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Don’t confuse Memberships and Subscriptions

Whether you build a membership or subscription solution is up to you. But it’s important to know the difference.

Memberships and Subscriptions

If you’ve ever wanted to buy pounds of quinoa at ridiculously low prices, you’ve likely considered a Costco membership. Costco membership isn’t super expensive, but it gets you access to a warehouse full of stuff that you didn’t know you’d need until you see it.

And while it’s true that you can buy liquor, prescriptions, shots, pizza and hot dogs from their food court and gift cards without a membership card, everything else – those amazing deals – all require that you have a current membership.

The membership gets you access to the store and discounts on stuff. But to keep your membership active, you have to pay a yearly fee – that’s the subscription.

And because they’re both so closely connected, few people make the distinction between them. So it’s easy to hear the terms treated as synonyms when they’re not.

They’re two different concepts completely. And it’s worth understanding the value of each.

What is a membership?

A membership is the notion of belonging. It’s a relational concept. It says nothing of cost or price, though most memberships end up having a cost to them. Whether you’re a member of a professional organization or a member of a club, the dynamic you’re most aware of is the “insider” and “outsider” notion.

Many memberships are exclusive. Some memberships have tremendous benefits. Just being a member gets you access to other members – which may be the thing that is most valued.

What is a subscription?

A subscription is a revenue agreement. It’s a financial concept. It says nothing of the benefits of belonging, but it’s rare that a person would pay regularly without benefit. The core dynamic with subscriptions are financial in nature. The subscription you sign up for articulates whether you’re paying monthly, quarterly or yearly and how renewals happen.

Some subscriptions allow you to pay a certain amount (whether monthly or yearly) to get access to discounts. Whether we’re talking about the Amazon Prime or Costco memberships, the yearly fee is the subscription.

Can you have membership without subscription?

Of course you can. I have membership relationships with Avis, United and Starwood. None of them charge me anything for being a member, and in fact, they give me benefits when I demonstrate loyalty to them. Each gives me a card (though I rarely have them with me) that highlights my membership.

Can you have subscription without membership?

Absolutely. Amazon Prime is one of those subscriptions that for the longest time was just about shipping. I paid a yearly fee for discounted shipping fees. I had no idea who other Prime members were and I wasn’t really a “member” of anything.

Over the years Amazon has worked to add more and more to their subscription and at some point it may feel more like a membership, but to me the value is the yearly fee that removes all my shipping fees (because I get packages here a lot).

The power comes when you combine the two

Chris & Jorge

Jorge runs Stogies World Class Cigars in Houston, Texas

My friend Jorge owns Stogies World Class Cigars, which has maybe the best VIP membership lounge in the country. Membership is neither cheap, nor easy to get. The waiting list is long. The member committee is careful. The process is not quick.

The membership program gives cigar lovers 24-hour access to their own lockers, a huge private lounge, and tons of large screen televisions in a non-smoky environment.

The members don’t think or talk about the subscription fee they pay yearly (even though it’s not cheap) because the members feel like members. Not just subscribers. They connect. They travel together. They’re friends.

People have no trouble paying subscription fees when they feel like they belong to something valuable.

When you connect a relational concept to a financial construct, you can marry memberships and subscriptions for the win!

This is true in the physical world and it applies online as well – which is why I challenge the folks I talk to about membership and subscription sites to make sure they understand the difference and apply the lessons of each.

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