Using Shopify To Create A Membership Program
Updated May 25,2020
By Jason Miles
Can you use Shopify to run a membership site?
Can you get paying subscribers to your Shopify site?
These were the questions we wondered as we began to put together the program elements of our new Sewing With Cinnamon program.
Our outcome? We launched on March 28th and as of this writing (8 weeks later) we had 584 paying subscribers. By the end of the 3rd year (March 2020) we had over 1,000 members and we are adding them weekly.
In this post, I'll walk you through the concept, milestones, and lessons learned. So you can decide if a membership program is right for you - and if using Shopify to do it is your best path forward.
[Update: We recently recorded a video explaining a terrific marketing technique to grow your membership program - and to give you an update on how our program has grown. Watch it here: https://www.winningonshopify.com/blog/running-a-membership-program-on-shopify]
The Financial Benefits Of A Membership Site or Program
The financial benefits of a monthly recurring revenue model are pretty compelling. Just look at the company you'll be keeping, Netflix, Costco, Amazon (Prime). They all use a monthly (or annual) subscription plan that creates huge benefits for their customers (and of course for their bottom line).
These programs all have a few things in common when you stop and think about them,
- They don't have any direct cost of goods or expensive overhead. So, as long as you can run the program and deliver the benefits affordably, they can have a huge profit margin. Go out into the woods and meditate upon this point very carefully.
- They encourage ongoing site use, return visits, loyalty, and increased purchases from the best customers.
- They invoke a "club" or "insider" feeling that makes the loyal customers feel special.
- They add monthly predictable cash, (after you learn what the attrition rate will be) so you can predict your income in a more stable way.
The Compelling Math Of Memberships
It doesn't take long to do the math on these types of programs. Even a very small monthly membership, if subscribed to by a large number of people, can make a huge impact on your financials. Here is a simple example where I start with 1,000 subscribers and modify the numbers by 10%, then 20%, then 30%. The increase in annual income is dramatic.
There are three core metrics of course,
Paying Members: The number of subscribers that join your program.
Membership Cost: The amount each member pays. Each business is different. Some businesses will easily demand $49 or higher. But many will be under $20. For our program, we decided to go with a $9.99 rate.
Attrition Rate: The number of members that stop each month. For our efforts, we are too new to memberships to know our attrition rate yet. We hope for the best, plan for the worst, and try to over-deliver to ensure we can retain as many people as possible.
An Advertisable Product
The other interesting aspect of a recurring membership program is that the longer-term nature of the customer revenue and overall higher price point (compared to the smaller average order values we are used to on our site) mean that we can advertise on Facebook (via retargeting) and make the math work! I already blogged about how we did that, read it here.
That aspect of the program alone makes it very compelling. We've tried to advertise other products before, but the lower price points make it difficult.
Should You Have 1 Price Or Several For My Membership Program?
We wondered this as we began to put together the pieces of our program. For our offer, we decided to go with a $9.99 rate. If they signed up for 3-month intervals for $27, they got a 10% discount. If they signed up for one-year intervals for $97, they got a 20% discount.
I think our lesson fairly quickly was that a good number of people signed up at the longer intervals in exchange for the discount. The breakout looked like this:
Was this 3-tier discount necessary and will this help us in the long-term? We don't know. We're too new to this to understand the math.
What Benefits Should You Offer In A Membership Program?
As you can read on our sales page, we try to offer a good value for this monthly subscription. Of course, what you offer is a brainstorming exercise at first. We decided to offer,
- A coupon to download one of the Liberty Jane patterns related to the monthly topic.
- Access to a members-only private Facebook group where you can get to know fellow students, see example projects and get your questions answered.
- Behind the scenes access to Cinnamon's studio via video.
- Member only access to the Sewing With Cinnamon educational videos (published weekly).
- Several bonuses that added up to $29.
- The promise of ongoing "insider deals and discounts".
You'll notice that none of these had any cost-of-goods. We are not shipping anything. We are not buying anything. We are only delivering intangibles.
