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Benefits of the Membership Model
The predictability of recurring revenue
In a world of uncertain economic times, it can be reassuring for franchisees to have a recurring income source thanks to the membership model.
Memberships have typically been associated with gyms, but now, many franchises are starting to embrace a similar model because of the predictability it offers, while simultaneously allowing franchisees to plan ahead for growth. Kennedy’s All-American Barber Club President and CEO Jay Hummer said being a membership-based business has many perks, one of which is the source of steady income it can provide and the connection it enables them to make with clients.
“We like the membership model because it’s a monthly recurring income, but that doesn’t work if you don’t provide great service,” Hummer said. “We pride ourselves on being a world class barbershop, but we are more than that. People want to go to a place to feel comfortable and have a place that feels like home. Our members find that experience here.”
Massage Envy Senior Vice President of Global Sales & International Lee Knowlton echoed Hummer’s point—the membership model allows a brand to cultivate relationships with clients. For Massage Envy, a membership-based massage franchise, their model allows therapists or estheticians to develop catered services for clients, which, in the end, makes them more satisfied customers.
Hummer added that at Kennedy’s, their barbershop can feel like a sanctuary for members, who can drop by at any time and socialize. Providing a quality service for customers will keep them happy and ultimately, it’ll encourage them to continue purchasing a membership. A superb customer experience can also lead to members telling non-members about it, resulting in a whole new line of income for franchises.
In today’s fast paced world, people may have trouble scheduling a time to take care of themselves during the week. But with memberships, prospective customers don’t have to worry. Dallas Bennewitz, chief marketing officer for Amazing Lash Studio, an eyelash extension franchise, said flexibility is a key selling point.
“Customers get greater convenience as a membership is typically valid at all locations, so they have their choice of receiving our services near their work, near their home, or while they’re on vacation,” Bennewitz said. “Also, the membership model allows the business to offer service when customers want it. In the case of Amazing Lash Studio, we offer extended hours so it is more convenient to get your eyelash extensions at our network of studios than at most other providers.”
The membership model also allows franchises to better forecast what sales are on the horizon. With the help of an appointment-based system, Knowlton said that the brand has better foresight into how many clients will be coming their way in the coming weeks or months.
“In a membership-based business model – like the one Massage Envy has – franchisees can better project sales and services delivered based on their member count and their activity. For example, are they coming in once a month or once a week,” Knowlton said.
Bennewitz said this business model works well with appointment-based companies, like Amazing Lash Studio and Massage Envy.
“It works well in service industries that customers visit on a regular basis,” Bennewitz said. “The beauty sector makes sense for a membership model; services like eyelash extensions, nails, hair care require regular upkeep so their frequency of visit is high and a good match for the membership model.”
Bennewitz went on to say that the membership model can help lower costs for members and the predictable income is great, but this is not sustainable if the business is not providing quality service.
“If your service is not good the membership model will not work, so the membership model by itself is not the reason for success, it all begins with the guest experience,” he said.
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