06.16.09

Building a membership business (Part 1)

Posted in Business Builders, Direct Debit, Growing Membership at 10:36 am by matt

At PeopleHub, we service several different business types, but as specialists in recurring, direct debit type payments, it is usually subscription based services or clubs which have the greatest need for our products.  We refer to these businesses as membership businesses and while they operate in different fields and service different demographics, the successful membership businesses share a common set of qualities.

Membership businesses are generally built around the following concepts:

  1. There is a common purpose or interest bringing a group of people (for example sailing, breeding canaries, sport or reading)
  2. Members are willing to pay an ongoing fee to be part of this group
  3. Members are provided with some material which identifies them as part of the group (for example a shirt, badge, certificate or piece of equipment).

We’ve been fortunate to speak to a number of successful membership organisations over the past 5 years and the list below describes the key activities they’ve undertaken to build their memberships from 1 member to thriving communities.

  1. Identify the key common needs of the group and go out of your way to deliver on those needs.  Successful membership organisations are not built over night, but the fundamental element of any successful organisation or club is that they have identified the key, common need of the membership base and they deliver on it.  Remember people don’t have to be part of your club, so unless you are delivering on that thing that made them become a member in the first place – they will leave.
  2. Provide a group identity – this is important whether you are a football group or a member of an exclusive club.  Members like to be recognised by other members and other people who share their interest.  A strong form of membership identity whether it be clothing (an AFL club), a membership card (a golf club) or some other trinket that provides an identity for the club or membership organisation (for instance BNI provides a badge and business card holder) is a common element in all the successful membership organisations we have observed.
  3. Reduce the barriers to entry – The goal of most (and I use the word most rather than all) membership organisations is to grow their membership base.  Quite simply, the more members a club has, the greater its resources to fulfil the common needs of the group.  Make it easy to sign up for club, collect an ongoing subscription fee rather than a large upfront fee and reduce the time taken to process an application.

We will add to this list of the upcoming months, but would love to hear your thoughts on growing a membership business or club.  What strategies have you implemented, what worked and what didn’t.

Also if you have any questions about PeopleHub and how our direct debit and billing solutions can assist your club, please do not hesitate to contact us.

    05.22.09

    But wait….. there’s more – how to implement payment plans for your product

    Posted in Business Builders, Customer relationships, Direct Debit, Growing Membership at 11:12 am by matt

    We get enquiries from many different business owners about our payment solutions.  They suspect that we might be able to help them but don’t really know where to start and what the adoption of a payment plan type set-up might look like.  The truth is, payment plans have been around for years.  From placing a surfboard on lay-by when I was young to buying a set of steak knives from Tim Shaw, payment plans have been a simple and easy to implement strategy to make products more affordable.  PeopleHub’s direct debit system can make payment plans a real option for your business.  Below I’ll tackle some of the regular question.

    How do I make sure I get paid?

    You will note from a previous post on avoiding the pitfalls of direct debit that there are some risks of providing direct debit to your clients.  There are a couple of strategies that you implement as part of your payment plan or lay-by system.

    1 – Don’t provide the product until you have received full payment. This is obvious I know, but with the proliferation of rent to own products, many products are provided upfront with payment collected over a period of time, with the option to purchase at the end of the rental period many customers expect to receive their product prior to payment being made in full.

    2 – If you are in an industry where the product is supplied upfront and your costs recovered over time, it is essential for your business that you have your lawyer draft a clear set of terms and conditions that will protect your business from receiving part payment.

    3 – Remember a direct debit request form is not a payment agreement. Many of our new customers signing up for a PeopleHub account think that by having their customer sign a direct debit form they have a contract.  This is not the case.  A direct debit authority gives PeopleHub permission to debit your customer’s account.  Your customer can cancel a direct debit authority at their bank, however if you have a signed contract, they will still need to pay you through some other means.

    I survive on low margins, how can I afford PeopleHub’s direct debit solution?

    Our direct debit solution is very inexpensive.  There are no set-up costs or monthly minimums.  At 88c per transaction, it is not a costly system and if used correctly, it will not only save you money in your accounts receivables, but will also provide a tool to grow your business.

    You can actually implement PeopleHub at NO COST to your business.  Most people realise that the freedom to pay a product off over time will incur some additional cost and will accept PeopleHub’s transaction costs in order have that convenience.

    A final word on direct debit and payment plans

    Direct debit is a reliable means of accepting payment, but it is important you implement your system in a way that is also convenient for your customers.  You can do this by aligning the payment dates with their paydays and by providing email and SMS reminders of upcoming payments to your customers.  These simple strategies can asisst in reducing your failure rate and providing a lot of goodwill to your customer.  As a consumer, there is nothing worse than being overdrawn and then being debited.  Not only will you need to find the funds to pay your next installment, but you will more than likely have to pay a default fee to your bank for being overdrawn.

    PeopleHub can assist you in providing this flexibility as well as reminders to your customers.  Call us to discuss our system and how direct debit may fit into your business.