Written by Michael Gillespie
In this Issue:
QUOTE OF THE WEEK
“While our member acquisition remains steady, our margins are also contracting steadily.”
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Just how predictable is the trajectory of a membership business?
That’s a question that’s on my mind. After eight years of studying the mechanics of membership, I have a lot of evidence that most membership businesses are not only predictable, but extremely predictable.
And there’s one expectation that, if set properly, will ensure that you operate a membership that’s sustainable over the long run.
That expectation is this: Your results will get worse over time.
Let’s dive in.
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A look at what happens when the period of easy membership growth ends.
I’ve seen some incredibly successful membership launches. The early months of membership can feel especially rewarding as new members flock to your new offering.
But believing this early wave of membership acquisition is an indicator of what’s to come in future months (or years) is often a trap for an operator.
For nearly every operator and organization I’ve worked with, there’s one thing that happens consistently…
Their results worsen over time.
This occurrence can take on many forms. Some examples:
Now, remember, a membership business can still grow under the above circumstances, it just grows slower.
But often, that pace of growth will fall below the pace at which the operator’s costs rise.
And this is precisely the point where many operators are forced to make decisions that are reactionary rather than strategic.
My goal is to keep you out of the reactionary line of thinking and in the strategic one.
The first step in doing that is acknowledging your results will worsen over time.
But more importantly, understanding the forces that drive worsening results will position you to turn this expected occurrence into a major opportunity.
📌 Info Sheet: The Drivers of Worsening Membership Results
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