If you had any question about how technology is penetrating our lives, consider the following statistics:

    Ninety-one percent of all adults have their mobile phone within arm’s reach every hour of every day.

    There are 6.8 billion people on the planet, and 4 billion of them use a mobile phone. Only 3.5 billion of them use a toothbrush.

    Every minute, 100 hours of video are uploaded on YouTube by individual users.

    Ninety percent of text messages are read within three minutes of being delivered.

    The average 21-year-old has spent 5,000 hours playing video games; sent 250,000 emails, instant messages, and text messages; and has spent 10,000 hours on a mobile phone.

Traditional value propositions are being transformed by technology. This is not news. Look at what WebEx has done for meetings or BaseCamp for collaboration. Each has enabled remote collaboration at a different level than ever before. Both have contributed heavily to the “work at home” and “remote workforce/global team” concepts. With WebEx (or Google Hangouts) you can share documents, video chat with multiple people around the globe concurrently, send documents to the team, and more. BaseCamp is a web-based project management tool providing to-do lists, wiki-style web-based text documents, milestone management, file sharing, time tracking, and a messaging system.

What might be news is that there are dozens of apps, tools, and platforms that have been designed with the unique needs of the Membership Economy in mind. As with any organization operating in the second decade of the twenty-first century, technology is very much a part of every Membership Economy success story. In this chapter, I focus specifically on those emerging categories designed to support Membership Economy organizations that use subscriptions, communities, and networks as part of their business models.

Technology Matters—Especially in the Membership Economy

Technology isn’t everything. It may be just 10 percent of what’s needed to build a successful Membership Economy organization. The other 90 percent—attitude, marketing, understanding your customer, all of that—is critical, but the platform, apps, and tools you choose do matter.

Technology is the underlying major enabler of the entire transformational shift to membership. To paraphrase LinkedIn co-founder Allen Blue,¹ there’s every reason to believe that the online systems are a shorter path to the same value provided by in-person relationships. Technology can speed up and simplify connections and idea sharing among members, but it also provides valuable insights regarding member needs and behaviors.

Membership organizations often are stymied by technical challenges, especially those that have been around a long time. The thought of change can be hard, and replacing or working around legacy systems can be intimidating. But there are lots of ways to leverage modern technology and execute on the promise of membership. Most Membership Economy organizations are not differentiated by their technology. They use services created by other companies to support their memberships. In many cases, they are accessing software-as-a-service (SaaS), so the responsibility for maintenance, management, and configuration isn’t even a principal challenge of the Membership Economy organization.

SaaS options have made it both easy and affordable to build a strong platform for a Membership Economy business. Nearly every kind of software is available on a subscription basis, providing flexibility, configuration, and affordability.

Sometimes, the organization wants to build its own platform from scratch. After all, you don’t want your key competitive differentiator (if that is the case) to come from someone else’s products! But in-house development of proprietary systems is becoming increasingly rare. It used to be that IT departments would strive for big budgets and teams, but now, the most admired IT organizations know when to rely on other solutions for speed and reliability, and when to invest in building custom solutions. Using solutions created by others that are managed in the cloud can be great ways to manage costs and stay nimble.

There is a downside to the affordability and ease of all these offerings. Michael Geller, CEO of customer success software company Preact, pointed out that, “As a result of the declining costs to start a business, the cost to acquire new customers has gone through the roof, and retention has become more important than ever.”² With all the noise in the marketplace, you really need to focus on retaining the customers you have. Technology is one of the key tools of the Membership Economy in part because it enables organizations to encourage and track retention in ways never before possible.

In any case, an organization that wants to leverage the power of the Membership Economy needs to consider its technology strategy as thoughtfully as it considers its operations, staffing, or services. Whether they develop custom solutions or work with vendors, organizations will be opening new channels or limiting connection with each decision.

