Memberships, subscriptions, loyalty programs—relationship marketing models of all sorts—have long been a staple of the marketing toolbox. But why is Peloton in such deep trouble right now? And Noom postponed its IPO? Join us as Mark DiMassimo explains what’s really going on, and how we can fix the apparent problem with membership marketing today. Spoiler alert: It’s not the model itself, you’ll be happy to know. Tune in for Mark’s advice on how to motivate customers to “start, stick and stay.”
Cyndi Greenglass: What's going on with subscription and membership models?
Mark DiMassimo: There’s good news and bad news. The good news comes out of the context of a very difficult marketplace for folks. There are a lot of folks out in Silicon Valley working through marketing technology and media technology that are changing that stuff so fast that people are being driven over the edge. Netflix literally says, our strategy is to compete with your sleep. What's legitimately happened in the marketplace is that people want to have more sense of agency and control over their lives. Products alone don't help enough. Memberships, true relationships with continuity go deeper, and they can help more. There's a really good market-based, consumer-based, person-based reason why memberships and subscriptions have been taking off. The dark side is that any human social truth is going to also become a cause. What happened is that the investors saw in subscriptions and memberships ongoing, predictable revenue. They started to value the profits and revenue of subscription companies at a much higher multiple than other companies. They kept bidding up the prices of these companies, which you know predictably drove, especially the leaders right over the edge. The only way to keep up with them was to start to do bad business and take the head risk. The leadership of the company has to choose between looking worse to the money - the people who give them loans and investments - by being moderate in a moderate environment, or by taking the huge risks of following the money.