When Robbie Kellman Baxter coined the phrase “the membership economy” in her 2015 book by the same name, she was mostly referring to the explosive rise of digital subscriptions and Software as a Service (SaaS) companies, such as Netflix, Adobe, and Spotify.  But as we near the end of 2016, we are entering what we are calling, the New Membership Economy.  The New Membership Economy is shifting to a new wave of membership businesses for physical goods that we use every day and help us connect to each other in unique ways that fulfill our needs.

Subscription and membership models for physical products are not new.  Many of us remember book and music clubs like Columbia House and skin care and beauty products sold via infomercials such as Proactiv.  But the New Membership Economy has reached a new tipping point. The growth of the “Box Business” signified by the growth and popularity of Birchbox and the thousands of similar programs, the $1 billion acquisition of Dollar Shave Club by Unilever, and the launch of Amazon’s Pods for many popular CPG products highlights the continued momentum of this shift.

But the real explosion is still ahead of us.  As more brands, retailes and entrepreuners realize that they need to be truly customer centric to survive and smart companies acknowledge that belonging to a group touches on powerful psychological human needs and emotions, we expect a new wave of innovation from both new and older companies in the space. 

To help with this shift, we have identified one key overlooked driver that will help propel and sustain the New Membership Economy.  The brands and retailers who can adapt and understand this driver will be the successful brands of the future.

Humans Need to Belong and Connect

As humans, we all want to belong and belonging in the New Membership Economy touches on important psychological and emotional needs that everyone has.  There are specific emotions that surround the desier to belong that are at the center of the New Membership Economy.  They include value, convenience. replenishment and even surprise which are the fundamental pillars often discussed and dissected when talking about the subscription box business .  But there are also deeper psychological needs driving this new sales channel. In our ‘always connected’ digital world, real connections are being lost. Physical memberships with the excitement of anticipation when receiving a package, personalization and the feeling of being known and special, the proudness of getting exclusive product, the inspiration provided from curation, the effective way to discover new products and sample them, as well as the surprise and delight of getting something you did not expect all trigger a real sense of belonging which is at the heart of the New Membership Economy.

To stand out in the New Membership economy we need to acknowledge these deeper needs and create programs and platforms that help satisfy this core desire to belong.