, they got this pop up that says, "Do you want free shipping on this order?" We had two CTA buttons. One said, "Yes, I do," and when they clicked that, it took them to the membership landing page. The other button was, "No, thanks, I'll pay full price," and clicking that closed the pop up.

Grace Everitt: We had rules in place so the pop up only showed up once obviously because pop ups are the devil if they don't want too many times. Things like that is constant very subtle reminder. Like, members are getting things that you aren't. Don't you want to be in this very exclusive club?

Chase Alderton: I love the text, no thanks, I'll pay full price. Because it's such a pointed, but really, really focused sentence that shows you like, oh, I'm not really making a good financial decision here because I can do something for cheaper here. All I have to do is click this other button. So, again it's playing with psychology, it's playing with your FOMO for sure. That's a really interesting one liner.

Grace Everitt: It is getting more used now. So it's like almost getting played out. There's one particular app that is a spinner thing and I see it showing up on a lot of different websites-

Chase Alderton: Every single ecommerce site has that.

Grace Everitt: I'm like, no, I don't hate free things. I hate full screen pop ups. That's what I hate. Please go away.

Chase Alderton: If you make this a quarter screen, I'm much more likely to click on it instead of the entire screen.

Grace Everitt: Exactly. So it depends on how you want to handle it, but these kind of just little reminders all of the time that members are getting benefits that you are not, I think as long as the value is there, they're going to say yes. They are going to because it's irresistible. It would be not in their best interest to continue saying no to becoming a member at that point.

Chase Alderton: Agreed. Last question on hurdles, which I think we've almost already answered. But in terms of payment plans, paying annually versus paying monthly or quarterly, something like that, does that just boil down to value as well? Maybe if you do a full price annual plan, you get higher benefits initially? How does that kind of shake out?

Grace Everitt: So I'm actually writing blog posts on this for you guys, because there's a whole level of psychology that goes into pricing, but membership pricing, or any kind of recurring billing pricing is kind of important to consider, more so than almost any other one time purchase product pricing, because every single time that charge hits the credit card, the user is going to look at it, and they're going to say, "What have you done for me lately?"

Grace Everitt: So if you're not having a really active membership program with a lot of different benefits and a lot of touch points, and they feel like they're getting a lot of value from it, they're going to question that decision every single time that charge hits.

Grace Everitt: So if you have a monthly plan, that's great for you as a merchant, because it's very consistent recurring revenue. You can use that to plan, it's great to fund projects that are in the works, and so on. So monthly plans are great, and monthly plans are generally really popular, just because most customers are already familiar with this sort of monthly recurring thing, but you better make sure that they're seeing the value of that membership every month, otherwise, they're going to drop off after about two to three months, because they're just not seeing the value there.

Grace Everitt: Then we've got other options for quarterly or six month or annual memberships, and that just kind of depends on what the product is, and how you're structuring your memberships. So, if you have a monthly, six month and an annual membership, there might be some benefit for me forking over 12 months worth of money at once, whether that's a discount on the actual membership price, or more perks or a higher tier or something.

Grace Everitt: I need to be getting more for that and the psychological benefit there is, well, the customers only paying once upfront, and so they're not going to think about it again for quite a while. So maybe you can get away with fewer touch points, but you better make sure that you've got a good alert campaign in place when their renewal date is coming up. Because if they get hit with a fee out of nowhere, and you haven't been interacting with them recently, they're going to be pissed and that is never a good place to be. Don't do that to your customers.

Chase Alderton: Sounds like we could have boiled this entire episode down to one word, which is value. You continue to provide value, your customers are generally going to come back to you. Continue to stay on board, continue to reap the benefits you're offering.

Grace Everitt: Turn them from customers into raving fans. That's really what it's all about. Membership program, I think if done right is one of the easiest ways doing that in the long run and at some point, it almost becomes like a self sustaining program, because if your members are really invested in what you're doing, and they really love what you're doing, you don't need to advertise the membership program anymore. Word will get out, they will want to be part of this and then it kind of grows on its own.

Chase Alderton: It's just a no brainer. If you're going to buy a product, you might as well be in the membership.

Grace Everitt: Yeah, exactly.

Chase Alderton: Cool. Shifting gears one more time. I want to take an existing brand or two and analyze their membership program and see if we think we could add anything to it, take anything away from that, to use the word value. Find where the value is, find where we can add or subtract value there. So I know you're working with an alcohol brand. Can you give us a little bit of detail around that, and then maybe what they're offering and what you think that can be doing better?