Key Technologies of the Membership Economy

The technologies available to help you support Membership Economy organizations include social, engagement, loyalty, and billing. Here are some of the specific technologies you might want to bring aboard. It’s not an exhaustive list, but it is meant to provide highlights of what’s available:

    Marketing automation (Marketo, Hubspot). Allows organizations to track their interactions with prospective members during periods when they are not members (before they join or after they leave) as well as ongoing marketing over the member lifecycle. Important because sometimes it takes a long time to win a member and upgrade that member to the right tier of membership; and because sometimes even after a member leaves, he or she can be won back.

    Customer relationship management (Act-On, Janrain, RightNow, Salesforce.com). A system for managing a company’s ongoing interactions with current and future customers, usually used in selling to businesses. Uses technology to organize, automate, and synchronize sales, marketing, customer service, and technical support. Often tightly integrated with marketing automation tools. Important because the balance of power has shifted from the organization to the member, which means that the organization needs to be continually delivering value to keep the member. There are hundreds of CRMs in the market today, many of which are customized for specific verticals—the options are endless.

    Subscription billing (Vindicia, Zuora). SaaS-based platforms that support nearly any kind of pricing model, no matter how complex. Important because they give organizations the freedom to design services that make sense for members.

    Community (Jive, Lithium). Allows organizations to provide a way for members to communicate with one another and with the organization online. Important because the more members can communicate with one another and with the organization, the more engaged they become and the more the organization can learn about its members.

    Customer success (Gainsight, Preact, Totango). Allows organizations to track leading indicators of customer health and drive deeper engagement. Important because members who don’t engage and who don’t understand the benefits available to them are more likely to leave.

    Loyalty (Belly, Punchcard). Allows organizations to track member behavior and provide recognition and rewards in exchange for loyalty. Important because it strengthens relationships, especially in retail, consumer products, and other historically transactional businesses.

Four of the most important categories to consider are billing, community, loyalty, and customer success. Some specific examples of providers of these functions are listed in the sidebar.

Billing: Invest in Billing Systems to Support Membership Pricing

There have been many times when my clients have been limited in the type of pricing they can provide because of their billing systems. For example, one company wanted to provide a 10 percent discount to anyone who purchased two or more offerings. But because of the limitations of the billing system, the client had to create a separate product called “bundle” for each combination, thus creating clutter and confusion for members.

Two well-known providers that focus on billing for subscription businesses are Zuora and Vindicia, although there are many others. Both offer organizations the ability to offer custom, often complex, pricing solutions. These new SaaS billing services offer tremendous flexibility.

Tien Tzuo, CEO of Zuora, points out, “When you move to the Membership Economy, you have much more flexibility with pricing and many more transactions (monthly, annually) which creates tremendous complexity—are you selling by volume? Duration? Services provided? Features available? The technology needs to support the strategic pricing decisions you make. You shouldn’t be limited by your software in terms of how you price your offerings.”³

A good billing solution can help an organization understand the actual cost of serving each member. Subscription billing expert David Werdiger, founder of the Australian firm Billing Bureau, believes that most subscription businesses suffer because they do not understand their costs and as a result are afraid to offer an “all you can eat” model because they don’t know how much the average person actually will eat.⁴ Fear that too many people will be heavy users prevents organizations from offering the pricing consumers really want.

Another often overlooked benefit of billing systems is the opportunity to use the billing communications as a marketing tool, providing relevant information about additional services in the invoices and communications themselves. Every communication from the organization should be seen as a potential opportunity to build brand loyalty and long-term connection—not just the materials that come out of the marketing department.

Community: Make Sure You Retain Control of Your Members, Even If It’s Not Your Technology

Using an existing technology platform (like LinkedIn, Pinterest, or Facebook) can be a quick way to build the key functionality needed for membership community. It’s fast and cheap and gives immediate access to your most loyal members. The risk is that the organization might lose control, the ability to offer something truly customized, and, sometimes, the ability to connect directly to members. For example, Facebook had a fan page idea, which a lot of organizations used as a means of building connections with their users. But unfortunately, Facebook recently decided to downplay the fan pages in its algorithm.

