Since the turn of the century, the subscription business model has gained popularity over traditional coaching services. According to a Forbes report, the global subscription industry is expected to be worth $900 billion by 2026. This means content creators are looking for other monetization methods beyond the usual sponsored ads.

The report notes that by 2026, the number of memberships and subscriptions is expected to increase by 31% from the 2021 numbers. If you are considering this business model, you may wonder if it's right for you. If this is your question, you have come to the right place. This article will discuss whether the subscription-based model is right for you.

What is a Membership Business Model?

A membership business model refers to a business where clients pay a specific fee for access to particular courses, tools, and other resources, such as access to community, information or a combination of these factors. Some of the popular membership clubs are: 

• Amazon Prime: Members are given free shipping and other membership perks.
• Sam’s or Costco club. Provides users with discounted products in bulk.
• Netflix. Users are given access to certain TV shows and movies on demand.

Remember that even a gym or library subscription is a membership, so these are also examples of membership clubs. For online businesses, the membership model often includes a dedicated membership site. This is where the paying members login and access their courses, content, and community. 

The membership site also controls access to the content contained therein. Members can pay a one-time membership fee or a monthly or annual fee to join an access club. You can read our guide on choosing between ad revenue and subscription monetization methods.

Benefits of a Subscription-Based Membership For Your Business

Since most membership clubs require users to pay a monthly fee, they generate a steady income regardless of their chosen membership model. That said, here are the benefits of a subscription-based business model:

• Steady income. While there is no guarantee that members of your business will pay each month, a subscription business can help stabilize your income. After you have been in business for a few years, you can get details on the new customer retention rate and acquisition and, therefore, predict the expected revenue with some certainty.
• Customer retention. One reason members prefer a subscription business model is the need for continuity. Instead of leaning on uncertainty, consumers choose to stay with a product or service. The customer retention rate depends on the quality of the product and whether it meets the user's needs.
• Serving more people. Service providers such as coaches and consultants also prefer a membership model, which helps them scale their businesses.
• Opportunity to upsell and cross-sell. Many business membership models have different levels. If a customer joins at the lowest level, they will often be reminded of the benefits of upgrading to a higher level or purchasing another complimentary package.
• Relationship building. Instead of a one-time transaction, membership focuses on an ongoing customer relationship. This ensures that the membership owner can see the progress and growth over a while, something that can be quite rewarding. If you are a member, you can be assured that you can enjoy ongoing support.
• Continuous sales. In some business models, such as business consulting and online courses, the business owner can also set sales deadlines. For instance, they can set a deadline when registration for a course is usually open. On the other hand, a subscription model means the business is always open for enrollment. There is no pressure for businesses to have a sales deadline.

How a Subscription-Based Business Can Benefit Customers

Subscription models not only benefit the business but also the customer. Here are some of the key benefits:

• Continuity. When customers maintain their membership, they can enjoy better continuity in learning or for whatever reason they subscribed. They don’t have to keep jumping around to various solutions.
• Greater resource access. An online membership model usually relies on site membership to provide customers with information on tools and products, regardless of when the team or owners are available.
• Pricing. Membership models often have competitive pricing to encourage customers to continue using the service or product over a period of time. This can benefit the customer over a big one-time investment.
• Convenience. The subscription membership model aims to provide customers with convenience by providing them with the product or service they are searching for.
• Community. The built-in feature of the membership is the community. Customers appreciate it when they feel they are part of something, whether it's being aware of a discounted membership or fostering conversation. 

Cons of a Subscription Business Model

While a subscription business model isn't a solution to all the challenges of your business, it also has its downsides. These can be:

• Pressure on creators. There are membership clubs that often promote new resources, such as content. For instance, a course creator can promote a new course each month. This may be beneficial for a member, but it can put a lot of pressure on the creator if they don't have a plan in place for creating content.
• Regular subscription cancellation. Subscriptions can have customers subscribing and cancelling after a few days. For instance, if they subscribe to the program and feel there isn't anything new, they will cancel their membership. Therefore, you should understand that some of your customers will still leave.
• Marketing funnel. Despite the many advantages of the subscription model for selling and marketing, you will add new users who will join the top of your sales funnel. Since you will have a percentage that churns out, as outlined earlier, it means you will need to regularly add cold leads to replace those already churning out.
• Better customer service. A membership model serves more people than a business with one-time customers. That means customer service demands will increase, so companies will need to prepare for it.

