Forget what you think you know about digital memberships. I’m not talking about adding a subscription app or pushing an upsell. I’m talking about an end-to-end strategy for skyrocketing the LTV of each of your customers so you can scale higher and faster. 

‍

Let me be clear: this is THE highest value addition to ANY eCommerce business.

‍

Enough gatekeeping, in this article I’m going to share the secret sauce and reveal…

• How to craft an irresistible membership offer that turns one time buyers into loyal members 
• The pricing sweet spot that maximizes both sign-ups AND lifetime value
• Tech stack secrets to slash churn and boost retention
• The most effective way for any D2C eCommerce brand to introduce digital recurring revenue

‍

These aren't just theories. 

‍

These are battle-tested tactics that have helped our clients achieve up to 10X profit increases per customer. 

‍

We're talking about the holy grail of eCommerce: high-margin, recurring revenue from customers who stick around for life.

The problem with 99% of eCommerce brands

‍

Before we dive into the solutions, let's take a hard look at the challenges that plague most eCommerce brands. These aren't just minor inconveniences—they're significant roadblocks that can stifle growth and profitability. They fall into four major buckets…

1. Volatile and unpredictable revenues
2. Customers that purchase once and never again
3. Razor-thin margins – often lower than 15%
4. High dependence on paid advertising and new traffic

‍

If you struggle with even one of these problems you know that they aren’t just frustrating—they're expensive and exhausting. They create a constant uphill battle, forcing businesses to constantly chase new customers to replace those that have churned. 

But here's the good news: there's a way out of this cycle.

‍

Enter digital memberships.

‍

Digital membership subscriptions are transforming eCommerce by offering a new way to build customer relationships and generate revenue. But what exactly are they?

At their core, digital memberships are subscription-based programs that provide customers with exclusive benefits in exchange for a recurring membership fee.

‍

Here's how it often works: A customer might be browsing your site, ready to purchase a $50 hoodie. At checkout, they're presented with an enticing offer: "Get 80% off this purchase and enjoy ongoing benefits by joining our membership program for just $30 a month." 

‍

If they decline the offer, you’re no worse off, but if they accept, you’ve now increased the lifetime value of that customer as they will start providing monthly recurring revenues. 

‍

This isn’t just wishful thinking either. In fact, our average client right now is making ~$107 in profit from each membership customer they acquire, net of acquisition costs, refunds, processing fees, etc and accounting for different niches. 

‍

There’s a reason why top brands like Fabletics, Savage x Fenty, and Public Goods are quietly using this strategy to increase their LTVs while offering ongoing value to customers.

‍

How digital memberships can transform your eCommerce business

‍

Before we dive into exactly how to implement digital memberships, let’s lay out why they’re so valuable…

As an eCommerce site owner, here's how digital memberships can revolutionize your business:

‍

1. Steady revenue, steady growth

Say goodbye to feast-or-famine cycles. With predictable income from memberships, you can confidently plan and invest in your business' future, creating a stable foundation for sustained growth.

‍

2. Margins that make you smile

Digital memberships compensate you for providing additional value to existing customers while sidestepping traditional advertising and fulfillment costs. The result? Our clients consistently achieve an impressive 70% margin on their digital revenue. It's not just an upgrade – it's a complete transformation of your eCommerce economics.

‍

3. Customers for life, not just one sale

Transform one-time buyers into loyal fans. Regular interactions through memberships showcase your brand's value, dramatically increasing customer lifetime value and building a devoted customer base. We’ve found that as many as 6% of customers acquired will never churn out of a $30/month subscription, regardless of usage rates (this number only dramatically rises with active usage). 

‍

4. Break the advertising addiction

Digital memberships free you from complete dependence on constant spending and the whims of ad platforms - no more (or at least a lot less stress due to…) holiday CPM spikes, end of quarter budget dumping, or frustrating privacy updates. A strong membership base lets you shift focus from unpredictable acquisition spending to enhancing your product and member experience, creating a virtuous cycle of growth.

When I tell serial D2C eCommerce founders that as much as 6% of the customers they’ve acquired throughout their lifetime could be paying them $30/month forever, regardless of new marketing efforts, they are understandably amazed. 

‍

5. Become irresistible to investors

Make your business a hot commodity. Stable recurring revenue, higher margins, and increased customer lifetime value make your company an attractive prospect for both investors and potential buyers. It’s not everyday that investors are offered the opportunity to literally buy revenue that will last for a lifetime.

