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Part 2 of Membership Mastery: Building and Scaling Profitable Subscription Sites
James has been running membership sites since 2009. In this podcast episode he revisits his 2020 product, “Profitable Membership Business,” to update the checklist and discuss how the membership landscape has evolved, what with new software tools, AI, and economic factors like inflation impacting membership models and pricing strategies.
In this first part of a two-part series, he’ll talk about the benefits of membership subscription sites.
He’ll look at the elements you need to build a membership site.
And he’ll share helpful tips for how to sell memberships and how to reduce churn rate.
Table of contents
1. Why have a membership?
2. What kind of membership would you want to be in?
3. The importance of being present
4. Matching the offer with the audience
5. Building the product
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A. What is essential to your offer?
B. Choosing your platform
C. What will they need to get the result?
D. Who will you solve problems for?
E. Going with minimum viable
F. Explaining your offer in words
G. How will you price the thing?
H. Monthly or annual?
I. Done-for-you, done-with-you, or do-it-yourself?
J. The power of professional design
K. Need help with the copy?
L. Tracking your important numbers
M. More isn’t necessarily better
N. How much would you sell it for?
6. Setting it up – the tech aspect
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A. Have a domain name
B. Simple versus complex
C. Where will you store stuff?
D. The dangers of dependency
E. What to start with
F. The sequences you’ll want to have
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A. Open, closed? Closed but open?
B. Referrals and podcasts
C. Getting people to stay
D. Lead magnets and coupons
E. How many members do you need?
F. Sales videos
G. Leveraging success through case studies
H. Start a conversation!
I. Have an application process
J. Do trials actually work?
K. Selling something in front
L. Referrals versus paying for people
Why have a membership?
Starting a membership can provide the ultimate benefit of recurring income, which eliminates the constant need to find new sales each month. Recurring subscriptions let you focus on serving and helping existing customers, creating a stable and predictable income stream over time.
It’s important, says James, to consider the initial startup phase, which can be challenging. Building momentum, such as creating a waiting list before launching, can help ensure a strong start. However, it’s crucial to understand that member retention and continuous member acquisition are needed for long-term success, as many memberships struggle to survive without sustained effort.
Agreeing to commit to the long-term process is vital, especially for those transitioning from one-time sales models. Although shifting from high upfront payments to smaller, recurring fees can be difficult at first, the lifetime value of a member in a well-managed membership can far exceed that of a one-time customer.
Note, though, it’s essential to carefully evaluate if a membership model is suitable for your business and audience.
What kind of membership would you want to be in?
When considering the type of membership to create, James suggests listing existing memberships in your target market using a spreadsheet. Include details like membership fees, features, target audience, and the results delivered. This analysis helps identify valuable aspects and potential gaps in the market.
For example, in James’s experience, he noticed that some memberships catered to solopreneurs aiming for a $1,000 daily income. In his own membership, he focuses on helping individuals who are already earning around $300,000 and want to scale to a million or more. This different audience often has a small team and a proven offer, making them more prepared for growth.
The importance of being present
James noticed in one membership he joined that the founders were active in promotion but disappeared from sight once members were in, a bait-and-switch scenario that bothered him.
James ensured his membership was different by being the sole coach, providing direct interaction and support to members without sub coaches and the like.
Keeping the membership small and manageable lets James maintain this personal connection, which sets his membership apart. Additionally, he chose to cover a broad range of topics rather than specializing, which has helped sustain long-term engagement. Some of his members have been with him since 2009, highlighting the effectiveness of this approach.
Matching the offer with the audience
After completing your market analysis, determine what type of offer aligns with your target audience’s needs and challenges. Consider how your existing solutions can be repackaged into a sustainable subscription model to effectively address their problems.
Building the product
The next step is to build your product, which includes creating an offer page and a functional login area for members.
Instead of focusing on a massive launch, start by refining and improving your product based on feedback. Gradually leverage and automate processes, and eventually scale your membership for broader reach and impact.
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1. What is essential to your offer?
To create an effective membership offer, James recommends starting with the minimum possible content. During COVID, he launched a membership with zero initial content to prove this point, and it was successful. Currently, his Mentor level membership at $1,500 per month includes only a chat window for private mentoring, weekly focus calls, and simple playbooks.
The key features are designed to provide essential value without overwhelming members with unnecessary content. This approach includes private mentoring through text, audio, or video messages, weekly scheduled calls, and practical playbooks for specific needs like email sequences. Supported by push notifications for updates, this minimalistic structure has proven so far effective and sustainable.
2. Choosing your platform
Choosing a membership platform can be simplified by opting for a user-friendly and customizable solution. James uses Kleq (K-L-E-Q.com), a platform he helped develop, which works well across various markets, from vegan recipes to gypsy jazz guitar lessons. It offers extensive customization options, unlike some out-of-the-box platforms.