The result is that people who say they are fans of a business page, like Old Spice or Bare Essentials (two successful fan pages that have been developed nicely and with a lot of effort) are used to seeing updates much more frequently. These “reach” rates, which were at about 16 percent in March 2012, are now as low as 1 to 2 percent for brand fan pages, according to EdgeRank Checker, a tool for checking Facebook rankings, and are expected to drop to zero. Brands will have to pay for ads to reach their fans—even if those fans had previously indicated that they wanted to hear from the brand on Facebook. So now these brands that have invested heavily in building a fan base have to figure out a new way to reach this audience. Facebook wants them to sponsor their posts instead, paying for the privilege. Using a platform controlled by Membership Economy organizations like Jive or Lithium may be a better option if community is core to the business model.

Loyalty: Going Beyond Punch Cards, Retail, and Hospitality

Loyalty programs build ongoing relationships with transactional customers. The way they work is that the organizations track and reward desired behavior. A physical punch card is the most basic loyalty program—but there’s a lot of friction in that approach, lots of ways that the customer can fail to gain the benefits and rewards of loyalty. They can lose the card or forget to bring it along. Even in the best of circumstances, a punch card can’t track much in the way of behavior, beyond the number (or dollar value) of purchases.

Today’s loyalty technology companies can track much more. They can track every interaction that the customer has with the company, across channels and over time. Then they can build in analytics to create a picture of the customer’s preferences and habits, and reward customers in ways that develop loyalty. These new programs change the game for retailers and hospitality companies that have long used loyalty programs. In addition, they enable a whole new category of organizations, such as consumer packaged goods companies and electronics manufacturers, to build direct relationships with end users—something that had been virtually impossible in the past.

Says Jamie Beckland, vice president at the technology company Janrain, “We are seeing that the types of organizations that are most interested in loyalty programs haven’t done loyalty before—the consumer facing ones. What they’re finding is that adding a loyalty experience helps them develop a direct relationship with their customer—which previously had been gated by the retailer.”⁵

Customer Success: Track, Analyze, Act

It used to be that the relationship with the customer ended at the transaction, unless of course customers called with a problem. In those cases, a “customer support” professional would help them resolve the issue. Generally the organization would seek to minimize the number of calls customer support received. But in the Membership Economy, where customer engagement is critical, every opportunity to engage with the customer is an opportunity to build loyalty and long-term connection.

As a result, there is a new functional area in many Membership Economy companies, called “customer success,” and there’s supporting software for this too. Companies like Totango, Gainsight, Frontleaf, and Preact monitor and track member behavior—whether it’s phone calls, emails, or actual membership usage—as a way to drive deeper value for customers. The more value or “success” members get from the offering, the more loyal they will become. In the Membership Economy, making sure that the member is successful directly drives revenue.

Implications for the CIO

What does all this mean for the leader of the technology team—the chief information officer? It means that with all the data being generated by the Membership Economy, the CIO at Membership Economy organizations has an opportunity to be a highly strategic player on the leadership team. Instead of being seen as the manager of a cost center or just a functional expert, the CIO now is on par with the CMO, sharing the opportunity and obligation to figure out how to collect and analyze the data that can drive decisions about what services to offer and which customers to focus on. Further, the CIO at a Membership Economy organization can and should be able to say to the CEO: “Here is what we should be doing to engage, retain, and even attract members.”

Remember

Some people reading this book love technology and have embraced it in their personal and professional lives. For others, technology feels like a necessary evil, something difficult to manage and hard to justify. Regardless of how you feel, the fact is that technological advancement is the single most important change driving the Membership Economy. If you remember nothing else from this book, I hope you take away the idea that technology can and should be used to build strong relationships with members. And even if you aren’t a technologist yourself, you need to become literate enough in tech trends to have them serve you in achieving your membership objectives.