By implementing a digital membership model, you're not just changing your revenue stream – you're creating a moat around your brand.

Digital membership programs create incentives for customer loyalty and introduce financial barriers that de-incentivize your customers leaving for other brands. Why would someone buy a hoodie from your competitors that are charging 3X more?

You can offer your catalog to your membership customers at an extreme discount, because you don’t have to factor in advertising expenses and you can focus on the digital recurring revenue as your main profit driver.

A digital membership optimized strategy positions your company for long-term success, transforming your eCommerce site from just another online store into a thriving, member-driven community. The result? A rock-solid financial future and a customer base that thinks twice before looking elsewhere.

‍

How to successfully implement digital memberships

‍

The below tips are battle tested with real eCommerce businesses doing tens of millions of dollars in sales a year. We are not exaggerating when we say we’ve seen brands 10X their customer LTVs. Let’s dive in…

‍

1. Initial offer: Launch with a compelling discount or exclusive deal. For example, price a $80 product (with $40 fulfillment cost) at $45 for new members to showcase value and attract subscribers. If you’re scared of having lower margins on this first sale, consider the following. We've never seen an offer that was doing at least 10% profit margins on a straight sale not get at least a 3X in annual EBITDA (usually much higher) through this shift in thinking. 

‍

2. Value stack: Layer perks like exclusive drops, early access, and members-only discounts. Maximize benefits using existing infrastructure to keep customers engaged. We find that most businesses can simply start providing their existing catalog at drop-dead prices to members, which provides immense value immediately without added cost. 

‍

3. Reduce involuntary churn: Leverage merchant processors with healthy approval ratios, introduce an effective decline salvage strategy, and incorporate smart algorithms for payment routing to make sure that you successfully bill all of your active subscribers.

4. Effective pricing: We recommend setting prices based on AOV, audience quality, and business goals. We've noticed that the front end AOV needs to be around 1.5X the subscription value for the best balance between volume and retention. As for audience quality, we’ve noticed that Meta consistently serves higher quality subscription audiences than TikTok.

The trade off between higher subscription value versus lower is that high subscription values bring in more cash flow earlier, but then less cash flow overall whereas low subscription values bring in less cash flow up front but have a greater lifetime value (less customers cancel).

‍

5. Tech stack and operating system: Invest in strong technology for deep analytics, efficient subscription management, and seamless integration. Use insights to refine offerings and enhance customer experience.

Ask yourself the following questions to guide your testing:
What’s the optimal subscription value from a retention perspective, given your audience ?
How long should your trial period be for optimal results? Should you bill once a month or once a quarter?
How can your advertising algorithms be trained over time to look for great subscribers, not just one-time customers?
A great technology stack combined with the right expertise can answer all of the above. 

‍

6. Customer support: Provide responsive, 24/7 multi-channel support with an easy cancellation and refund process. Be prepared to manage potential frustrations from recurring payments with elevated attention to issue resolution.

‍

The Phoenix Advantage: Fuelling Digital Subscription Success

‍

Digital membership subscriptions offer a flexible path to recurring revenue and deeper customer engagement, no matter the vertical. Unfortunately, most brands don’t have the time or know-how to create custom chargeback mitigation software, develop complex decline salvage algorithms, or split test hundreds of different product/subscription pricing structures. 

‍

These brands are smart enough to know they need to start working on a digital membership solution, but also recognize that if they don’t move fast enough they’ll get left in the dust.

‍

It’s for exactly these brands that we developed Phoenix.

At Phoenix, we empower eCommerce brands to unlock the full potential of their customers through digital subscriptions. Our clients have experienced as much as a 10X increase in profit per customer acquired, all without disrupting their existing marketing strategies or product lines.

We’re a team of experienced entrepreneurs with robust backgrounds in eCommerce, technology, and merchant services. All of our strategies and processes have been battle-tested through helping eCommerce businesses generate tens of millions of dollars in additional revenue that was previously left on the table. 

‍

With our managed technology platform, industry-leading checkout process, and comprehensive services, eCommerce businesses can maximize customer lifetime value, reduce churn, and generate consistent income in the absence of advertising.

‍

If you’re a brand with at least 10% profit margins and $2 million in yearly revenue, then see if you’re a good fit by scheduling a call with a member of our team:
http://start.phoenixtechnologies.io/

‍