The LIES about Continuity and Membership income

[Ken Preuss]

Ahh, here we are again.

'Tis that time of year when someone comes out with a major launch relating to the "best IM strategy in existence": making continuity income through membership sites.

First let me say I don't claim to know it all, nor do I have anything personally against any of the big-name trainers. I really don't.

My commitment is to two things: 1) helping real people get real results, and 2) reinforcing simple truths based on experience.

The big launches relating to starting a membership site will have you believe the following (taken directly from their sales pages, all of which are similar to the others):

"Membership sites are the easiest way to make a solid consistent income"

"You never have to look for more customers" (yes, the sales page actually says that)

"Continuity income allows you to work once and get paid over and over again"

"The 'Set it and Forget it' way of making money online"

Here's my point. As with everything else in this industry, all sorts of things are said to get you to buy the premise of what is being sold.

---> If you don't buy the premise you won't buy the product.

The problem is this: there are many exaggerations and inaccuracies in what is being shared with you.

So let's address the facts, ma'am.

1) Membership sites involve work - in many case A LOT of work

Anyone who has ever started and *successfully* run a membership site will tell you it's not a cake walk. Yes the continuity income is nice. But in order to keep that income consistent - and even to get it built up in the first place - really takes something.

One of the key things to remember is that customers are NOT inherently interested in paying for something on an ongoing basis. Think about it - if you had the choice would your default desire be to pay for something once or to keep paying for it over and over again?

Because of this customer expectations are often high with membership sites. Often this has to do with continuously providing more and more content, which can be fun but it's certainly a ton of work depending on the nature of the site and content.

My point is simply that membership sites are never a cake walk no matter how you slice it (pardon the pun ).

2) The attrition rate with most membership sites is high

This is a biggie and is rarely if ever discussed on a sales page nor highlighted enough in the training materials themselves.

The attrition rate - the rate at which customers cancel or fall out of the membership - is quite high with most membership sites. Why is this?

Well, truth is there are a ton of factors. Maybe the content wasn't good enough in their view, maybe there wasn't enough interaction, maybe the membership itself is not at all consistent with the premise under which they purchased in the first place.

Whatever the case, the idea that "you never have to look for more customers" in a membership model is complete and utter bunk.

On the contrary, to maintain a consistent and thriving income you ALWAYS need to be attracting new customers. That's because your existing customers will be dropping out at a much higher rate that you may think.

Sure, there are things you can do to offset this attrition and good courses will always cover this.

However the fundamental element of human nature will always be present - so regardless of what you do a certain attrition rate WILL exist. There's no getting around it.

3) A membership model is NOT a business model

This is the biggest thing to remember, and it's one that most are completely oblivious to seeing.

At its core, membership is simply a structure for product delivery and payment receiving. And that's all it is.

A membership model does NOT create what your business fundamentally is to your customers. Specifically:

- If you don't understand your target market, a membership model won't magically fix that
- If you don't provide something your target market WANTS, a membership model won't magically fix that
- If your training or information products are severely deficient, a membership model won't magically fix that

I can't emphasize this point enough. A membership model is only a structure. If your business is lacking the core fundamentals then it won't matter one lick what structure you are using.

The point is not to get seduced into thinking a membership model is the magic bullet that will solve all your problems.

Quick story:

Several years ago shortly after I first started marketing to real estate investors, I had this "great idea" to start a membership site for the industry. I too fell in love with the idea of "ongoing recurring income", because heck, who wouldn't want that?

I decided that my membership site would be filled with real estate articles, a forum, a killer knowledge base...all the same stuff that everyone says to put into a really good membership site.

I also decided I would make it "top notch" by having my web programmer build it from scratch. I spent close to $8,000 (yep, 8 grand) developing the site so it would be exactly the way I wanted it.

And I must say, it was damn impressive. It was miles better than anything else in the real estate industry and I was really proud of that.

But here was the problem: The customers didn't want to pay for a membership! And if I had opened my freakin' eyes rather than become completely seduced by the membership model, I would have seen it clear as day.

It was right in front of me. There were already several HUGE free forums people were flocking to in real estate, and there was no evidence whatsoever that existing customer behavior would have them paying for a membership site. None.

