How to make more money on consumer subscriptions with Crew Plans™
I noticed something really smart my local gym started doing recently to improve retention.
It’s a bit like a family plan, but they market it to friends as well.
The gist is that for every member that joins a “crew” (my term), the price decreases by some set amount. AKA a membership is $300/month, but if 2 of you join, each membership is $280/month. And it keeps decreasing the more people you have tied to the crew. While decreasing the overall price, this does 3 things:
Existing crew members cancel less, because leaving causes their friends’ prices to go up.
The existing crew has a meaningful ongoing incentive to refer friends. Rather than a one-time thing, this is a $20/month benefit for as long as you’re a member. I’d expect a 5-10% increase in new members via referrals.
When someone drops off a membership, the existing crew has an incentive to find a replacement. This effectively directly reduces churn and can be modelled as a “Chance a departing group member is replaced,” which I think would be somewhere in the 10%-20% range.
The tradeoff is you are giving out a discount, so there is a direct upfront cost.
If you model this out for a system like $GRAB Unlimited, which charges about $4/month, you get the following (see images, or check out the linked spreadsheet and copy it to play with the inputs yourself):
Long run: about +13% monthly contribution once crews reach full adoption.
Short run: cumulative contribution is down for nearly four years, and payback is around month 24. The discount costs about 19% of contribution right away, while the extra members build up slowly.
What pays for it: lower churn alone doesn’t cover the discount. Replacements and referrals tip it positive.
You could couple the launch of a program like this with a slight price increase to help speed up the turnaround time.
This is a different type of referral program, and it’s decidedly different product-wise IMO from a family plan. Family plans are about consolidating billing and ideally also getting a discount.
This is about trying to incentivize your existing users to become your sales force, replacing churned users and recruiting new ones.
I think this could relatively meaningfully change the shape and performance of many subscription plans, especially if they are high-margin, high-churn products that people use together.
Phone carriers have done this with family plans forever, but it hasn’t really expanded beyond that. I think marketing these as Crew Plans would help meaningfully.
