Optimizing your membership model
With any membership model the deadliest issue is ‘the leaky bucket’. The leaky bucket is caused when churn is greater than new acquisition. A good (or bad) barometer to watch out for is if monthly churn is greater than 10%.
Studying membership models that I have developed, particularly Nike Adventure Club, and those of colleagues, peers and mentors, there is an equation that seems to consistently describe how best to avoid the leaky bucket and achieve strong retention.