Grace Everitt: Yeah. So we're working with a spirits club called Pour More. They're a curated spirits club and they have several different options, but you sign up and it's based on the type of spirit that you want and delivery frequency and how long you want to become a member and I am a member. I got cajoled into that, trying mezcal for the first time. I was not a huge tequila drinker, but mezcal is very interesting.

Grace Everitt: So at the moment, it's relatively straightforward. You sign up, it's a spirits club. They don't have a memberships piece yet, but I think it's a great potential avenue for them in the long run and here's how I would set this up. I would have just one tier for them and call it like the tasters club, for example, something like that. They get access to exclusive mixology videos for their particular spirit whenever they're getting a shipment. Maybe a series of three because not every cocktail is for everyone and they could do influencer highlights, guest spots from great bartenders, from phenomenal bars around the country doing possibly totally unique cocktails.

Grace Everitt: Maybe two out of the three is like a traditional historical one. Talk about the history behind this, where does it come from, what's the lore surrounding this cocktail, and then one would be an exclusive Pour More tasters club cocktail that's just for them that the bartender creates there. So it's kind of a cross promotional opportunity for this bartender or influencer, and members get this really cool cocktail that they get to try every month.

Grace Everitt: Then possibly, there's a cross sell opportunity here where they could partner with a cocktail accessory company or start offering that on their own, where well, when you're sitting is getting ready to come up, members only have the option to choose a cocktail kit that will ship with their spirit.

Grace Everitt: So now it's like, okay, I want the mojito cocktail kit that came with my curated video, I want to make that cocktail. So let me just buy the kit for that because I don't want to have to go out and make a shopping list and go buy this stuff myself. Although that could be a great thing to offer in an email marketing campaign leading up to your shipment was you can buy the kit here, or here's the shopping list for cocktail one, two, or three and here's how you can go out and do that yourself.

Grace Everitt: So that would be, I think, a pretty good entry level sort of membership program for them that it does rely on content, which is work, but if you partner with the right people, I think that takes some of the labor off of the merchant's shoulders for that and gives the end user a little bit more of an opportunity to interact and get excited with what's coming for them that month.

Chase Alderton: I'm almost upset that you just ran down that road, because now I want this membership. Cocktails are right up my alley. That's something I have in my past. So I think you're spot on and I agree with you that the content piece of this is definitely work, but I think the hardest part is providing that spirit in the first place. So from my perspective, having history here, every spirit tastes a little different. You can say a mezcal is a mezcal, but where it's grown and how it's distilled and where it's aged, and what it's bottled and what kind of ingredients you're using and is it lemon, is it lime, is it all of these kind of mixers.

Chase Alderton: Every single thing plays a different role in creating that cocktail, not to mention the types of tools you're using. So is it chicken, is it stream, what type of ice, all of these kind of things. I think that's again, just from personal experience, that's one of the most common pitfalls that a lot of new cocktail enthusiasts fall into, is using the wrong tools or subbing something out that they shouldn't be doing.

Chase Alderton: So this kind of mentor guided activity of here's exactly how you make the cocktail, here's the list. If you want to just subscribe to this, we can send you all the products in the first place. It's absolutely genius to get higher engagement. Then you start to have friends over and then you can start to see where this referral process works and people say, "Oh, that's a great cocktail. I'd love to do this over here, have a party," or whatever it is, and just that one person with that one cocktail in the first place spreads to 10, 15, 20, 30 people and all of a sudden, it's an exponential number of people that you've interacted with.

Grace Everitt: Absolutely, yeah. The Pour More guys, they really know their spirits. So their big value proposition at the moment is that they have access to really small batch stuff, and really unique things that will allow you to explore something new every month, and having this added layer of a membership program, I think would just take them really to the next level of engagement and kind of growing their base.

Chase Alderton: I love it. I love it. Let's go on the phone, let's make sure they're doing this in the near future. I'll be the first subscriber in the membership program. So last one I want to talk through is, I know you're working with a fashion brand. Give me the high level on what they're building right now and maybe a couple of other interesting ideas on how they could take their membership to the next level.

