How to Build a Membership Business: Everything You Need to Know

In the world of business, recurring revenue is a great tool for keeping your business stable and even helping it grow. A membership business is a great way to obtain repeat customers and ensure your business’s long-term sustainability. Let’s take a look at how the membership business model works, how successful it’s proven in recent years, and how to set one up for yourself.

Understanding the Model

In its most basic form, a membership business is one that charges customers a regular fee, and in return member customers receive perks or services. Some businesses use the membership business model by itself, allowing no other options, while other businesses, like ours at Altitude, use memberships together with individual transactions, allowing long-term customers to receive extra benefits and shorter-term customers to get the goods and/or services they need without additional ones they don’t.

Building long-term relationships is the key to providing memberships. You pay attention to the needs and interests of your customers and provide them with a reliable source of what they want. For example, for people who want to regularly engage in trampoline activities as a form of exercise and fun, Altitude offers memberships that allow regular access to our play spaces and trampoline attractions.

Membership is a proven business model, and market data reflects this. According to market analyst company IBISWorld, the gym, health, and fitness club market, as of December 2023, has a value of $31.2 billion in the U.S. These clubs frequently rely on memberships. The indoor play center market, which includes franchises like Altitude that offer memberships, reached a market value of $1 billion by January 2024; both markets are forecasted to grow through 2029.

The Boons and Challenges

A membership business offers several key benefits to the business owner. First, membership program models provide recurring revenue. This helps you better estimate your cash flow and plan for business development. Memberships are also scalable, allowing you to build by adding locations or expanding services or merchandise. For example, Altitude franchisees can open multiple locations, as well as expand a single location by adding more attractions.

Finally, a membership-based business model encourages business owners to form long-term relationships with their customers. By getting to know your customers better, you’ll foster their loyalty as well as cement yourself as a supportive pillar of your local community.

Of course, every business model has its challenges. For membership-based ones, you need to watch out for customer churn, the rate at which customers cancel memberships. You want to keep the rate low; high turnover may mean re-evaluating what you’re offering members and what they’re looking for in your business.

You also need to keep up with market trends; this can mean investing in new products or services. Finally, many new businesses struggle to build a reputation, which can affect early membership sign-ups. Good customer reviews, comprehensive marketing, and noticeable advertising helps, as well as joining a franchise with a strong, solid reputation, like Altitude has among trampoline park franchises.

Getting off the Ground

Starting a business based around memberships is a lot like starting other businesses, only there’s a bit more planning to do:

Analyze your strengths and weaknesses to determine the right business to open.

Set clear short-term and long-term business goals and a broad outline of how to pursue them.

Research your target market and customer pool.

Create a structure for your membership model, including benefits, pricing, and terms.

Create your business plan and incorporate your membership model into it.

Network to find potential business partners or investors.

Hire the necessary staff.

Find a good location and obtain the capital or financing to purchase and equip it for your business.

Hold a grand opening and market your business to attract members.

Monitor market trends and customer feedback, using them to adapt and grow your business.

This process can be eased for you by joining a franchise in your desired industry. A franchise like Altitude allows you to open your own business with the help of a franchisor, which will provide training, support services, industry connections, and guidance.

Jump on Your Franchising Chance with Altitude

We’re excited to offer you the opportunity to join our indoor playground franchise. We’re looking for ambitious entrepreneurs like you who are eager to bring a fun, family-friendly outlet for active play to your community. Don’t miss your chance to become an indoor active play destination for your local area; submit a franchise form today to learn more about your franchising opportunity with us at Altitude.

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