The Membership economy book review

This month we sat down with a copy of “The Membership Economy: Find Your Superusers, Master the Forever Transaction, and Build Recurring Revenue by Robbie Kellman Baxter.”

In the book, Robbie Kellman Baxter (or RKB as we will call her for ease) charts the inexorable swing of the pendulum from ownership to membership. In every part of our lives, we rent/join/subscribe now, rather than buying or owning.

We can see this in the rise of everything from Uber and Netflix through to LinkedIn and Peleton.

RKB argues that the membership economy will have as profound effect on the world as the Industrial Revolution. A pretty big claim.

She underscores the importance of thinking about how you can create just one “forever transaction” in your business. So that once a customer signs up, and right up until they cancel, that customer gets the same great experience without having to enter their payment information ever again. They enjoy being a part of your community – being a member – and buying more, evangelising about you, and grow within the community you create over time.

We have always believed here at Customer Thermometer that any sale process isn’t over until the customer leaves you, and this is borne out by “The Membership Economy.”

How do you get there? RKB in an interview said that “People prefer organizations that “solve the problem” as opposed to organizations that just sell stuff.” Build a company that solves problems over and over again in an inclusive way, and you are on track to build a great membership company.

RKB reaches some valuable conclusions for a diverse range of leaders, from CX and marketing practitioners and to pricing and technologists, across the chapters of this book.

She explains that success in the modern economy involves a move from ownership to access; from anonymous transactions to known, recognized relationships. This neccessitates moving from one way messaging to two-way communications between the organization and its members, (but also conversations among the members themselves, under the umbrella of the organization.)

Here are our key takeaways:

The Membership Economy: Top takeaways and quotes

“A certain type of organization is winning the hearts and voices of their customers, and building the kind of loyalty that traditionally was reserved for family, community, and church.” 

Community is what everyone craves and you can see it successfully deployed in things like Crossfit, Peleton and Virgin. RKB differentiates membership from mere “subscription” by saying that a subscription is a pricing decision; just simply a tactic. The Membership Economy is about a mindset – that mindset might include a subscription – but that’s not what’s at the centre. Humans are joining and belonging beasts by nature, great Membership companies understand and harness this.

“Just as with employee onboarding, membership onboarding ensures that the member has the knowledge, habits, and cultural mindset to be successful in this new community. Onboarding begins right after someone signs up.”

The author sees the customer sale process as a continuum where the customer starts with no knowledge, travels through the up-skilling, knowledge phase, through to customer success and eventually advocacy, referral and growth beyond just their purchase. We thought it was interesting to approach this in the mindset of putting as much effort (or similar) into a new customer, as into bringing a new employee onboard. This, RKB argues, leads to stronger recurring revenue, and ultimately a self-feeding customer funnel.

“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.”

We’ve all heard the warnings about the cost of customer acquisition but the above quote provides extra food for thought. Technology, and the incredibly cheap access now available to the internet (and thus) the global marketplace, has brought it within the reach of a single person with a computer to acquire customers.

RKB cautions us as to the right kind of membership approach to take. Avoid, she says the “electric fence” rather than “magnet” approach to loyalty. Basically, make sure your group/community attracts people to keep them loyal, rather than gating them in and making it too expensive for them to leave.

“An organization’s most loyal customers disproportionately drive revenue and profitability…the approximately 20% of customers who have visited a business 10 or more times drive 80% of the business’s total revenue. 

The author argues that the ‘core mission’ of the customer – the central thing the customer is trying to achieve – is the arbiter of success in this new economy. She says that what the customer is trying to do is more important than your product, and more important than the mission of your company. She says you must focus on living the customer’s mission more than you love your product set. A really interesting way to think about it.

“The best Membership Economy models go beyond the transaction, tracking behaviors including sign-ups for additional services and levels of membership.”

In order to look beyond the transaction, the author argues, you can build an onboarding process that is geared entirely around making new members into renewing and evangelising members. She suggests starting by removing all friction from the process of signing up. As soon as the user/customer is signed up, you need to deliver immediate value. This could be a rewarding dashboard, instant feedback, a gift, connections – something they will value. Finally you must encourage the desire behaviours; asking for referrals, customising experiences and providing a nurturing program. RKB suggests there are three Key Metrics you need to monitor on your journey toward the Membership Economy: You need to measure (1) Transaction value (2) cross-selling and (3) economies of scale.


We review top business books every month, from books by Nike’s founder through to books on Amazon’s meteoric rise – check out our collection of reviews here.