Grace Everitt: Yeah, very cool streetwear, fashion, LA based fashion brand and they wanted to add a membership piece. So we're starting with entry level stuff. We've got three different tiers. It's a different price. It's two monthly plans and one annual plan. So we've got some options there, and it's the standard store credit model. So we wound up using the stamps.io app because they were using that for some user generated reviews on their product page, linking in together nicely.

Grace Everitt: So they're just doing a standard store credit model which involves a lot of customer tags, product tags, things like that. Then the top two tiers offer free shipping on every purchase and a free bag with your first order. So we set that up so that the tags are passing through. As the user purchases the membership they get this customer tag on the back end. Then we have all the flows set up in Klaviyo so that they get all the right flows. Welcome to the membership so on and so forth. We've got segmenting set up on the back end so that we've got a segment for each membership tier and then the memberships as a whole.

Grace Everitt: Then we have another segment for the top two membership tiers, because those are the ones that get a free bag. So we have to communicate with them, well, how do you get this free bag. So we set that up using a discount code with some very special parameters. This particular client is Shopify Plus. So we could leverage Shopify scripts for that, because we had to do some really custom coding to really fine tune that discount code so it would work only for customers who were verified to have a tag of the tier that's eligible for this free bag.

Grace Everitt: Then they could come back. That was an instant second incentive. It's kind of like an instant post purchase bounce back campaign is that they bought their membership, probably checked out with at least one other item in their cart for the most part, and then they could come back immediately, make a second purchase, because that's how they get that free bag.

Grace Everitt: That's a generous offer, because it's a free bag of any value. So they have bags that are $20 and they have bags that are $80. So a member can choose literally just whatever it is that they want. Maximum freedom for their membership perk gift.

Grace Everitt: So on the surface, it's a relatively simple way of getting started. We've got store credit, we've got free shipping for the top two tiers and we've got a free gift with the first purchase for the top two tiers. In the future, I could see us expanding this program so that we're doing member access to first product drops because they do these really great capsule collections. Possibly like influencer collections in the future.

Grace Everitt: Members could have a day early access, two to three days early access to those products, possibly members-only exclusive products. That's achieved with product tags on the back end there.

Grace Everitt: Similarly like early access things, we can achieve that using collections, tags, verifying against customer tags so that only they can see those collections and check out with those. A couple of different tags. Tags are very important in the Shopify ecosystem when you're trying to set things up like this, and tags work really great with ReCharge because recharge just identifies all these great tags and knows exactly what to do and passes them through correctly.

Grace Everitt: So that's like a cornerstone for setting up a lot of this stuff and it's easy, because once you understand tags on the merchant side, you understand how they work, you understand how all the different pieces of your program will work. It's not like reinventing the wheel every single time you're adding a new benefit to your membership program. If they're functioning on a tax-based system, at least in Shopify, it's kind of the same thing. So you know how to manage it really well.

Chase Alderton: It's essentially tags, if you think of it just in real world terms, you're just putting a name tag on and when you walk through the club, they're saying, okay, you have this specific name tag. You're allowed to come over here and that's all the tag is. It just shows you what you're allowed to do and what you're not allowed to do.

Grace Everitt: They're very versatile in ecommerce because a lot of third party softwares will recognize the same tags together and they can communicate with each other really well. So it makes it relatively easy to set up. I don't want to sell it as being incredibly easy to set up stuff like this, because there is a lot of development work involved with this and strategy, but in terms of the long-term value, obviously I think it's very worth it to go through setting it up.

Chase Alderton: Absolutely. So I think that membership model is really standard, but I think standard is different from boring or different from, it's not going to work. I think a very standard, very well set up, very well organized membership model. It doesn't need to be complex despite our last 25, 30 minutes of talking through all of these options you could do. A very well thought out, it matches our brand. It matches our identity. Here's who our consumers are. Here's who our brand is. That makes a lot of sense. Set up exactly what you need and open it up to the world and see what happens.

Chase Alderton: You can always A/B test later. Maybe not even A/B testing within your platform, but you can always A/B test, okay, that didn't really sell as much as we thought. Let's swap some benefits. Let's add this, let's attract this. It's a very straightforward way to get set up on a membership model without being overly complicating.

