Membership Lessons From For Profits

By: Kim Fernandez

Membership is no longer just for associations and nonprofits. More and more for profits have jumped on the bandwagon, realizing that by allowing customers to become members, they are fostering a sense of belonging and improving customer loyalty. Now it's time for associations to learn from these for-profit membership models.

If it's true that imitation is the most sincere form of flattery, associations should be very flattered. An increasing number of for-profit and private companies are following the membership model associations have been using since their inception. The theory is that by allowing customers to become members, with or without added benefits, the companies are fostering a sense of belonging, resulting in improved loyalty as well as repeat business and greater profits.

Does it work? The companies doing it say yes. Harley-Davidson has been at it since 1983, when it launched the first Harley Owners Group (H.O.G.), offering its motorcycle owners memberships. The concept made sense: Bikers who always felt a kinship toward one another could now cement it in something official.

H.O.G. members receive their first year of membership free with the purchase of a motorcycle. After that, they pay fees starting at $25 per year to stay in the group. And lots do just that: Harley-Davidson now has more than one million H.O.G. members around the world.

Harley-Davidson is not alone. Hotels have launched similar programs that offer benefits ranging from free stays and extended concierge services to magazines and upgrades to those who join. Healthcare has jumped on the bandwagon, too, with both large companies and private doctors' offices peddling memberships that entitle people to healthcare benefits for a year, outside of whatever insurance they may have. Even retail has discovered the membership trend, with large warehouse clubs and grocery stores giving out special sale prices and notifications as a membership benefit.

"If they're going to be willing to sign up and pay for it, they have to get exclusive benefits that nobody else is getting. It has to be exciting for them."—Carol Roth

So what exactly can associations learn from these businesses? Plenty, say those on the for-profit side. While they've learned membership basics from associations, they say they could now teach their nonprofit friends a thing or two about exclusive benefits, marketing, and even customer service. Those lessons, they say, help bring more people in and move the bottom line upward. And no matter what industry you're in, that's a very good thing.

Launching Memberships

Carol Roth, partner at Intercap Merchant Partners, spends her days designing membership programs for all sorts of businesses, from toy catalogs to restaurants to retail stores. She says these programs are a no brainer for companies looking to develop more loyalty from customers who already patronize them.

"They're privy to inside information, and we create a sense of community among our customers," she says.

Four years ago, she helped develop the W Club for Integrity Toys, which was looking for an innovative way to market high-end collectible dolls. Club members are offered special dolls that are exclusive to those who've joined and have access to a special website that gives them the chance to offer feedback and ask questions of the company.

"The W Club reaches out to several thousand of the company's most avid customers," says Roth. "It gives them an opportunity to dialogue with the company directly and be connected in a very special way."

While customers were first invited to the club, membership now opens for about one month per year.

"It's much more economical to market to your existing customers rather than to go out and look for a ton of new customers," says Roth. "To be able to leverage a membership base is really fantastic for the company in terms of generating incremental sales. And frankly, those members can become influencers of other people, who then want to join to get the benefits."

Nik Mody agrees. He took his longtime experience in franchise hotels online last year to establish the Members Hotel Network. MHN members pay $5 per year to belong and can then book hotel stays through the network at rates of either $10 off or 10 percent off the best rates available for that time. Unlike other online booking services, Mody says MHN doesn't keep a commission, so everyone's a winner: The member saves money, and the hotel keeps what it collects.

Mody says MHN's partners chose to go with a membership model rather than a traditional commission-based model for one simple reason: It increases loyalty between consumers and providers.

"We're a privately owned hospitality company, and we recognized that we needed the opportunity to make guests more satisfied with their stays," he says. "We needed to generate more loyalty." MHN officially opened for business last May, and Mody says the partners are pleased with the membership levels so far.

"We've embraced the concept of a wallet share," he says. "Our members can combine our discounts with AAA, AARP, or military discounts. The feedback we've received so far is that they're saving a good amount of money, and they still get their priority club or Marriott Rewards or HHonors Points, plus their cash-back rewards from MHN."

The "membership" here may feel a bit like a subscription, but Mody says the company was quite deliberate with its choice of verbiage.

"When someone has a membership, there's almost this elitist type of feel," he says. "They can one up someone else, or they have an edge over someone else. It's that competitive nature, that spirit that everyone has. We tested the concept with focus groups, and people felt like they got their return on investment immediately because the membership cost was low."

