Robbie Kellman Baxter is the author of “The Membership Economy.” We had the chance to chat with Robbie about the Membership Economy and how to successfully apply this approach to online communities - here are the highlights.
Higher Logic: How can we apply the practices of a Membership Economy to online communities? How do they complement one another?
Robbie Kellman Baxter: Any organization that is joining the Membership Economy is trying to build a long-term, formal relationship with their customers. This kind of relationship is different than the anonymous transactional nature of the past. Community becomes important as organizations enable connection between the customers and the organization, as well as among the customers themselves.
HL: With this membership model in mind, what should a community’s growth strategy be?
RKB: It’s really important for organizations to understand the objectives of their communities. Many organizations simply say “We have to add community for our customers/members” without really knowing why. There are so many different ways a community can be structured and what goals can be achieved. Some communities exist to help customers get the most use out of complex products they have purchased, like cars or cameras. Other communities are designed to connect like-minded professionals.
In cases of professional associations, the connections are the primary benefit, but in cases like Marketo’s online community, the professional connection among marketers is hugely valuable to members, but it’s Marketo’s software which ultimately drives revenue for the organization.
HL: You say this model isn't a new idea, it's just that technology has finally caught up for companies to offer "an infrastructure of trust" - what should that infrastructure include?
RKB: The point I tried to make in the book was that the cost of technology is declining, and technology is becoming easier to implement and use. You don’t need to be an engineer to evaluate, select, and deploy a SaaS solution.
And yet, many organizations still treat decisions to incorporate new technologies, say to enable a community or subscription billing, as “big projects” requiring tech support. Everyone in the organization should be able to create requirements defining what they need to be able to do, and then shop for the technologies to support these requirements. We’ve got to get over our tech-phobias!
HL: How can we improve customer support and feedback through a Membership Economy?
RKB: We need to move from customer support to customer success. If we get to know our customers, through ongoing data about their preferences and behaviors, and have access to reach out and ask them questions, we should use that privilege of connection to learn about them and even to proactively reach out and see how they feel about us.
HL: Tell us about your experience working with Netflix. What can we learn from them?
RKB: Netflix was one of my first clients in the Membership Economy, and one of the pioneers. We can all learn a lot from them. Here are my top 3:
- Do one thing well. They have always focused on delivering one thing really well—professionally created video content with efficiency and cost certainty.
- Gather member data. They used the behavioral data from their subscribers to continually improve the experience.
- Limit churn. They focused on minimizing churn before investing in acquisition.
HL: What are the pitfalls (if any) to the Membership Economy - what should communities look out for?
RKB: Communities can get too insular, focusing on the needs of the most vocal members, instead of also listening to quieter (but often more representative) members or prospects. While I preach the idea of putting your customer at the center of everything you do, it can’t just be the people who’ve been your customers for a long time. You have to stay sensitive to the changing landscape and expectations of new members, too.
HL: You’ve said before that marketers should focus on retention just as much as acquisition - can you elaborate?
RKB: If you focus on acquisition, but can’t retain your customers, you have a sieve and not a funnel. This is especially true in subscription models, popular in the Membership Economy, because often it takes a while before the acquisition cost is paid off. It’s critical to make sure you can retain the customers you have before investing in finding more of them. Product/market fit is everything.
HL: The Customer Success team may be the new hub of a business (onboarding and customer warning signs are integral). How can we leverage that in an online community?
RKB: If you have your customers coming together in community to share successes, concerns and complaints, you have a great open channel to help them thrive. Customer Success is really about flipping Customer Support upside down, and instead of waiting until someone complains, it’s about optimizing that person’s success so they never have to complain.
HL: In your book, you cite Salesforce as an example of a powerful community, harnessing further power from “superusers.” Can you talk more about the power of superusers, and how Salesforce succeeded with those tactics?
RKB: A superuser is a customer who goes beyond being an ideal customer, paying on time and using your services frequently and appropriately. They also invest their own resources (time, reputation, and sometimes money) to help your organization thrive. These are people who act as ambassadors, participate in your focus groups, and otherwise help the community in what might be called an altruistic way.
Salesforce has always invested in these people. One example is their MVP program, which recognizes the most supportive and generous members of their community. But it’s important to remember that Salesforce also listens to prospects, new members and other key segments of their community. Superusers are important, but not the only ones that matter.
About Robbie Kellman Baxter
Robbie Kellman Baxter is the founder of Peninsula Strategies, a full-service strategic marketing consulting firm, as well as author of “The Membership Economy.” Robbie has over twenty years of strategy consulting and marketing expertise. Her clients have included start-ups and mid-sized venture-backed companies as well as industry leaders such as Netflix, Yahoo!, Oracle and eBay.