Today, many membership tools are robust and can quickly get your membership up and running. While there are numerous options, James prefers Kleq for its flexibility and comparatively fewer limitations.
Although platforms like WordPress can be complex with many plugins, modern all-in-one platforms simplify the process and offer reliable solutions for building and managing memberships.
3. What will they need to get the result?
To create an effective membership, identify what members need to achieve their desired results by listing their problems and the ideal solutions. Consider what instruction videos, support, playbooks, and interactions (small group or one-on-one) would be necessary. Focus on solving the problem genuinely rather than just selling a product.
4. Who will you solve problems for?
When starting a membership, it’s crucial to choose the right audience to solve problems for. Many beginners try to help those just a few steps behind them, but fall short in their knowledge and experience. Ensure you are genuinely good at solving the problem, says James, or have access to experts who are.
Think about the long-term needs of your audience and provide ongoing support. Memberships can cover a wide range of topics, from musical instruments and languages to business skills and hobbies. Focus on markets where continuous engagement is valuable, avoiding one-time needs like those, for instance, of new brides, which are better suited for standalone products.
5. Going with minimum viable
For recurring subscription memberships, says James, focus on creating the absolute minimum viable offer that provides real value. Avoid the mistake of overbuilding complex systems that take years to launch; start simpler and earlier than you might think to avoid costly failures.
6. Explaining your offer in words
To explain your offer, start by drafting your sales page using frameworks or AI tools that outline your audience’s problems and the solutions you provide. This rough draft can be refined into a simple, conversational explanation of your offer, similar to the approach on the homepage at JamesSchramko.com.
While hiring a professional copywriter can enhance your sales page, even a straightforward description in your own words can be effective. Focus on clearly conveying the structure of your membership and the primary outcomes members can expect, ensuring potential customers understand the value you provide.
7. How will you price the thing?
To determine your pricing, research what others in the market are charging and consider how your offer compares. Understand that your customers may use multiple products or services, so focus on how your membership stands out and complements others.
Set your price based on the value you provide and your market knowledge, even if it means underpricing compared to others. This approach simplifies the sales process, avoids high-pressure tactics, and encourages long-term membership retention, which is crucial for sustained success and fulfilling relationships.
8. Monthly or annual?
Deciding between monthly and annual billing is an essential part of your pricing strategy. Some markets may use weekly or quarterly billing.
The less frequently you bill, James has found, the higher the retention, but also the need to resell the membership each billing cycle.
Annual billing can secure long-term commitment, while monthly billing offers flexibility but might see higher dropout rates during tough months. Offering both billing options can balance these pros and cons.
To encourage annual subscriptions, James suggests giving significant discounts, making it attractive enough for members to commit for the year. However, annual billing can require more effort to re-engage members before renewal and may face issues with members feeling stuck if they aren’t a good fit.
Monthly billing, on the other hand, tends to be simpler and less frictional, allowing members to leave anytime without long-term commitment. This approach avoids high-pressure sales tactics and ensures that only those benefiting from the membership stay, fostering a more satisfied and engaged member base.
9. Done-for-you, done-with-you, or do-it-yourself?
When deciding on your service model, consider offering done-for-you, done-with-you, and do-it-yourself options. These models can be combined, allowing flexibility in how you assist clients. For example, you might work collaboratively with clients on tasks like rewriting email autoresponders or webinar scripts, offering a done-with-you approach.
Done-for-you services are easier to sell at a higher price but require more resources to deliver, as you handle tasks directly for clients.
On the other hand, do-it-yourself services involve providing clients with resources like playbooks to follow independently. While this model is less costly and easier to manage, it typically generates lower revenue and requires systems to support self-paced learning.
Consider these models’ strengths and weaknesses and how they fit your business capacity and client needs. Each approach can cater to different client preferences and ensure you provide the necessary support while managing your resources effectively.
10. The power of professional design
Once you’ve validated your membership and experienced growth, investing in professional design can significantly enhance its appeal and value. For instance, Greg Merrilees at studio1design.com has created thoughtful design elements, including style guides, colors, and fonts, for James’s homepage and membership, making them look polished and professional. This attention to design can help attract higher-paying clients and potentially double or triple your revenue.
11. Need help with the copy?
Hiring a professional copywriter can be a significant investment, but it often results in highly effective sales copy. While James now writes his own copy to reflect his current approach, the work done by a skilled copywriter previously provided excellent conversion rates.
If you need help with copy, avoid hiring inexperienced writers who rely solely on AI. You might try tools like the 16-word sales letter tool on this website, JamesSchramko.com, for a solid starting point. This free tool helps draft a sales letter, which you can then refine to suit your needs.
