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Are You Selling a Product or a Membership Fee?

Posted by Luc Vezina on Jan 22, 2015 3:40:29 PM

1 minute read

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Conventional thinking is that customer communities are put in place to help users of a product share ideas and support each other. Smart businesses are realizing that communities can be a powerful competitive advantage, and in some cases even more valuable than the product itself.

I recently spoke to a startup founder who told me that his first hire was not going be a developer or salesperson but a community manager. He felt that if he could build a community before launching his product, he would have i) a captive group of enthusiastic potential customers and ii) a defensible competitive advantage if competitors launched a similar product.

Last week, the famous venture capital firm Andreesen Horowitz made a multi-million dollar investment in Solyent, makers of a meal replacement powder. In their rationale, they positioned the company as ‘a community of people who are enthusiastic about using science to improve food’. I.e. the product in it’s current state isn’t as important as the community Soylent has built around the idea of the product.

If gaining access to your community is what tips a consumer’s purchase decision in your favor, is the customer buying your product or buying a membership to your community? For some products, like a gritty, bland, flatulence-inducing meal replacement powder, the benefits of the community are likely greater than that of the product itself. For products that provide a lot of value on their own, a community allows users to share and improve that experience and creates a competitive advantage for the brand owner.

Topics: Community, News

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