Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / Why CMOs Are Marketing Through Membership Models
Transcript
- Lucas: So there's this idea that's been quietly gaining traction in CMO circles — and it basically flips the old campaign funnel on its head. Instead of asking 'how do we acquire more customers this quarter,' more marketing leaders are asking 'how do we turn every customer into a member?' Luna: And by member, you mean an actual recurring relationship — not just someone who gets an email newsletter. Lucas: Exactly. I'm talking about a paid or loyalty-based membership that creates a persistent data and revenue connection. Think REI's Co-op model, or Patagonia's Worn Wear program. These aren't transactional campaigns — they're ongoing relationships that reshape the entire marketing cost structure. Luna: Let's start with Patagonia. Their Worn Wear program — that's the one where they buy back used gear and resell it — how does that function as a membership model? It's not a subscription. Lucas: Right, it's not a subscription in the Netflix sense. But when a customer trades in an old jacket, Patagonia gets a direct data point: what they bought, when they bought it, how it held up. That customer then gets store credit and becomes part of a closed-loop relationship. The average Patagonia customer who engages with Worn Wear has a customer lifetime value about 40 percent higher than someone who only buys new. Luna: Forty percent — that's significant. And it's not just about the resale revenue, it's about the data they gather on product durability and customer preferences. Lucas: Precisely. That data feeds back into product design and marketing targeting. It's a virtuous cycle that a one-off transaction can't create. Meanwhile, REI's Co-op membership has been around for decades, but in the last three years they've doubled down on it as a marketing anchor. Today, over 23 million people are Co-op members — they pay a one-time $30 fee for lifetime membership. That $30 is not a big revenue line, but it creates a psychological contract. Luna: The commitment device. Once you've paid to join, you're more likely to shop there, you're more likely to feel a sense of ownership. Lucas: Exactly. REI found that Co-op members spend 2.6 times more annually than non-members. And their retention rate — members who renew their engagement year over year — is above 85 percent. For a retailer competing against Amazon and Walmart, that's a fortress. Luna: So the CMO's job shifts from acquisition to retention. But that means the metrics change too. What are they looking at instead of cost per click? Lucas: The north star metric becomes member lifetime value, and the cost of acquisition gets redefined. Instead of measuring cost per new customer, you measure cost per new member — and your allowable cost can be much higher because you're amortizing over a multi-year relationship. One CMO I spoke with at a outdoor brand said they now allow a member acquisition cost that's three times higher than their old customer acquisition cost. Luna: Three times — that's a huge shift in how you allocate budget. It frees you up to invest in content, community, experiences. Lucas: And it changes the creative brief. If you're marketing to a member, not a prospect, the messaging has to evolve. It's less 'buy this thing' and more 'here's how to get more out of your membership.' Patagonia's emails to Worn Wear participants aren't product drops — they're stories about repair tips, stories about gear longevity. Luna: It's almost like a service layer on top of the product. That's very different from the old 'campaign of the month' mentality. Lucas: There's a risk though. If you build a membership model but don't deliver ongoing value, you get attrition fast. And the economics of membership can look great in year one but deteriorate if you don't keep engagement high. I've seen DTC brands launch subscription programs and then watch churn hit 10 percent per month because they treated membership as a billing mechanism, not a relationship. Luna: So the CMO has to partner closely with product and customer success — it's not just a marketing initiative. Lucas: That's the key insight. The CMOs who are succeeding with membership models are the ones who've reorganized their teams around member journeys instead of campaign funnels. They have a 'member experience' team that sits between marketing and product. And they're using first-party data from the membership to personalize everything — from email to product recommendations to in-store experiences. Luna: I think the biggest shift is in how they measure success. It's not quarter-over-quarter sales growth anymore. It's member retention rates, net promoter score among members, share of wallet. Lucas: And the CFO actually likes those metrics because they're more predictable. A membership base with high retention gives you a revenue floor. That's why you're seeing more public companies — not just retailers but media companies, software firms — appointing Chief Membership Officers or embedding membership targets into CMO compensation. Luna: Which companies beyond Patagonia and REI are doing this well? Lucas: Sephora's Beauty Insider program is a classic — but they've recently layered in tiered membership with experiential benefits. Peloton, despite their subscriber slowdown, still has extremely high retention among their all-access members — north of 90 percent. And then there's a newer player, Outside Interactive — they combined a bunch of outdoor media brands into a single membership that gives you access to all their content and events. Their CMO told me they're seeing 70 percent annual retention and a 30 percent lift in cross-brand engagement. Luna: So the membership model is spreading beyond the usual suspects. It's becoming a core marketing strategy across industries. Lucas: I think within two years, membership will be a standard offering for any brand with a repeat purchase cycle. The question is not whether to do it, but how to design it so it's genuinely valuable — not just a discount club. Luna: And that design challenge — that's where the CMO's creativity and strategic thinking really come into play. Lucas: If these marketing conversations have sparked something you've actually used in your own work — a way of thinking about retention, a new metric to track — you might be the kind of person who keeps Fexingo going. A handful of listeners already chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making shows like this one. Luna: It is. No ads, no sponsors — just people who find value in what we do. And it means we can keep digging into the specific angles that matter to you, without anyone dictating the content. Lucas: So back to membership models — one thing that's still emerging is how CMOs are using membership data to inform product innovation. REI, for example, uses Co-op purchase data to decide which new gear categories to test. If they see a cluster of members buying climbing shoes and chalk bags but not harnesses, they know there's an unmet need. Luna: That's a feedback loop that campaigns don't give you. The membership becomes a research panel. Lucas: And it's self-selecting — these are your most engaged customers, so the signal is stronger. I think that's the next frontier: CMOs using membership not just as a retention tool, but as a strategic intelligence asset. Luna: We'll have to revisit this in six months and see how many more brands have made the leap. Lucas: I'd bet on more than a few. And I'd bet the ones who do it well are the ones who remember it's a relationship, not a transaction.