Building a New Business Model for Membership
The COVID-19 pandemic has upended the traditional business model of membership, and museums everywhere must confront the reality that audiences may never again participate in the same ways that they once did. As the traditional membership business model is built on the core benefits of on-site participation such as free admission, exhibitions, and special events, there is an opportunity to explore how museum membership programs might look different in a post-COVID-19 world.
In response to the pandemic, museums have been quick to develop new digital content and virtual experiences to be able to continue to deliver on their missions while their buildings remained temporarily closed. However, even after our doors reopen, museums must be prepared to continue offering virtual experiences and digital content to ensure that audiences remain involved and connected.
To find new sustainable revenue streams, museums must now turn their attention toward creating a new business model for membership. Thinking beyond one-off revenue drivers such as single tickets to virtual events or zoom cameos, museums need to develop a comprehensive business model design for membership that will allow them to create value and recurring cash flow by monetizing virtual experiences and digital content.
Designing a new virtual membership program requires working through the following nine building blocks of a business model:
Customer Segment(s): These are the people you wish to serve and who will buy your product(s). Understanding the needs, motivations, and behaviors of each customer segment is critical to building a new business model. For a business model to be viable, the customer segment market size must be large enough to be profitable over time.
Value Proposition(s): This is the problem the product solves and the core value that the business model delivers to customers. The value proposition answers the question “What is the job that needs to be done?” for each customer segment. A value proposition must be differentiated from competition and tailored to each customer segment’s unique needs.
Channel(s): The channels are the mechanisms for how an organization will communicate with and deliver the value proposition to customers. Channels often are divided into types and phases. For example, types of channels may include the museum website and Zoom. Whereas channel phases may include awareness, evaluation, purchase, delivery, and post-purchase. The channels that support these phases may include social media, digital advertising, or search engine optimization. Thus, channels represent the marketing and sales strategies for communicating with and delivering value to customers.
Customer Relationships: Customer relationships are closely tied to channels. Customer relationships include management of the customer lifecycle and may range from highly personalized to automated. Key questions in understanding the customer relationships dimension include “What type of interaction and service does the customer expect?” and “How do we get, keep, and grow customers?” Customer relationships are built on understanding of the customer journey and making decisions about how to deliver the customer experience. For example, customer relationships may include dedicated personal assistance, self-service, automated services, or co-creation of products.
Revenue Streams: The various methods through which the organization will earn income from its offerings. Revenue streams reflect the value customers are willing to pay for and how they will pay for it. Price, consumption, and payment structures are involved in the dimension of revenue streams.
Key Activities: The crucial processes that the organization needs to engage in to deliver on its value proposition are considered “key activities.” Key activities include the touchpoints and methods for delivering value. For example, a behind-the-scenes tour or early access may be key activities for a membership business model.
Key Resources: Key resources are the strategic assets (e.g., physical, intellectual, human, financial, etc.) that are required to execute on the business model. In many cases, the museum itself is a key resource. A museum’s website or mobile app also may serve as key resource. Similarly, resources might include services such as a concierge, docents, customer service, and technology such as software that allows for advance ticket purchase. Intellectual property, people, and financial capital are also key resources.
Key Partners: The vendors, suppliers, strategic alliances, joint ventures, funders, and others who play an integral role in ensuring the museum can deliver on its value proposition are key partners.
Cost Structure: The infrastructure necessary to support the business model is known as the cost structure. The cost structure is inclusive of the expenses incurred by operating within the business model. Museums must include all tangible and intangible costs associated with delivering the value proposition, including people, physical, and out-of-pocket expenses.
The Business Model Canvas
A tool that can help museum leaders visualize how to incorporate the nine building blocks into a comprehensive membership business model is the “business model canvas.”
Source: The Business Model Canvas by Strategyzer.com made available under the Creative Commons Attribution-ShareAlike 3.0 Unported license (CC BY-SA 3.0) https://creativecommons.org/licenses/by-sa/3.0/.