Research Finds Three Quarters of Business Leaders Feel Subscription Holds Key to Growth in the ‘Membership Economy’
New research from international growth strategy experts Manifesto Growth Architects has revealed that 70% cent of businesses believe that membership and subscription models hold the key to future commercial growth and expansion, yet very few are harnessing its potential.
With Disney announcing details of its new streaming service to rival Netflix, the Financial Times reporting 1 million paying readers a year ahead of plan and Unilever pushing into healthy snack subscriptions with acquisition of Graze, the last few weeks alone have shown that membership models are fast becoming one of the hottest topics on the UK business growth agenda.
However, according to new independent research from Manifesto, which surveyed 504 senior business leaders across sectors spanning retail, finance, leisure, automotive and utilities, only a quarter (24%) of businesses are currently implementing subscription models, with less than one in ten (7%) generating significant revenue via membership.
A quarter of business leaders (24%) said they were trialling membership models but weren’t sure how they would evolve and a similar number (22%) said membership products had definite potential, but they were unsure how to approach them.
Manifesto, which also conducted in depth interviews with over 40 executives with subscription offerings as part of the research, says both its own findings and wider market trends show companies need to seriously consider investing in their direct to consumer offering to protect market share, boost revenues, and develop sustainable long-term customer relationships, or risk losing out.
Whilst subscription fees often define the membership model for many, Manifesto says transactional, advertising and affiliate income can hold equal if not greater revenue potential – but harnessing this for some companies can mean a bold departure from ‘business as usual’.
The business, which specialises in developing growth strategies for major international household names including Merlin, Disney, News Corp, Purina, Pay.UK and Coty, says the research should be a wake-up call to business leaders and encourage more to explore new customer propositions in the wake of evolving tech and behaviour shifts linked to the membership economy.
The findings feature in ‘How to Make Money from the Membership Economy’ – a new report from Manifesto which shows the Leisure and Entertainment, Retail and Media sectors recognised as having the most potential for membership, reflecting the success of proven subscriber models including the Wall Street Journal, The Times and Netflix. Utilities and the Automotive sectors were though by business leaders to have the least potential – an assumption challenged by Manifesto in its analysis.
Manifesto Executive Vice President, Sam Jordan, a specialist in membership proposition development said: “Netflix is the pioneer of the membership economy so it’s no surprise to see Disney and Apple following suit and announcing a streaming platform as a way of increasing long-term customer relationships and generating ongoing revenue.
“Our research and report shows just how much of an opportunity there is for businesses looking to take that plunge and develop a subscription model for their customers. The success of a membership or subscription models ultimately begins and ends with the consumer, and in line with this, evolving the associated consumer proposition and experience. It’s important for businesses to recognise the potential subscription holds forcapturing and retaining fresh revenue streams – but equally it’s got to be done right.
“Our report is the first of its kind. It not only shows the revenue potential of a well-executed subscription or membership model, but also identifies the core capabilities a business needs to master to be successful. It’s never a case of one size fits all.”
Manifesto Growth Architects will launch the findings at an event exploring membership models and their benefits on Tuesday, April 30 from 8:00-10:00 am at h Club London, 24 Endell Street, London, WC2H9HQ, featuring speakers from The Times, Revolut and Tortoise.