12. Tracking your important numbers
It’s essential to track your income and expenses using a spreadsheet or other tools that also provide insights into churn rates and cohort data.
Many membership owners lack awareness of how long members stay and their churn rates, which are crucial for understanding the health of a membership. High churn rates mean you don’t have a sustainable membership model but rather a multi-pay offer disguised as a membership. Collecting and analyzing this data helps ensure the long-term success and viability of your membership.
13. More isn’t necessarily better
Ensure your membership offers the essential features without overloading it with unnecessary options. Too many irrelevant features can make members feel they’re not getting full value, leading them to request a “pause,” which often means they want to cancel. Simplifying your offering can enhance perceived value and reduce cancellation requests.
14. How much would you sell it for?
At this stage, James advises setting a target exit price for your membership, even if it seems early. This pricing will guide the growth and development of your membership to fit that value.
While a membership built around a personal brand might not be sold, it can still generate significant income and valuable connections with influential partners, enhancing your business network and opportunities. James, for instance, has found most of his revenue share partners through his membership.
Setting it up – the tech aspect
Setting up the technical aspects of your membership site is crucial and often a focal point for many. James has been involved in selling website software since 2006, making his first $100,000 from it, and continues to do so with Kleq (K-L-E-Q.com). Choosing the right software is essential, as it provides the necessary infrastructure to manage your membership efficiently.
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1. Have a domain name
Ensure you have a domain name for your membership site, as it provides control and stability that platforms like Facebook groups, Discord, or Telegram cannot offer. A domain name helps maintain your marketing material and preserves your content regardless of changes in third-party platforms. This approach, learned from John Reese’s “Traffic Secrets” and the “OwnTheRacecourse” concept of James’s previous mentor, ensures you maintain ownership and control over your online presence.
2. Simple versus complex
Using Kleq allows you to point your domain name to their server, simplifying the technical setup and maintenance. This is ideal for small operations, eliminating the need for extensive resources to manage website backups, security, and integrations.
Complex setups can be costly, requiring significant investment in technical staff, whereas professional services like Kleq manage everything for a reasonable monthly fee.
Additionally, integrating both Stripe and PayPal as payment options ensures flexibility and reduces dependency on a single payment processor.
3. Where will you store stuff?
Choose reliable storage solutions for your membership content.
James uses a standard operating procedure (SOP) where new content, like playbooks, is added to a Google Doc. His team collects and posts it to the membership site, ensuring everything is backed up and exportable.
Emails are stored on a backup CSV, and videos or audios are stored on Amazon S3, Wistia, or Loom. This approach safeguards assets and ensures control and access to content, even if the membership platform changes.
4. The dangers of dependency
James warns against dependency on membership platforms that handle all your media and communications. While convenient, these platforms can pose risks if they prevent you from exporting or backing up your content. If the platform faces legal issues, goes out of business, or gets acquired, you could lose access to your content. Always ensure you have control and backups of your essential assets to safeguard against these potential disruptions.
5. What to start with
Begin by preparing your assets and deploying your campaign. Ensure your sales offer is live, have a system to collect email addresses, set up your order and thank you pages, and launch with starter content.
Expect your membership to evolve, says James, based on user feedback and usage patterns, as it will likely undergo many changes over time. Since 2009, James’s membership has continuously adapted to meet members’ needs, showing the importance of flexibility and responsiveness to maintain long-term success and engagement.
6. The sequences you’ll want to have
Ensure your forum or community has starter threads, and set up essential sequences and tags. The three most crucial sequences, in James’s experience, are the onboarding sequence, cart abandonment sequence, and slipping-away sequence, as they significantly impact member retention and revenue.
The onboarding sequence welcomes new members and guides them through initial steps, reducing the risk of refunds or chargebacks.
The cart abandonment sequence targets potential members who didn’t complete their purchase, encouraging them to finalize their subscription.
The slipping-away sequence re-engages inactive members, preventing cancellations and maintaining membership numbers.
These sequences, which James includes as playbooks in his membership, are vital for maximizing income and retention.
Testing all elements before launching ensures everything works correctly and prevents issues that could hurt member engagement and satisfaction.
Time to sell your offer…
When selling your membership, James recommends focusing on one or two traffic sources where you can excel, whether that’s leveraging your existing database, using someone else’s, or learning a new one.
Concentrating on a few effective channels is more productive than trying to cover all possible options.
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1. Open, closed? Closed but open?
When deciding how to offer your membership, you can choose between open, closed, or a combination of both.
An open membership allows anyone to join at any time, which is how James currently operates. This approach provides continuous accessibility and flexibility for potential members.
