Latest / Community Marketing with Fexingo: Discord, Slack Groups, and Brand Communities / How Memberships Are the New Customer Retention
Transcript
- Lucas: So you walk into a McDonald's, order a large coffee, and hand over a few dollars. That's fine. But what if instead, you paid fifteen bucks a month and got that same coffee every single day, plus a few other perks? That's not hypothetical — McDonald's started testing a McCafé Rewards membership tier in select markets earlier this year, and it's part of a bigger shift I think we're going to see across a lot of industries. Luna: A monthly subscription for fast food coffee. It feels both inevitable and slightly weird. What's the thinking behind it? Lucas: The thinking is pretty straightforward: lock in recurring revenue and deepen the relationship. Right now, the typical loyalty program is points-based — you buy ten coffees, you get one free. But that's transactional. A membership model adds a fixed cost every month, and the psychology switches: the customer has already paid, so they feel compelled to come back and use the benefit. It's the same logic as a gym membership. Luna: Right, sunk cost. You want to get your money's worth, so you show up more often. That's powerful for foot traffic. Lucas: Exactly. And for McDonald's, that foot traffic is huge. Even if the membership only breaks even on coffee, the incremental sales — maybe they add a McMuffin or a hash brown to that coffee run — that's where the profit lives. Plus, you get a direct relationship with the customer through the app, which means better data on preferences and visit patterns. Luna: So the membership becomes a data play as much as a revenue play. McDonald's knows exactly when you're coming, what you usually order, and can push personalized offers. Lucas: Bingo. And this isn't just McDonald's. We've seen it with Amazon Prime, obviously — that's the granddaddy. But more recently, brands like Taco Bell, Panera, and even some regional pizza chains have tested subscription tiers. Panera's coffee subscription, launched a few years ago, was a pretty clear precursor. You paid monthly, got unlimited hot coffee for a year. They reported a significant lift in both visits and basket size. Luna: Didn't they also find that subscribers were more likely to buy bakery items and sandwiches? So the coffee was essentially a loss leader that drove higher-margin purchases. Lucas: That's exactly what the data showed. And it's the same playbook Patreon uses for creators — a monthly commitment creates a stable base, and then you layer on extras. For a brand, the 'extra' is the upsell. The membership fee covers the cost of the coffee, but the real profit comes from everything else the customer buys while they're there. Luna: But let's talk about the risk. Subscription fatigue is real. People are already managing Netflix, Spotify, a gym membership, maybe a meal kit. Adding a fast food subscription feels like another line item they might resent. Lucas: Yeah, that's the flip side. And that's why the value proposition has to be crystal clear. The McCafé Rewards tier — at least in the test markets — wasn't just unlimited coffee. It also included a free bakery item once a week, early access to new products, and exclusive app-only deals. You need to make it feel like a club, not just a payment plan. Otherwise, the cancellation rate will kill the economics. Luna: It's a fine line. Make it too cheap, and you're leaving money on the table. Make it too expensive, and nobody signs up. How do you figure out the right price? Lucas: That's where data from pilot programs is critical. McDonald's is smart to test this in a handful of cities before rolling out nationally. They can measure sign-up rates, retention, average visit frequency, and basket size changes. Then they can tweak the price or the perks. I'd bet the initial price point is deliberately a bit low to drive adoption, and they'll raise it once they've proven the model. Luna: So for a marketer listening, what's the takeaway? Should every brand with a repeat purchase consider a membership tier? Lucas: Not every brand, but any brand where the customer has a relatively high frequency of purchase — say, at least once a week — and where there's a natural 'anchor' product that you can use as the centerpiece. For McDonald's, it's coffee. For a pet store, it could be dog food. For a car wash, it's unlimited washes. The key is that the membership should save the customer money if they use it regularly, but the brand makes more because of the ancillary purchases and the loyalty data. Luna: What about the execution side? Building a membership program isn't easy. You need the right tech, the right pricing, the right communication. Lucas: Absolutely. And I think the biggest mistake brands make is treating it as just another loyalty tier. It has to be a separate product in its own right. You need dedicated onboarding — welcome emails, maybe a welcome kit — and you need to remind members of the value they're getting. If someone signs up and then doesn't visit for two weeks, you should probably send them a push notification: 'Hey, you haven't used your free coffee yet. Come in and grab one.' Otherwise, they'll question why they're paying. Luna: So it's almost like a membership concierge service within the brand. That's a lot of operational work. Lucas: It is, but the payoff can be massive. Look at Amazon