If you're like many entrepreneurs, the idea of a membership business sounds appealing. You can charge your members a regular fee, and expect X recurring payment every billing period. But before you take that leap, make sure to consider all the pros and cons.
Veteran membership owners James Schramko and John Lint talk through the types of memberships available and what to expect from each. Listen in and get an idea which is right for you.
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Memberships have been an effective marketing strategy for decades. They’ve become a popular way to sell services, products and experiences. But what type of membership is right for you? And how can you make it work?
The stop-start way of doing business
As a reminder of how advantageous memberships are, James recalls a client of his whose business was event-based. On a semi-frequent basis, he’d put up a big marketing campaign, book a venue, fly out, and run an event. He’d expend energy and cash managing and paying for everything, then go back home and after a while, do it again.
In between, there’d be the post-event follow up and the pre-event process of selling the next event. That, says James, is a sort of stop-start way of doing business. If that’s what you’re doing now, then a membership could be a great alternative.
James knows someone else whose wife does a twice yearly launch. She builds it up, has a big waiting list. Then she sells and brings in a lot of money at once. For a while, it’s cream. Then they build up till the next launch.
The catch is, they’re closed for four or five months between launches. Anyone wanting to join has to get on the waiting list.
That’s the type of thing, says James, that you could sell as a membership, but it’s currently sold as a launch model, with a big spiky pattern of income. He sees cases like this and helps people transition them into a membership. Granted, though, there are people who it’s not right for.
Courses and the membership model
In John’s 10XPRO.io membership, there are people who create solely courses, who don’t think of memberships. And then there are those who are focused on membership, and don’t realize the power in also creating and selling individual online courses.
There’s a mix of everybody, but as James and John discussed in a previous episode, adding a membership component to your business is one of the greatest weapons, getting you off the hamster wheel of hard selling and periods of no income.
Yes, you can make good passive income off a course, say a masterclass. It’s fine as a finite product. But that leaves a lot of money on the table. That’s why in 10XPRO, John encourages members to think about the people who bought their course.
Those customers can be a source of buyers for a membership program. Say they go through your course and get the result promised. After that, some people want more. After achieving, say, the biceps of their dreams, what about their overall health? A membership could provide the continuing support, coaching and community they need to reach their ongoing goals.
And that gets you the ultimate online business – a subscription-based model that will pay you every month or six months or year for providing the ongoing benefits your customers are after.
Why the lifetime membership isn’t the best model
James’s ideal membership is a highly valued, recurring solution. But you can’t always get recurring, he says. What factors come into play? One might be the lifetime customer value.
To get the lifetime value upfront, you could look at a onetime, or lifetime, membership. A lot of people have made sales that way, selling $2,000 or $3,000 programs.
James personally doesn’t like lifetime. Because how long is lifetime? Is it the lifetime of the product? The lifetime of the customer? Is it the lifetime of the owner? If you go 10 years down the track, you’ll find very few people still have old stuff.
One of the plus sides of the lifetime membership, says James, is that people stay subscribed for the updates, and they’re there and accessible. A downside is that they’re likely not to buy anything else from you unless you branch out into other areas.
“Be careful with your positioning.”
James had someone email him recently, asking if he still had templates from a website software they purchased in 2006, not from him, but from the website company he was affiliating for. He no longer had them. If that had been pitched as a lifetime membership, they might have complained. Luckily, James never sold it as such. So be careful with your positioning.
One of the ninja moves James advises customers is to sell an upfront product with a year’s worth of support, then sell the support component for a recurring payment. If you can come up with a recurring solution, and support people on an ongoing basis, you’ll find that it’s relatively easy to have an ongoing fee for that.
Four main components of a membership site
At the end of the day, says John, there’s four main things you can offer on a membership site:
1. Content. This may be special training that you create about specific topics. So depending on your niche, you might have a need to create more content.
2. Community. This could be a forum or a social wall, a private group, just a way for members to be with other like-minded people. They can support each other, ask questions, get feedback. And that’s a very powerful thing.
3. Coaching. This is direct access to the person in charge. Say you want coaching from James or John. You join their memberships, and every single month you can ask them questions. And there’s various ways they can interact – it might be via chat, via private forum posts, or on Zoom.
4. Group coaching. This is something you can do via a live event, say a livestream, or a Q&A, where people can ask you questions and you can help many people at the same time.
The fixed-term membership option
Another membership model you might consider, says James, if you want to test the waters, is what’s called a fixed-term membership. It’s like an information product that is staged over monthly payments. So you can do it over three months, six months, 12 months.
James did this himself to decide whether to do high-level coaching. He wanted to see if people were interested in it, and if he was interested in it. So he offered it at $599 per month for three months. That was the commitment. And he took it out to his audience.
Twenty people were down for it. He ran two separate groups of 10 for three months, and at the end of three months, he let people who wanted to stay rejoin for another three months. He resold it to his audience as well, letting them know how the first three months had gone.
He then had 40 people paying $599 per month for three months each. At the end of that, he re-tooled it and set up what is now SilverCircle, which has run as a recurring membership program since 2010.
There are memberships for which people will pay forever, as long as they continue to solve their problem. The business entrepreneur market continues to change, and if you have constant change, people will seek out the right people to go on that journey with, people who can help them with the challenges that are going to come up.
Choosing your membership model
So whatever market you’re in, have a think: should you have a lifetime membership, have people pay you once and get all the value upfront? Or do you want to dip your toe in, maybe try a fixed-term membership? Or do people want what you offer enough to pay recurring for an unfixed period of time?
One thing James has learned is that a group typically works in stages. There’s the forming of it, then the storming, where people figure out who’s who and work out their place. Then there’s norming, where things settle into a flow. Then they perform, with everyone getting results. And then it ends, and people have to go their separate ways. The thing with an ongoing membership program is it doesn’t have to end.
That’s why people in fixed-term memberships or one-time courses are often happy to pay recurring to continue. You may have a goldmine in the people who you’ve already sold to.
True, there’s some markets that are quite limited and have not so much runway. And then there’s other markets that are just forever. Unless you solve things once and they’re done forever, there’s potential there.
It’s kind of simple, the concept of a recurring membership. It’s easy to buy a course on it. You do have to do some work, but once it’s set up, it’s that locomotive that just keeps going.
“The concept of a membership is simple.”
James has seen membership success in all sorts of markets. We have them as case studies on SuperFastBusiness, and a lot of them are 10XPRO members. 10XPRO.io is an all-in-one membership software and online course platform founded by John, who does a great job looking after his own group of members.
This episode’s action step is, have a think about what kind of membership is good for you. If you’re not sure what you do is membership material or not, flick James an email, [email protected] You can write or you can make a Loom video (but please keep it under two minutes).
If you’ve got technical questions or want to know how the membership platform works, reach out to John at 10XPRO.io.
And look out for the next Membership Series episode, where James and John will talk about the steps for creating a membership site.
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