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Is Your Subscription Business Product-Centric or Member-Centric?

Admin | 27 August 2021 | Read time: 20 minutes
Topics | subscription model, subscription economy

In the past, large companies used to rely solely on product-centric approaches to their organisations. When you consider some of the brands that have utilised this concept, you can understand just how successful it’s been.

Since its birth in September 1998, Google’s growth has been nothing short of incredible and shows no sign of stopping. The brand's main aim has been to offer a comprehensive search tool for users and now dictates much of what we see online. 

In 2020, the search engine’s market value reached $858 billion – up from $340 billion in 2015. In June 2021, Google held 92.47% of the world’s search engine market share. Its closest competitor, bing, had just 2.31%.

Apple is another giant that has enjoyed decades of success, concentrating on a range of innovative products and regular new releases. Forbes ranked the company top of their most valuable brands list for 2021 with a value of $241.2 billion. While Steve Jobs did have a customer-centric approach when he joined the business there's no denying that the overall focus of the company is to constantly release new and updated products. 

In March 2021, Apple became the first company to reach a market capitalization of $2 trillion. Even COVID-19 can’t stop Apple’s domination.

However, while the service or product is important for a business, a customer-led approach is growing ever more popular. In the same Forbes list, digital subscription streaming service Netflix saw the largest value percentage gain from 2019 to 2020 – an incredible 72%. 

This is a marked difference from 2011 when the company raised the ire of subscribers with price increases and a customer-unfriendly approach. However, by adopting a member-centric strategy two years later, Netflix encouraged two million new streaming customers to sign up. This also tripled their stock within an eight-month window.

With such huge companies adopting both approaches, you may be wondering which is best for you? 

In this guide, we’ll examine both methods here and their pros and cons. By the end, you’ll see potential ways your business can grow by taking the best aspects of each. 

What is a product-centric organisation?

Product-centric companies focus their attention on… you've guessed it – their product. All strategies and processes are built around the product sold rather than the customers who buy them. These companies use the latest technology to develop upgrades on existing products or produce new ones. This is typically done in-house. 

Product-centric businesses:

  • Invest heavily in research and development – time and money is spent on innovation and the eventual introduction of new products.
  • Double down on products that perform well and release new iterations with improvements – for example, Apple’s regular updates of the iPhone.
  • Strive for a range of first-class products – and the best features within their chosen industry.

One very successful subscription-based, product-centric company is Dropbox. This file-hosting service began in 2008 and within four years, had 100 million registered users. This number has now reached 700 million and generates $1.91 billion in annual revenue. Dropbox defines itself by its product and succeeds in doing so.

Key features of a product-centric business

Here, we've taken a closer look at three key features that many product-centric businesses consider most important. 

1. Visual identity

First impressions are so important for product-centric businesses. Online, it takes only 50 milliseconds to form an impression of a company and their offering. Therefore, a memorable, professional hero shot of the product on a site’s landing page is essential. 

Visual identity is important, as it represents a company’s brand, how it works and how it would fit into a customer’s life. It can also set the tone for the site and branding a company uses to promote itself. This key feature has an impact on the ongoing success of a business and will need to be adapted over time to match the current climate and needs of the industry in which the business resides. 

2. Product development

The success of product-centric companies is directly tied to the development of new products. These companies need to keep evolving to stay ahead of rivals, or stagnation can lead to their downfall. It can be risky, but if new products are a hit, they can refresh a company and keep the upward curve rising.

3. Research

As noted earlier, R&D (research and development) is very important for product-led businesses. Brands spend large amounts of budget on improving existing products and developing new ones. 

This is done to encourage as many transactions as possible. Specific customer requests and feedback are also taken into account. In the B2B subscription world, this could mean companies who provide software as a service (SaaS) pumping money into finding ways to improve the product or making systems easier to navigate for clients. If they succeed, they can perhaps use it to justify increasing subscription charges.

The pros of a product-centric subscription business

Although customer-centric strategies are becoming ever more popular, there are still many benefits for subscription businesses that concentrate on their product.

1. Customer loyalty 

Your customers may not even know they need your product until it’s out there. But if you can make it essential, they may stick with you long-term and become hooked on new versions of existing products or brand-new additions. 

Followers of Apple, for example, are fully integrated into the brand's ecosystem, from buying hardware to subscribing to their music streaming service. New product releases become must-attend events in their own right, and die-hard fans of the brand believe it can do no wrong. A product-centric subscription business that can capture just a small element of this is sure to enjoy success. 

2. A focused approach

Businesses that concentrate mainly on their product benefit from losing valuable time, energy and money on other distractions. Putting all your efforts into building the best-in-class product can make you more likely to achieve efficiency and could save money overall.

3. Reputation

And if you can do the above and continue making high-quality products, you become trusted to keep on delivering the goods. This obviously takes some time, but customers and clients flock to names they know they can rely on or that others have recommended.

The cons of a product-centric subscription business

Of course, this approach isn’t without its negatives. Here are some to consider:

1. Higher risk

Becoming popular due to your product can be very rewarding – just look at the statistics for Google and Apple. But for every success story, there are so many more that tried and failed. 

Customer acquisition can be much harder because you are expecting customers to take a leap of faith. In a crowded digital publishing market for example, how do you convince people you’re worth their time and money? 