A closed membership, on the other hand, involves having a waiting list and opening up periodically. This creates genuine scarcity and helps manage resources and member integration more effectively. It also allows existing members to establish a culture without constant interruptions from new members joining.
Some memberships are always closed but occasionally open, creating anticipation and increasing engagement when access is granted. While this can be automated with tools like Kleq, it didn’t feel right for James, so he prefers keeping his membership always open. This simplifies the process, allowing anyone to join whenever they are ready.
2. Referrals and podcasts
Referrals and podcasts are highly effective traffic sources for James’s membership. Referrals from satisfied clients drive significant new memberships, and his long-running podcast attracts many clients as well.
Similar results can be achieved with a YouTube channel. Starting a podcast or YouTube channel is still a viable strategy, as evidenced by James’s own recent success with a surfing channel and a partner who sells memberships through educational YouTube videos.
3. Getting people to stay
James recommends designing effective email sequences to retain members, as retaining members is more critical than acquiring new ones. He dedicates 95% of his efforts to working directly with his members, providing coaching and mentorship, while only 5% is spent on acquiring new members through podcasts and social media.
Initially, treat your membership offering as a pilot program to test its viability and make adjustments based on feedback.
When James started, he sold three-month memberships, and, after several successful iterations, made his higher-level Mentor program continuously available. Fourteen years later, the program remains strong and effective, a product of focusing on member retention and continuous improvement.
4. Lead magnets and coupons
Create lead magnets that address the problems your membership solves to collect email addresses or make small sales. A useful strategy is selling a low-cost item, like for $10, and offering a coupon worth $100 off your membership. This effectively gives them a free month for a $100/month membership, providing significant value and encouraging sign-ups. This approach has been successful for many of James’s clients.
5. How many members do you need?
Set a target for the number of members you need based on your pricing strategy. For instance, at $1,000 a month, having 50 members would generate $50,000 monthly revenue. Lower price points require more members to achieve significant income, which may not be as manageable or profitable. Choose a pricing level that aligns with your goals and ensures the best results and engagement.
6. Sales videos
Refine your sales offer, based on feedback from buyers and non-buyers, to continuously improve it. Create a sales video, as it effectively conveys your message; even a simple video of you discussing the sales page works well. Start with the video, transcribe it for your sales page, and then clean up the text.
Explore various traffic strategies like webinars, video sales letters, and live presentations to find what suits you best. Ensure your cart abandonment process is optimized to minimize lost sales opportunities.
7. Leveraging success through case studies
As your members achieve success, collect case studies to showcase their results, as they are highly effective marketing tools. Many of James’s podcast episodes feature successful users of Kleq, which encourages others to try the platform. These case studies highlight positive experiences and attract new members from various fields, such as musicians, software developers, e-commerce businesses, health and fitness professionals, and language teachers, who see the potential benefits and seek similar success.
8. Start a conversation!
Create conversations on social media to engage potential members. When people follow or comment on your posts, start a conversation with them via direct messages. While your team can initiate contact, ensure that you personally handle the follow-up conversations to build genuine connections and trust. This fosters authentic engagement and demonstrates your commitment to potential members.
9. Have an application process
For high-ticket memberships, implement an application process to ensure a mutual fit between you and potential clients. This process helps both parties determine suitability and prevents regret from taking on clients who aren’t a good match. Only accept clients who are a great fit, as taking on unsuitable clients can lead to dissatisfaction and complications.
10. Do trials actually work?
Free trials typically result in less than 40% of users staying past the trial period to the billing point. However, if clients purchase a high-ticket event or product and receive a loyalty coupon, retention rates can increase to 65-70%. Therefore, using coupons and offering valuable content before the membership can significantly improve retention rates.
11. Selling something in front
The most effective way to sell a membership, in James’s experience, is by first selling a higher-priced product, such as live workshops, masterminds, or other high-ticket items, and then offering the membership as an add-on. Using challenges and coupons can also be beneficial. For example, collaborate with a relevant Facebook group by offering one of your modules for free, together with a coupon for a membership discount, such as two months free. This strategy can attract potential members who are already interested in your niche.
12. Referrals versus paying for people
Ask your current customers for referrals, as this method can be more genuine and effective than paid promotions. In 2024, there has been a rise in shallow schemes where members are incentivized to recruit others purely for commissions, resembling a one-layer MLM.
James had an affiliate program but discontinued it to avoid charging higher prices and dealing with potential mismatches in expectations. Instead, he focuses on offering a fair rate directly to the market, relying on his skills as an online marketer to attract clients, which has proven successful.
Keep an eye out for this…
In the next episode, James will discuss strategies for driving traffic to your website, delivering results for your members, and retaining them, along with advanced membership tactics for leverage. Stay tuned for episode 1074, which explores these important topics.
Our preferred membership software is KLEQ.
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