Prime. Members spend about twice as much as non-members on average. They also have a higher retention rate. That's the holy grail. Now, obviously, not every brand can be Amazon, but the principle scales down. A smaller retailer could launch a ten dollar a month membership for free shipping and a monthly gift, and if they have a loyal enough customer base, it could work. Luna: Let's talk about the downsides more. Besides subscription fatigue, there's also the risk of alienating non-members. If the perks are too good, regular customers might feel like they're being penalized for not subscribing. Lucas: That's a real concern. You have to be careful not to degrade the experience for non-members. McDonald's, for example, can't make the coffee taste worse for non-subscribers or make them wait longer. The perks have to be additive, not subtractive. That's why early access or exclusive deals work better than basic service degradation. Luna: And you need a clear exit path. If someone cancels, you don't want to burn the bridge. You should try to win them back with a discounted re-engagement offer, or at least keep them as a regular loyalty member. Lucas: Exactly. The membership should be seen as a relationship accelerator, not a gate. If someone cancels, you lose that recurring revenue, but you still want their future business. So the cancellation flow is just as important as the sign-up flow. Luna: I want to circle back to the data advantage. With a membership, you know exactly who your best customers are and what they value. That seems like a huge asset for personalization. Lucas: It's massive. Every visit generates data: time of day, items purchased, payment method, maybe even how long they stay. Over time, you can build a profile that's incredibly rich. Then you can use that to tailor offers, predict churn, and even inform product development. For instance, if you see that a lot of subscribers buy a breakfast sandwich with their coffee, maybe you launch a new breakfast sandwich and promote it exclusively to members first. Luna: So it's not just a marketing tool — it's a product and strategy tool. Lucas: Right. And that's what separates a good membership program from a great one. The best ones feed back into the business, not just the marketing department. That's why I think we'll see more and more brands experimenting with this model. It's not a fad. Luna: One more thing — what about the community aspect? This is a community marketing show, after all. Does a membership automatically create community? Lucas: Not automatically, no. A membership gives you the container, but you still need to fill it with interaction. For McDonald's, the community might be very loose — maybe it's just the shared experience of being a McCafé Rewards member. But for other brands, like Peloton or Sephora, the membership includes access to exclusive groups, events, or forums. That's where the real community value comes in. The membership fee is the ticket, but the community is the show. Luna: So if a brand wants to build community through a membership, they need to invest in the community layer — not just the transactional perks. Lucas: Exactly. And that's where a lot of brands fall short. They launch a membership, give people a few discounts, and call it a community. It's not. Community requires facilitation, moderation, events, and a sense of belonging. That's hard work. But the brands that do it well — like Glossier or LEGO — see incredible loyalty because people feel like they're part of something. Luna: Let's look ahead a bit. Where do you see membership models going in the next couple of years? Lucas: I think we'll see more hybrid models, where a brand offers multiple tiers. A free tier with basic loyalty points, a paid tier with core perks, and maybe a premium tier with exclusive experiences. I also think we'll see more partnerships — like a McDonald's membership that gives you a discount at a partner gas station or a movie theater. And I think AI will play a role in personalizing the membership experience in real time. Luna: Before we wrap, I want to acknowledge something. If today's conversation gave you a concrete idea or a framework you can actually use, that's exactly what we're going for here. And the way we keep these episodes ad-free and focused on substance is through listener support. If you found value, you can help keep it going at buy me a coffee dot com slash fexingo. Lucas: Yeah, a lot of work goes into researching and scripting each episode, and knowing that listeners find it useful is what keeps us going. So if you're inclined, that link is buy me a coffee dot com slash fexingo. Now, back to the topic — one last thought on membership models. Luna: Sure, go ahead. Lucas: The biggest mistake I see brands making is launching a membership without a clear retention strategy. They spend all this effort on acquisition — ads, landing pages, sign-up incentives — but they don't think about what happens after month one. The first renewal is the most critical moment. If you haven't delivered clear value by then, people will cancel. So my advice: design the first 30 days as carefully as the sign-up flow. Make sure the member gets a win early. Luna: That's a good note to end on. Make the first month matter. Thanks, Lucas. Lucas: Thanks, Luna. And thanks to everyone listening. We'll be back next week with another deep dive into community marketing.