Robbie Baxter, a Standford School of Business alumnus with over 20 years of experience in strategy consulting and marketing, coined the popular business term “membership economy,” which instructs brands on how to develop enduring relationships with their clients. Companies and organizations are always thinking about growth, with most growth being fueled by technology. Blockbuster became a victim of the world-changing around them when Netflix offered to its customers a “forever transaction” — a subscription charge giving access to the same experiences with added perks and loyalty programs for users. Blockbuster heavily depended on each movie transaction to drive revenue. This is where Netflix had the advantage. For what you paid during your weekly trip to Blockbuster, you could get a full month of unlimited rentals through Netflix. By 2010, Blockbuster had officially declared bankruptcy. This disruptive change to the industry paved the way for Netflix to experience explosive growth as technology-enabled new ways of engaging customers in an ongoing, authentic way.
Direct-to-consumer (D2C) platforms have now fueled the upswing in the global subscription sector, which was formerly dominated by B2B subscriptions. D2C models provide simplicity and predictability that are advantageous to both businesses and their clients. They support continuous client connections and produce recurrent revenue. Therefore, it should come as no surprise that many companies are following in the footsteps of Netflix—looking for subscription management solutions to take advantage of the growth opportunity.
Let’s take a dive into two e-commerce companies that are utilizing new D2C technology to build relationships with their customers.
The first is Amazon. Its current market cap of $1.6 trillion dollars stems from its Amazon Prime members. The annual subscription takes away the pain of paying for shipping along with a host of other services for its policyholders. At the end of 2021, there were nearly 160 million Prime members in the U.S. Why does this matter? Because Prime members spend more than double on the e-commerce site than the spending of non-Prime Amazon members. Subscriptions enhance their members’ experiences as it allows the site to make recommendations for products and services you may be interested in due to past purchases. Amazon One-Click ordering saves its members time by eliminating the steps that require you to enter your user name and password for every order.
Finding the best way to sell your products and services online is a challenge for many small businesses. Shopify’s online store platform makes it simple for companies of all sizes to launch their operations and later develop by adding new features and services. The Amazon Prime like Membership offers members exclusive content. Shopify merchants can build member engagement by offering access to exclusive member-only web pages & products.
User participation in any online internet community generally follows the 90-9-1 rule:
- 90% of all users are lurkers. They read, search, navigate, and observe, but don’t contribute
- 9% of all users contribute occasionally
- 1% of all users participate a lot and account for most of the content in the community
Users start contributing to communities soon after they go live, but everyone contributes at a different rate—participation in communities is highly skewed and unequal. A small number of hyper-contributors in the community end up producing most of the community content. To address participation in social media and online communities the best companies focus on long-term relationships with their customers. NFTs and blockchain technology are changing the infrastructure that enables trusting relationships. The idea is that NFTs are a kind of loyalty card — in the form of a cryptographic key — that a brand’s top fans can use to access exclusive items. Like Amazon, Nifty Bridge offers a One-Click Wallet which sets up wallets for our clients to make purchases in a single click. This reduces friction and creates a seamless NFT purchase experience for all the brands we work with. Through our partnership with Shopify, we can help brands strengthen their community and build long-term value and utility for their customers. Our tokengating app enables customers to unlock special perks, products and real-world experiences with merchants through NFTs to unlock special perks, products and real-world experiences with merchants through NFTs.
Whether your brand is an online business or not, a loyalty program should be a major element in your customer retention strategy. It’s your ticket to not only retaining current customers but also attracting new ones.