While the above downsides don't mean the business model is bad, you should bear the downsides in mind when opting for this business model.

Steps in Creating a Subscription Model for Your Business

The step you take will depend on the membership model you choose. However, here are some of the general steps to follow:

Select a Model

There are different types of subscription models. When selecting the ideal one, consider your ideal customers, your company's values, and your preferred method of content delivery. Remember that while it's important to perform your due diligence and consider the offer you want to make, you can add perks and features to the membership over time.

After selecting a good model, consider your offer as a one-time investment or with recurring fees. Will there be different membership tiers with varying benefits? As with other offers, think of the features and benefits that are likely to attract customers.

Choose a Software

Online subscription models require software to ease the membership process. Whether it's a website through which they can subscribe, an online course to subscribe to, or access to an online community, you will need the right technology to deliver that. Remember that you will need to firewall the product or content so that only exclusive members can access it. 

Whether you charge a one-off fee or a recurring fee, you will need a way of receiving your payment. You will also need to consider the features you offer in your subscriptions, such as assessments, quizzes, communities, certifications, and more. When selecting a membership software, there are several questions you need to ask yourself. These include:

• Is an online course included in your membership?
• Are you starting your coaching career, or are you a veteran?
• Do you have a site?
• Is taking complete control of your brand important to you?

These key questions will help you determine the right membership software for your needs.

Building the Membership

In this step, you will need to perform several tasks, such as adding items to the online store, adding content to the course, or creating space for customers to connect. As a creator, you can begin with a minimum viable product and continue to expand your course as people join. 

For instance, when starting an online course, you can create course materials that people can buy. You should develop worksheets, record videos, and add assessments, among other things. Create a product or content that aligns with your preferred membership model.

Set Up Your Sales Funnel

You will need to spread the word about your coaching. Otherwise, if people don't know you're offering it, how will they join? You can use different methods, such as running ads for your ideal customers or relying on word-of-mouth marketing. You can even set up an affiliate marketing program. Regardless of your chosen method, you must create a sales funnel to nurture your leads. 

Types of Subscription Models for Your Business

Consider your business's most profitable membership model and whether you will need one or more. Some of the top options are:

Discount Club

The idea behind this model is to offer your customers discounts or good deals. For instance, if someone joins for $50, they get a 20% discount on their purchases. You can even take this to the next level by having tiers where people pay upfront for good deals. 

You can achieve promotions of up to 50%, especially when promoting video software or digital downloads with a high profit margin. An example is Dollar Flight Clubs, where members are notified of discounts on flights leaving their closest airports.

Online Community Subscriptions

These communities aim to foster strong relationships with paying members, just as social media is localized to a site. Successful subscription sites that employ this structure typically focus on providing members with access to one another through a specific platform or community service model. These models can be identified by various features such as:

• Member directory. Enables members to search for and connect.
• Membership forums. This allows members to go on with the group discussions.
• Accountability tools. This aims to empower members to follow through on their goals and achieve them.
• Masterminds. This provides members with high levels of support, feedback, and resources.

This type of subscription site can be especially helpful for clients who aim to meet their needs and gain the support of individuals seeking high-end resources.

Education Benefits

This membership model operates similarly to Netflix, where members gain access to a curated selection of content from the day they join. That means they have a course library that continues to grow with time, incentivizing your current customers to remain and continuing to attract new ones. When creating this type of membership, ensure that people can easily find the right course. You can do that using various methods such as:

• A search functionality.
• Giving them recommendations based on other previous courses.

This model is ideal for coaching, as it enables individuals to join and achieve their objectives. You can even create an education roadmap that guides individuals on where to go after reaching their initial goals.

Membership Directory Listing

A paid directory listing can be an excellent way for membership sites to generate an instant revenue stream. This works in the same way as chambers of commerce, but for your industry. Members can list their products and services in the directory when building credibility with potential clients. The paid listing starts at $49 per year and can increase the results.

After listing their business, you can charge annual renewal fees. There are also various membership options available, which may include a premium listing for select members, resulting in a higher search engine ranking.

Final Thoughts

Subscription-based models have undoubtedly replaced traditional coaching. This can be attributed to the numerous benefits of this model, including recurring income and the opportunity to build relationships with clients. If you're wondering how to get started with this model, our detailed guide will help you do so.