The membership economy is over and above just a transactional action. The transaction should be just part of the whole membership thing. Membership shouldn’t be — let’s say after the transaction. -jd
Robbie Baxter: Right, exactly. This brings us into the whole idea of a Freemium Model, which is the idea that you can have a free subscription or a page subscription, and they work in concert together. We talked about LinkedIn; they use a Freemium Model. 95% of LinkedIn customers never pay a nickel, but that’s okay because they’re a membership. They get value for being members, and they’re creating value for the LinkedIn ecosystem. So there are three ways that you build a Freemium Model that is valuable for the organization. One is if the Freemium experience serves as a source for awareness or trial. So in other words, “Hey, what is this LinkedIn thing? I think I’ll give it a try. I’ll sign up. It’s free. I’ll see what it’s got and maybe I’ll upgrade if it’s good…” So, that’s reason number one.
Reason number two is a network defect; meaning that each new person that joins LinkedIn for free is increasing the value for the existing members and for the paid members. Because if you’re a recruiter or sales person, you’re paying for your LinkedIn subscription, it becomes more valuable the more people that are part of it. The third reason is if those free members, those Freemium subscribers are actually serving as channels for acquisition. They call this a viral, right? The example, the first one to really talk about this was Hotmail, which was the free email accounts probably like 10 years ago where it said you will sign up for a Hotmail account to have private email that wasn’t related to your company. At the bottom of every email it said, “Would like your own private email address for your personal contacts? If so, click here for a free subscription.” And so the person who sent me an email had nothing to do with the fact that there was a little attachment at the bottom that invited me to join, so that person that sent me the email is actually a channel for marketing to new people. So those are the three reasons when Freemium really makes sense.
About: Robbie Kellman Baxter is a long-time advisor to some of the most popular membership-based businesses and author of the recent book, The Membership Economy: Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue.
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