Part I: How is a Membership Model Different Than a Subscription Model?

In the retail world, "membership" and "subscription" are frequently used interchangeably, confusing consumers and diluting the value each can bring to the business. However, our research reveals that most consumers perceive a distinct difference between these two types of programs despite brands not trying to differentiate between them. The Bond Loyalty Report highlights each program's unique value based on a survey of over 1,000+ consumers across various age segments. It was found that customers view memberships as distinct from subscriptions. Chief among what makes them distinct is whether or not they provide a sense of community, exclusivity, and relevancy.

Subscriptions: Convenience at Its Core

Subscriptions operate on the principle of habit formation, encouraging consistent consumer behavior through regular, predictable deliveries of goods or services. For instance, replenishment subscriptions (like Dollar Shave Club) offer routine shipments of essentials, creating a frictionless experience where convenience is key. Predictability is essential here; behavioral science indicates that when customers rely on regular service intervals, they begin to develop a habit, turning subscriptions into an automatic routine. 

Discovery or exploration subscriptions (e.g., FabFitFun) offer a more curated experience, introducing subscribers to new products or services that they may not have otherwise discovered, often with an element of surprise and delight. These services engage subscribers with the excitement of discovering new items each delivery, adding an experiential layer to the transactional nature of subscriptions.

When you subscribe to a service or product, you're paying for goods or services delivered at regular intervals, often at a discounted rate. Think of your favorite streaming service, meal kits, or monthly beauty boxes. The primary appeal is ease and predictability—subscribers know what to expect and can rely on consistent delivery without the need to repeatedly place orders.

The transactional nature of subscriptions means that they can often be impersonal. While they may include personalized elements such as tailored recommendations or curated boxes, the relationship between the consumer and the brand remains largely functional. The goal is to simplify life, save time, and, often, save money. Only 58% of customers who consider a program to be a subscription have a likelihood to renew, further indicating the transactional nature of subscriptions (The Bond Loyalty Report).

Memberships: A Sense of Belonging

Memberships build on social identity theory by fostering a sense of belonging and aligning members with a brand’s community and values. When consumers join a membership, they often seek more than just goods or services—they seek a deeper connection to a purpose or lifestyle. Sense of belonging to a community stands out as the defining feature of membership programs, with 43% of respondents identifying it as the key differentiator among other program attributes (The Bond Loyalty Report). This strong inclination toward community reflects members' desire for deeper, more personal connections with brands, beyond mere transactional benefits. Memberships often have perks that enhance this sense of belonging, such as access to special events, members-only content, exclusive deals, or even having a say in product development. 

Take Lululemon’s Membership Program, which creates a community centered on wellness, fitness, and personal growth. Members not only enjoy product discounts but also gain access to curated events, wellness content, and workout classes; these are benefits that align with Lululemon’s focus on fostering health, mindfulness, and community engagement. This goes beyond product sales and builds a deeper, purpose-driven connection that resonates with the values of health and well-being central to the Lululemon brand.

The feeling of exclusivity and community is particularly appealing because it aligns members with a shared purpose and brand values, making them feel part of something bigger. When members feel valued and included, they form deeper emotional connections that reinforce loyalty and advocacy. For instance, lululemon’s membership program is centered around health and wellness, attracting individuals who share those same values and seek a lifestyle aligned with the brand’s ethos.

In this context, personalized experiences become even more meaningful. By tailoring benefits to individual preferences and behaviors, brands demonstrate understanding and respect for what matters to their members. This can foster a unique sense of connection, making members feel not just like customers but active participants in a shared mission, ultimately enhancing their commitment to the brand and its purpose. 

Our data indicates a strong emotional connection between customers and brands with membership programs. Specifically, 69% of members who perceive a program as a true membership report being likely to renew, driven by this emotional bond (The Bond Loyalty Report). This data highlights the role of membership programs in fostering loyalty and encouraging continued engagement due to the personal value members feel.

The Perceived Value

Bond’s research intelligence highlights a pivotal distinction in how consumers perceive subscriptions versus memberships. While subscriptions are often seen as tools of convenience—offering predictable service, cost savings, or regular product delivery—, memberships transcend this functionality by fostering emotional connection and a sense of belonging.

Membership programs often weave exclusivity, personalization, and purpose into their offerings, creating value that extends beyond tangible benefits. This, in turn, creates the perception of membership, even when rooted in a subscription model.

To paint the picture further, consider a subscription skincare service that evolves into a membership-like experience. Beyond delivering curated products, it could include personalized consultations, invitations to skincare masterclasses, or access to an online community of enthusiasts. These additional touchpoints signal to members that they are part of something meaningful, shifting the dynamic from transactional to relational.

This deeper connection aligns with findings from The Bond Loyalty Report, where memberships are more likely than subscriptions to be seen as rewarding commitment, granting exclusive access, and fostering a sense of community. By embedding these elements into subscription models, brands can reframe the customer experience to cultivate emotional loyalty and long-term engagement. This nuanced design approach ensures a balance of functional utility and emotional resonance, transforming subscriptions into perceived memberships that enhance customer relationships and elevate brand affinity.

Designing Effective Programs

For retailers, understanding these differences is crucial in crafting effective loyalty programs. A subscription model might be the best fit if the goal is to provide convenience and tangible value. However, if the aim is to provide both tangible and intangible value to create strong community, foster deeper customer relationships, and create a sense of exclusivity, a membership model could be more effective. Brands must understand these differences, and we at Bond have the expertise to determine and design a solution that will enhance your customer experience. 

Our solutions are rooted in consumer intelligence, Behavioral Science, and leverage human-centered design principles, allowing brands to create solutions that align with their customer's needs. To learn more, please reach out to Seema Bihari or info@bondbl.com.