Companies utilizing memberships is a not a new business tactic, but it has recently been on the rise thanks to a boom in e-commerce businesses. It’s a smart move for any company looking to increase their attractiveness to potential customers. By getting new or infrequent customers to enroll in a membership program instead of just buying products every so often, businesses will be able to create a coveted recurring revenue stream as well as communicate with customers about their buying preferences, both of which could help companies in the long run.

Let’s take a look at three companies who have used memberships to their advantage:

Amazon.com Inc (AMZN - Analyst Report)

Arguably the most well-known and used online membership program is Amazon Prime. For only $99 a year (or $8.25 a month), members receive the highly-valued free two-day shipping (which, as a Prime member myself, is incredibly convenient), unlimited streaming video, a free e-book lending library, unlimited music streaming, and unlimited photo storage plus 5GB of video and file storage that is a part of Amazon Cloud Drive.

While having to pay $99 up front may hinder some customers from signing up for Prime, the free 30-day trial could help ease shelling out that price, since you get access to all of the above mentioned perks. Prime is trying—and succeeding—to make online shopping feel like shopping at a brick-and-mortar store; customers are now using Amazon, with their Prime membership, to buy things they would normally need to drive to a Target (TGT - Analyst Report) or Walmart (WMT - Analyst Report) to purchase, things like household goods, food and beverages, and beauty and grooming products.

Most importantly for Amazon, Prime members spend more on the website than non-members:

Costco Wholesale Corp (COST - Analyst Report)

Costco, the successful wholesale retailer, has made a killing in the membership business. The company makes most of its profits from its membership fees, and this business tactic has proven successful for the company. Look at Costco’s consistent rise in revenue over the past 10 years:

Costco Wholesale Corporation (COST - Analyst Report) Quarterly Revenue & Growth Rate | FindTheCompany

There are three tiers to the company’s membership program: Gold Star, which is for individual persons, costs $55 a year; Business, which is for businesses, costs $55 a year; and Executive, which offers rewards on qualified purchases, costs $110 a year. Both Gold Star and Business are able to upgrade to the Executive membership, and all paid memberships receive a free household card.

Up through the most recent quarter, Costco had an impressive 44.6 million paid members and 81.3 million total cardholders. And, membership fees make up the bulk of Costco's operating income; the customer’s annual fees are where Costco makes its money. This high membership number shows how customer-oriented the retailer is. Costco maintains high levels of loyalty among its members due to affordable prices and modest markups, with renewal rates in the 90% range.

Netflix Inc (NFLX - Analyst Report)

A bonafide leader in video streaming, Netflix has seen tremendous growth in the past few years. Like Amazon and Costco, Netflix has focused its core business on memberships. The streaming giant has an array of plans for customers to choose from. If you wish to only stream content, there is the Basic plan (watch on one screen at a time in standard definition) for $7.99 per month, the Standard plan (watch on two screens at a time with HD available) for $9.99 per month, and the Premium plan (watch on four screens at a time with HD and Ultra HD available) for $11.99 per month.

Netflix also offers DVD and Blu-ray plans. To rent one DVD at a time, customers are charged $8.99 per month; for two DVDs at a time, it costs $11.99 per month; and for three DVDs at a time, it costs $15.99 per month. The Blu-ray plans are slightly more expensive. Renting one disc costs $9.99 per month, two discs cost $14.99 per month, and three discs cost $19.99 per month.

Check out this chart comparing Netflix’s revenue streams:

Along with high growth, Netflix excels in engaging their customers by offering unlimited movies and television shows as well as a wide range of critically-acclaimed original content. Users are able to watch content on their TV, phone, tablet, or other device and receive their first month free of charge. For Netflix, these membership factors not only drive customer loyalty, but each one contributes to the company’s rapidly growing revenue and cash flow.