I would strongly meditate upon your deliverables before you launch. Promising to ship anything is a serious step. Don't underestimate the drama of handling physical items.
How To Use Shopify For Membership Sites
One of the primary decisions we had to make was whether we were going to create a stand-alone program name/brand/URL, or run this entire effort right on our primary e-commerce website.
Our quick response was "NO" not another domain! This needed to be hosted on our primary site - so we could get the benefit of the traffic bump to our site, the simple connection to our Shopify system, and the value of the integrated look / feel for our customer user experience.
Recurring Membership Apps For Shopify
So we had to go on the hunt for a 3rd party Shopify App that would enable recurring memberships. Fortunately, we heard about the Recurring Memberships App from the fine folks at Bold Commerce.
We use (and really like) two of their other Apps, (Product Discount and Product Upsell) and so we decided to go through the implementation process and see if their Recurring Membership App would work for us.
After a bit of a rough start, and with a lot of their fantastic help, we got the App installed and working.
The Bold Commerce Recurring Membership App Secret Sauce
The primary site functionality that makes this work really well is the use of Tags on customer accounts. And the publication of hidden content that can only be viewed by the customers with those tags. In that way - your site can begin publishing content that is invisible to people that don't pay - and visible to people that do pay. This is cool. It works. It's simple.
The only customer service drama that this system creates is that new customers don't initially understand that they have to be logged into their account to see our hidden content. Once they learn that - they are totally happy.
Features We Need To Add
Unfortunately, the Recurring Members App isn't perfect. (Note to Bold Commerce team and/or Shopify). It works, but it could be so much better! In particular, we need the following functionality asap:
- The lack of direct integration with the Shopify shopping cart is a real bummer. This payment oddity means that customers cannot "add on" the membership program as they shop and transact with 1 checkout. Instead, they have to buy the membership and pay directly via Stripe (using credit card or paypal). Man that hurts.
- Because of this lack of cart integration, we cannot use the Product Upsell App for the membership program, which really really hurts and is odd, since the Product Upsell is a Bold Commerce App. We make a large portion of our income by upselling items. Our membership program could easily be one of them. I think it would really skyrocket our enrollment if this could be resolved.
But the Bold Commerce Team is super helpful and very good at getting you up and running - and they did a fantastic job for us in this case. There was a learning curve on using this App, but after a week or two, we understood it pretty well.
Important Note / Shopify Announcement: I first wrote this article in May 2017. In May 2020 at the Shopify Re(Unite) virtual event, they announced plans to implement functionality to support membership programming. Time will tell whether it solves all our problems outlined on this post - we hope they listened! That would be terrific!
Our Unfair Advantage
Yes, we have a thriving Shopify site, (according to my secret sources, we are ranked around 600th out of 541,000 Shopify sites in terms of global Shopify site popularity). So in our case, we were adding a new product to an existing system that has traffic, customers, transactions, etc.
If you're just starting out, then your outcomes will vary of course. But the program benefits remain the same.
Is A Membership Site Worth Your Time?
One decision point we did have to consider was - at what threshold is it worth our time to create new content every week and support the private membership area?
Those program features take "real" time in an ongoing way from our guru/expert/site maven (my awesome wife Cinnamon). So, if we had only signed up 20 or 30 people, we would have probably abandoned the program. In fact, our initial goal was to get to 100 members in the first month as a test. We ended the first month with almost 400. So, we knew very quickly that this program was going to be worth the effort. We recommend you approach the effort with a similar "test-your-way-into-it" approach.
But you can design your program very differently than ours - and not include those labor-intensive elements.
If you're an e-commerce seller and you're trying to find ways to add a high-margin product, boost your site traffic, serve your customers well, and stabilize your income, then consider rolling out a membership program.
Investor Disclaimer: In May 2017 I became an investor in Shopify (wow, am I glad I did). I believe so strongly in their long-term growth prospects, that I decided I need to not only be a super fan / blogger / but also an owner of the company. I don't think my ownership of the stock will influence my blogging / writing / opinion giving, but I wanted you to be aware of it.