Contracts and Memberships

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By Shawn McGee

Marketing Consultant and Author

Contracts and memberships are great ways to ensure that your customers use your product or service repeatedly. Just as importantly they provide your customers with peace of mind for a long period of time.

For small businesses, contracts and memberships are a valuable product marketing strategy for many reasons:

Marketing costs per customer go down.

Revenue per customer goes up.

Customers are “locked in” for a specific period of time and/or a minimum number of purchases.

Customers purchase more frequently.

Forecasting becomes easier.

Marketing to customers can be much more personalized and targeted.

Customer loyalty increases.

Customer retention is easier to manage.

The benefits to customers of the contract or membership you offer should be clearly spelled out. Make it easy to join or enroll. An initial discount is one way to entice potential customers. A more complete service and priority status are other ways to help the customer decide to sign up.

And once you have customers under contract or as members make sure you fully leverage the relationship. Consistently communicate with these customers whether it’s by phone, direct mail, email, or face to face. Use your customers’ purchase histories to provide very specific and timely customer service messages. Communication should be personalized and result in the customer understanding that the special message is specifically for her because she is a member or under contract.

Landscapers provide good examples of leveraging the relationship with the customer. Many landscapers provide contracts for a season or an entire year. These may include weekly mowing of the lawn, tree and shrub care, flowerbed design, fertilization, and even snow removal in the winter.

That’s a whole lot more guaranteed revenue than a single lawn mowing would provide. Plus, a customer under contract will have no reason to pay attention to the competition’s advertising.

By frontloading the membership with free offerings and by not limiting the length of time of the membership, savvy marketers guarantee themselves a sizeable captive direct-mail audience for long periods of time.

Look for a way to incorporate contracts or memberships into your product marketing strategy. Can you develop a comprehensive, long-term solution for your customers? Can a single service that you provide be expanded into a regular service? Is this something that is done in your industry? If it’s not, could it be a unique selling proposition for your business? In other words, could offering your customers a contract or membership differentiate you from the competition?

Shawn McGee is a marketing consultant and author of

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Contracts and Memberships