And guess what? They wouldn't pay for it. Gee, who'da thunk it?

So after (gulp) $8K spent and a couple months working that sucker to the bone, I folded it and moved on to something else based on actual evidence that customers WANTED it and were more than willing to pay for it. Within a couple months I was back up to a solid and growing 5 figure monthly income.

Here's the moral of the story:

Do not be seduced by strategy - membership or otherwise.

Focus on your underlying business model as well as providing what your customers want. If the strategy matches these things then move forward. If not, pass and don't think twice.

You'll be glad you did.

Best regards,
Ken

[LB]

I think that ridiculously high churn rates are a problem especially in the IM niche with many customers joining for only one or two months and then leaving. In many cases it would be more profitable to simply sell a one-time product rather than try for membership income. This is especially true if you are a beginner and may not have competitive content to offer each month.

On that same note, if you create a truly "sticky" site that people "can't live without" they will be happy to pay monthly for it.

Keep in mind that in the "real" non-IM world, membership fees are typically substantially lower.

It kills me to see a lot of beginners charging $97 per month for a site and then two months later it's closed.

[JasonParker]

I get what you're saying... and I know there's always some #1 strategy buzzing throughout the IM world. I actually believe it IS best though, having watched a friend rake in 6 figures per month with his newsletter for a while. It takes no more energy to write a newsletter for 100 people than it does 10,000.

[Alminc]

Excellent post Ken.

I would just add here that those who romantically picture the membership model as the magical solution for lasting recurring income are most often those who sell membership scripts and plugins. They try to introduce the software itself as the magical, powerful income producing machine that you just need to install and presto - recurring income is born...while the software is actually just a tool as any html editor and will never produce one single dollar without the investment of tremendous human efforts in content creation, marketing and entertaining.

[Debbie Songster]

You are absolutely correct.

• Its not easy
• People don't want to keep paying
• If there isn't something new in there each time a person logs on its like they aren't getting their money's worth --and I mean EACH time a person logs on.
• There is always some new gimmick or technique that lures them away
• Its NOT a business model

All your points are dead on - I just felt the need to post them again.

As for the guy who writes a newsletter - thats different. If its a typical newsletter you are delivering it to Them - they get it, read it, end of story til the next issue.
With a membership site they are "coming to your house" - the expectation is different.

Besides I think there have been so many "membership sites" that have disappointed people that the expectation is greater now.

Personally I have belonged to many that were never upgraded each month even though the owners would leave messages that "new stuff is coming soon". Some I paid a lot of money each month to belong to.

A couple are with some really big name in the industry.

The bottom line, its a lot of work and I dont' think people realize that before they create one.

End of my rant

[Kyle Tully]

Nice post Ken, the key line in that whole post to me is this:

Originally Posted by Ken Preuss

3) A membership model is NOT a business model

I've seen it time and time again where someone thinks all they need is the perfect membership model and they'll magically succeed despite not thinking about any of the other factors involved in their business.

While I admit I'm a little biased (notice my sig link ) and do think, when done right, membership sites are a very effective model, there is definitely a certain naivety in regards to what it takes to create a successful site -- but then that makes it no different to every other model out there.

[Junaid Gamieldien]

I'm sure that it really is market specific. For example, who would subscribe to a "How To Get Your Ex Back" membership site?

But I suspect that the price point would be market specific too and is a big determinant in the potential success of a membership site.

I suspect that in some niches it would probably be easier to reach 1000 subscribers at $10 per month using a $5-$10 front-end funnel than it would to get 500 at $20 per month using a more expensive (or even the same) front end.

Just thinking out loud...

[Careygee]

Originally Posted by Debbie Songster

You are absolutely correct.

• Its not easy
• People don't want to keep paying
• If there isn't something new in there each time a person logs on its like they aren't getting their money's worth --and I mean EACH time a person logs on.
• There is always some new gimmick or technique that lures them away
• Its NOT a business model

All your points are dead on - I just felt the need to post them again.

As for the guy who writes a newsletter - thats different. If its a typical newsletter you are delivering it to Them - they get it, read it, end of story til the next issue.
With a membership site they are "coming to your house" - the expectation is different.

