Paid-for - The Pros and Cons

Cards on the table - I like paid-for communities, and in many fields including media, entertainment and professional services, my experience is that they usually work well for businesses and members alike. However, they’re not for everyone, so I thought that I’d take a look at the cons as well as the pros.

Pro No 1 :  Proving your community is delivering

Monetising your community quickly answers the “why?” of having one. You don’t need to measure its contribution only through insights on acquisition, conversion, and engagement - there’s also the revenue that’s being directly generated. Plus, a 2020 McKinsey survey on memberships and loyalty programs found that members of paid programmes are 60% more likely to spend more on the brand after subscribing.

Con No 1 : The pressure is on from the get-go

The flip-side of this is that, as soon as you put a price tag on your offering, you’ll have revenue targets to hit. The potential of the new revenue stream will tend to narrow the focus of your C-Suite to how much it’s making for the business. You might find it more difficult to get them to give equal weight to those other metrics, with the risk that the consensus swings against the programme if those revenue targets aren’t immediately hit. So it’s hugely important to set expectations carefully before you launch, and especially to get across the message that generating direct revenue should be seen as a useful bi-product and not the primary aim.

Pro No 2: Ability to add more value for the members

A paid membership usually necessitates offering a higher level of service and user experience for members. Fortunately, the projected direct revenue should make it easier to justify and demand from management the extra resources needed to provide in-depth research, quality content and early access features. 

Con No 2: The discovery factor

A hard paywall is a bold move. Since all that lovely engagement and content is hidden from non-members, paid-for offerings are less ‘discoverable’ in their nature (not only by the customer, but also by search engines). One workaround is to introduce tiered or freemium models, which give potential customers a taster of what they will get if they sign up for the complete offering. This, however, may not be enough: a significant level of overt marketing and promotion is usually also needed to reach and convert your potential audience, including clear signalling of how they can expect to benefit personally and strong testimonials. Bear in mind though that, even in the case of free communities, only a certain percentage of people join, so don’t get crazily ambitious with your predicted conversion rate.  Pride comes not only before a fall, but before a paywall.

Pro No 3: More meat/ less spam

Trolls won’t pay to join your community. A subscription model pretty much guarantees you’ll have less spam, often needing less moderation in the long run, so you can focus on engaging your members.

Don't forget that as well as the financial commitment, your customers are committing emotionally to your brand. As a result, real engagement should be significantly higher.

Con No 3: Churn

If you've chosen a subscription-based model, having someone join your community doesn’t guarantee they will stay indefinitely. You need to work hard to keep them, starting with a personalised onboarding experience.  Keep the offering relevant and always staying laser-focused on helping them achieve their goals.

However, there’s no getting away from the fact that you will experience some level of churn. Churn is hard to bear for any community, but when it’s directly linked to revenue, it will rise in importance (and pain!) within your business.

Pro No 4: Exclusivity and Value

A price tag can create a perception of exclusivity and added value. Members feel they're part of a special club, accessing premium content and experiences not available to everyone. In most areas of life, people value something more if they’ve paid for it.

Con No 4: Perception of inaccessibility

There’s a risk you could unintentionally create an image of elitism and pricing people out. Of course, you might actually want to pitch your group as elite (the women’s network, Chief might be a good example of this.)  But if you don’t, make sure you strike the right balance between value and affordability for the audience you want to attract. 

The Verdict: It's All in the Nuances

There's no one-size-fits-all answer. The decision whether to go for paid or free depends on your goals, target audience, and the value proposition you want to offer. In particular, consider these factors when you are considering charging:

Value Proposition: What unique benefits will you offer paying members? Can you demonstrably justify the fee?

Target Audience: Are they willing and able to pay for access? Research their budget constraints and expectations.

Competition: How do your fees compare to similar services? Offer competitive pricing or unique value to stand out.

User experience: Can you consistently deliver a high-quality offering that justifies the paid model? Do you have the resources to maintain the levels that will be expected? 

This newsletter is brought to you by www.customer-ization.com. We work with B2C brands to activate and empower customer communities to deliver growth, retention and satisfaction. To find out more why not book a call to explore how we can help you harness your customers’ enthusiasm and achieve a step change in your business outcomes.