Why must companies pay attention to membership business starting from 2023?

This article objectively analyzes the importance of consumer digitalization and member companies from the perspective of consumers and companies, as well as digital trends, based on the proportion of member businesses. It is recommended for companies that need digital transformation.

Not long ago, when I was helping a client formulate business indicators for consumer digitalization for next year, I specifically added the indicator of "membership business share".

Today it has become an important dimension to measure whether a company's operations are healthy and whether its future growth potential is strong.

If you don’t believe me, pay a little attention and you will find that when more and more companies announce their performance, they will mention the percentage of member business in the data. For example:

• Kidswant: Member business accounts for 98%…
• KFC: The number of members exceeds 330 million, contributing 62% of the overall revenue
• Jiangnan Buyi: Membership is the cornerstone of performance. As of June 30, 2022, its membership reached 5.9 million, contributing 70% of revenue.
• Huazhu Hotel Group: All Seasons, Hanting and other brands are its brands. Currently, it has more than 200 million members and contributes more than 75% of its revenue
• …

You will find that most of the companies with a high proportion of membership business today are very stable and excellent in themselves. This is not a coincidence, or something I want to prove.

This is the law of business. Members are high-value customers. The more trust they have, the more loyal they are and the more they buy. This is how a healthy business should be done.

So what is a member? What does a member mean? Let me share with you.

Here, we first define the unified standards for members: any consumer who has registered in the corporate membership system, left a mobile phone number, identity information, and has a unique number.

On the contrary, non-members are consumers who have not registered in the membership system and do not have a mobile phone number or identity information.

In short, members are consumers who have visited, bought, and actively left traces; non-members are consumers who have visited, perhaps bought, but did not actively leave traces.

Of course, membership is divided into paid, non-paying, monthly, and annual memberships, which will not be discussed here.

1. What is the difference between members and non-members?

1. From the consumer's perspective

Members have certainty and strong trust in the company. They are willing to give up some of their private information, such as mobile phone number, address, birthday, etc., in exchange for corporate services and discounts; while non-members have uncertainty and weak trust in the company. Of course, strong trust makes it easier to do business.

2. From the perspective of enterprises

When members hand over their information, companies can proactively reach out to, care for, and market to them based on their data, such as purchase records, social behavior, and identity information. For non-members, companies cannot reach out to, care for, or market to them because they don't have contact information or know their preferences, and their value becomes smaller.

2. If consumers are compared to assets

As a member, the company has a certain degree of initiative and can effectively manage them, maintain relationships, and gradually increase the value of assets. As for non-members, the company has no initiative and cannot effectively manage them. The assets cannot effectively increase in value, and some may even be "non-performing assets" or other people's assets. The company will waste its investment and get little results.

Having said that, I believe everyone understands the importance and value of membership.

In today's digital age, consumer digitalization has become a general trend and has become the core competitiveness. What about members? They are the most important group in consumer digitalization and the most important asset of enterprises.

Therefore, the larger the number of members and the higher the proportion of member business, the more benign assets and loyal users the company has, which means that the company's ability to achieve sustainable growth, resist risks, and gain data insights will be stronger.

For such enterprises, the more stable the business growth, the more consumers will like them, the more confidence the market will have in them, and the higher the stock market value will naturally be.

Therefore, companies that have not yet paid attention to consumer digitalization and membership should act quickly.

Author: Yan Tao Sanshou

Source: WeChat public account "Yan Tao Sanshou (ID: yantao-219)"