Five dollars per year seems insignificant, but Mody says that too was intentional. "If you make it free, consumers will just put it in their desk drawer and not use it," he says. "For $5, we added a value dimension. Now they feel like they have to get their money's worth out of it. We're drawing patronage that way—if they sent in money for this, they want to get a return out of it."

Roth says the toy company she worked with found the same thing to be true and determined that if membership would come at a cost, people had to feel there was some concrete value to it.

Making Membership Worth It

Of course, just calling something a membership isn't enough. You have to provide your members with something that they can't get elsewhere, a concept that associations are familiar with.

"You have to offer members some sort of unique proposition," Roth says. "You have to offer them something that's based on their feedback and that makes it worth their time to become members, especially if you're going to charge for it. If they're going to be willing to sign up and pay for it, they have to get exclusive benefits that nobody else is getting. It has to be exciting for them."

That's something that was the foundation for Harley's H.O.G. program more than 25 years ago. Riders of the iconic bikes already felt a kinship (watch two Harley riders pass each other on the highway and notice the low, brief wave between them), but the owners group concept further cemented that in an official way.

"It is a paid, for-profit part of our company," says company spokesman Paul James. "It provides services and discounts, four issues of a special magazine, roadside assistance, and rides and rallies across the country."

H.O.G. membership is offered to new bike owners at Harley dealerships across the country. For full membership benefits, owners need either that invitation or to submit their bike's VIN number to the company. Harley fans who don't own motorcycles can become associate members for a lesser cost, but they don't receive all the benefits owners do. Owners can also choose to upgrade to a lifetime membership and stop paying annual dues.

James says that while members do enjoy the camaraderie they find through H.O.G. membership and activities, they join and remain active to receive the group's benefits. "The number-one benefit people cite is the magazine," he says. "They also appreciate the security of a nationwide towing service."

Additionally, he says, members say they enjoy being able to receive a map of the country that shows all Harley dealerships in every state. "If you're on the road, you know where the closest dealer is," he says. "That's really valuable."

Members can take part in exclusive contests and receive pins and patches for various achievements and milestones; the company says that owners who don't know each other at rallies or other events will often strike up conversations based on their H.O.G. accessories. The website invites owners to become part of "one big happy family" that includes everyone from Harley's top corporate officers to the newest bike riders.

H.O.G. is broken into chapters across the country. "Those are organized by dealers themselves," says James. "Everyone who joins is a national H.O.G. member but may also have the opportunity to join their local chapter at no extra cost. Some people do, but a lot don't."

James says that while members get a lot out of their memberships, the company has certainly benefitted as well. "It helps us in terms of being close to our customers," he says. "It's a way for us to interact with them. All of our employees in the H.O.G. organization are out there riding, interacting, and touring with our members. Our executive people get the same opportunities as our members do."

Those connections, say others, can be vital when it comes to marketing memberships in for-profit companies. And, they say, that can provide a lesson for nonprofits.


"We're in this crazy Web 2.0 society," says Roth. "Everything is about community. Social tools are really about creating connections. This membership concept creates not only a connection with the company that's sponsoring it, but creates a community among like-minded individuals who share common interests."

Her membership programs feature message boards and other ways members can connect with each other and the companies' hierarchy, normally online. "We offer direct dialogue with higher-ups in the company, from the CEO to lead designers," she says of the W Club for doll collectors.

"This is the company creating a way for a customer to give feedback or interact in a way that makes that customer feel really special," she says. "It can be through a video clip on a blog or an online chat or a podcast, but you're getting a real face that you're putting with the company that's sponsoring that membership. It's not a monologue. It's really a dialogue—two parties are conversing."

Mody says his company has also found it valuable to remove roadblocks that customers are used to leaping. Membership, he says, makes life easier, which is a benefit itself.

"The membership route drives loyalty, especially if we reward our members for their patronage," he says. "It makes sense; it's pretty simple. There aren't a bunch of rules attached to it. The only rule is that you have to be a member."

"There's got to be a value-oriented benefit to the member," he continues. "I purposely don't use the word 'perceived' because it's got to be tangible. It has to be an actual benefit. And right now, anything tied to the economy is fantastic. They're receiving an actual monetary benefit."

Kim Fernandez is a freelance writer based in Bethesda, Maryland. Email: [email protected]

Kim Fernandez