2. Sunken Costs

Product-centric approaches can involve higher cash burn because you have to nudge potential clients and customers into liking what you’re offering. You’re likely going to need to invest a lot to get off the ground and cope with losses until you gain momentum.

3. Lack of customer consideration

If you’re going to go all-in and concentrate solely on your product, you’re in danger of not being able to find the right product-market fit. You’re going to have to think about your customer to some extent. Ignore at your peril, because you can have the best product in a niche, but what use is it if customers don’t want it anyway? 

Now, we'll take a closer look at the member-centric business model and how this affects businesses and what to consider should you decide to implement it. 

What is a member-centric organisation?

An ever-growing number of subscription businesses are taking this approach. Being member-centric means focusing on the unmet needs of members, clients and customers. 

These companies find a demographic and build their service around them, and all their strategies revolve around them too. Member-centric types strive to find new and evolving customer needs. 

For example, publishers with their fingers on the pulse will note that the COVID-19 pandemic has changed the behaviours of media consumers. To increase customer share, these companies: 

  • Pride themselves on the loyalty of their members – it’s all about keeping them satisfied.
  • Reward managers who develop and sustain customers – understanding customer psychology and what makes them tick is key to making them happy.
  • Identify customer ‘pain points’ – research can uncover what makes members unhappy and stops them from signing up for further subscriptions.

Traditional newspaper businesses have spent the last few years waking up to the potential of this strategy. With advertising revenue plummeting amid declining print readership, many publications have made the leap to digital. 

Key features of a member-centric business

The most relevant metrics for member-centric businesses are recurring revenue and subscriber lifetime value. Again, we've taken a closer look at what each of these features entails. 

1. Visual identity

Unlike product-centric companies, member-centric ones place the focus on images of happy customers rather than products. Successful subscription companies like Dollar Shave Club manage both, with an image of a man shaving on their UK landing page. This makes the overall focus on the consumer and how the product benefits them – rather than just the razors themselves. 

2. Product development 

Continuous evolution and an engagement-driven approach are key. Improving customer value constantly can be time-consuming but will encourage members to be loyal and keep on subscribing. Keep them engaged and you can strengthen the investment a customer has in you.

3. Research

For a subscription business to be member-centric, it should spend the majority of research time and money on the customer journey. Through feedback via surveys, for example, discover the positives and negatives to a subscriber’s experience with you. 

Customer journey maps are useful to visualise the experience of members. Personalisation is also becoming more and more important and digital subscription products use tools that gather first-party data to help create personalised subscriber journeys

The pros of a member-centric subscription business

We’ve touched on the fact that this model is growing fast, but why? We've considered the pros of a member-centric subscription business here that are contributing to this rise. 

1. Sustainability

To be a member-centric business, you won't simply focus on launching a product and then moving on to the next one. By researching what your customers experience through your product, you can keep up to speed with changing expectations. If you do this, you should have a sustainable business model and your product could last for the long haul.

2. A ready market

Any customer-centric subscription company worth their salt will have conducted extensive market research into what potential members need. In theory, the market is ready and waiting for your service. You just need to ensure you get your marketing right to reap the rewards.

3. Building brand affinity

If your subscription service is built with the customer taking prime importance, it will reflect in every aspect of your business – marketing, sales and support. By encouraging positive sentiments from your members throughout their journey, you build affinity that should hopefully last for years.

The cons of a member-centric subscription business

If member-centric is the best way to run a subscription service, it can’t go wrong, right? However, there are some things to be aware of when adopting this model.

1. Your product may suffer

It’s all well and good to focus all your energy on member experience. But don’t let your actual product or service suffer as a result. You can have the best customer service in the world but don’t let it result in a poor-quality product. Get a balance between product development and customer experience and you’ve hit the sweet spot.

2. Loss of authority

Working purely on your member’s terms may have a detrimental effect. They may perceive it as a negative trait if you then struggle to always meet demands. There needs to be an element of authority in your service to earn the respect of clients and members.

3. Expensive and time-consuming market research

Spending time on marketing automation tools, surveys and feedback is all well and good and can be of great benefit. But it can be costly too, and once again, get the balance wrong and your product may suffer in comparison. 

Which is the best approach?

Now you should be able to identify which philosophy your business subscribes to. And it may have even made you decide to change tack. Which approach is best? We're afraid there is no definitive answer. 

product centric or member centric

Again, Netflix is a great example of a product-centric company that changed its approach and reaped the rewards. But although member-centric subscription approaches are becoming ever more popular, it can be dangerous to hold too strictly to either philosophy, as you can see from the pros and cons.

Companies that adopt elements of each method and take on a balanced approach are some of the most successful. Apple may be product-centric but they also use member-centric elements. The brand prides itself on its customer support and pre-pandemic, it turned buying new products in-store into an event. Amazon is another brand that considers itself customer-centric but also sells every product there is! 

Digital subscription services can use tactics from both strategies with the right tools. Intelligent paywall solutions drive revenue conversions but also build, deploy and rebuild customer journeys. Looking ahead, the businesses that will lead the pack will most likely adopt the best elements of both strategies.

Whichever business strategy you decide is best for your digital subscription business, Zephr can help. Download our eGuide – The Publisher's Digital Subscription Toolbox – detailing the steps you need to take to make your subscription offering a success. 


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