Grace Everitt: Your members themselves will be a great testing group for future benefits. If you want to just start with the store credit system, that's easy. Everyone understands store credit. There's very little learning curve involved with that, and it's like, okay, well if I pay $20 a month and I get $40 in store credit, that's like a no brainer. That's very easy to say yes to. Now, granted you need to have enough activity going on on the backend to encourage them to come back every month. Otherwise all these points are going to accrue and they're not going to do anything with them, but once you've got that mechanism in place and it's set up and if you want to start expanding into early access or exclusive products, exclusive products is going to be the easier way to start as opposed to early access.

Grace Everitt: That's slightly more complicated on the backend side, but just set up an email flow like, "Hey, we're thinking of testing exclusive products for our members. We've got this one coming on this day. All you have to do is make sure you're logged in, and if you want to check it out, here you go," and just see,. Just see what the response is. Maybe test three different products and see how it goes, and if you're going to be releasing new stuff anyway, you may as well test the response with your membership group and just see A, is that product being received well in the first place and B, are exclusive products a nice perk to have? Is this being received well by the members as a benefit? So I think there's a lot of different layers. It's like an onion, many layers.

Chase Alderton: I don't think I have anything else to add. I think that was really well wrapped up, really well said. I'm ready for some rapid fire questions. Are you?

Grace Everitt: Yes. Let's go

Chase Alderton: Subscription brand, just launching. What's a piece of advice you'd give for someone who's just getting off the ground?

Grace Everitt: Make sure your brand is strong and your value proposition is super solid. Like what do you do better than anyone else? Why would someone choose you over your competitor? I'm always consistently shocked at how new people don't have good answers to that, and if you don't have a good answer to that, the customer sure as hell won't. So you better make sure you are rock solid in your brand, in your value proposition. Why are you here? Why is what you have to say important and why are you worth the customer's time? You better have very good answers to that if you want to be successful.

Chase Alderton: Couldn't agree more. Flip the script a little bit. Same piece of advice, but a subscription brand trying to scale, let's say past 100,000 subscribers, six figures.

Grace Everitt: Get your house in order. Get your house in order for sure. Take a step back, look at your business as a whole and see where you're fragmented. It's easy to go for the flash bang, like conversion things and ROI and apps and this and that, whatever else and you want to grow and you get addicted to this feeling growing, and you want to strap yourself to the rocket and ride to the moon.

Grace Everitt: I understand that but if your house is a mess, if you are working with nine different systems and you've cobbled together something to get to where you are now, there is no way on God's green earth you are going to scale where you want to go. You have got to get organized and it's not always sexy. It's not always fun. It's not always sexy. It's rebuilding your website. It's restructuring the way that your CMS is working with your website or whatever it is. You've got to take a step back and invest in making sure that you have a really solid foundation before you want to go to the moon.

Chase Alderton: I'm seeing a very common theme everybody asks about this. The word unsexy always comes up. The way to scale is not sexy. It's not just a rocket ship. It's all the dirt and the grease and the grind and building the rocket ship in the first place.

Grace Everitt: Everyone always sees like the overnight success. Well, the overnight success took 30 years to get here.

Chase Alderton: Exactly. Exactly. We just talked about the overnight success on Instagram and that's why everyone says that. Last question for you, a fun one. What are some products that you subscribe to?

Grace Everitt: I got so many. So I am like a subscription junkie just because it takes a lot of guesswork out of a lot of stuff. So Stitch Fix for clothes. I loathe clothes shopping more than anything on this earth. So Stitch Fix is awesome for me. Meal kits. So I don't have to go out and think about every single meal I'm going to eat. I've got meal kits coming. Personal care stuff like Billie cosmetics, Billie razors and IPSY cosmetics, stuff like that.

Grace Everitt: That stuff really cool because it just comes, you don't have to think about it. It's one less thing, and spirits from Pour More of course. Got to keep the bar stocked. Then I have to say, I am a LitJoy Lunacorn, and I have the LitJoy Magical Crate subscription as well I'm very excited about. Tip of the iceberg, by the way, on all of the subscriptions that I have. That's just the tip of the iceberg.

Chase Alderton: That's what you could rattle off, off the top of your head. I'm sure there's a handful more that we can get to at a later podcast episode. Grace, this was phenomenal. Thank you so much for joining us. Appreciate it.

Grace Everitt: Thank you for having me.

Chase Alderton: We want to thank Grace once again for joining us. If you're interested in Tako Agency, you can head over to takoagency.com. If you're looking for more of our episodes, check us out at rechargepayments.com/hit-subscribe and to get the latest episodes, remember to hit subscribe on whatever platform you're listening from.

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