Besides I think there have been so many "membership sites" that have disappointed people that the expectation is greater now.

Personally I have belonged to many that were never upgraded each month even though the owners would leave messages that "new stuff is coming soon". Some I paid a lot of money each month to belong to.

A couple are with some really big name in the industry.

The bottom line, its a lot of work and I dont' think people realize that before they create one.

End of my rant

Yes, this thread is pretty well dead on.
I started one in 2006 and found out much of the above.

The main point is above (In Red) and it pertains to the biggest problem
that is not pointed out. In 2006 I found that out.

I am now working on a site which I started in Feb of 2008 and
I need a few more things done to be qualified to be able to
launch and call it a true quality site and apply most of the above
comments to the site's structure to be fair to customers and to
stand the test of time.
Over 8 months and counting.

[Kyle Tully]

It's only a lot of work if you set it up to be such. And members only expect what they sign up for

In fact, a huge mistake newbies make is investing huge amounts of time doing all the work of setting up a full-blown site without first proving the site will actually sell.

They model other sites (without any real idea if that site is actually profitable) and keep churning out masses of content thinking that is what keeps people interested. It's not, or at least it's only a small part of it.

Like any model there are tips and tricks to learn that make it so much easier than most people believe.

And like most things it's a matter of perception and beliefs.

[John S. Rhodes]

There are many different types and flavors of membership models:

* restricted access to special content
* autoresponder memberships
* 1-time fee memberships
* secure forum memberships

I could generate a fairly large list of memberships. My point is that
you might be throwing the baby out with the bathwater. Before I
go on, I want to agree with you:

* memberships can take a lot of work -- but not ALL of them do
* memberships face attrition -- but it's often a slow decline over time
* memberships are not business models -- but they are part of models

Let's really investigate one big issue: attrition. If you have a membership
that only requires a 1-time fee then there is no attrition. Sure, there
might be refunds, but you don't exactly face attrition. You can make
a lot of money from these memberships and they can be low work.
They can also be used to deliver a ton of value. Everyone wins.

You're making some outstanding points but you're also making it
seem like memberships are evil. They can be wonderful. They can
be relatively low work, especially in relation to the ROI.

~ John

[Frank Donovan]

I broadly agree with the substance of the OP, but I think Kyle makes an excellent point:

Originally Posted by Kyle Tully

It's only a lot of work if you set it up to be such. And members only expect what they sign up for.

Many successful membership sites merely provide a weekly or monthly newsletter - you only need to be setting up massive content, forums etc. if that is what you've led your prospective members to expect.

But, yes. Some of the claims being made in the big launches are a bit OTT.


Frank

[Debbie Songster]

Ken started this with

'Tis that time of year when someone comes out with a major launch relating to the "best IM strategy in existence": making continuity income through membership sites.

Continuity income through memberships

John you bring up some good points on the types of memberships but a couple of those are not continuity programs. If there is no monthly fee then the attrition rate is going to be extremely low if at all.

Carygee - I can identify with you. I know how much work has gone into mine.

And yes Kyle - a membership site is just like any other business venture. You need to see if there is a market for it before investing time and money.

I'm sure numerous people have started membership sites thinking its going to be a walk in the park and the current sales climate is trying to make membership sites look as easy as writing an article.

I would bet money that the vast majority of people who started one didn't have a clue how much was involved until they were knee deep in the project and felt obligated to continue.

I'm close enough to Vegas - where do I place my wager - I'd probably win this one

[OnlineMasterMind]

Did you read his disclaimer at the bottom?

[Amy Bass]

I can tell you that the membership site I am running (see my signature) is FAR from being a passive or easy income.

My members expect a lot out of me and I spend several hours a day making sure I over-deliver. So I totally agree with you when you say it is not easy.

However, I do need to say... It is one of the most fulfilling projects I have ever embarked on. I get a lot of joy and satisfaction being able to get to know and work one on one with so many awesome people.

[AndrewCavanagh]

Originally Posted by JasonParker

I get what you're saying... and I know there's always some #1 strategy buzzing throughout the IM world. I actually believe it IS best though, having watched a friend rake in 6 figures per month with his newsletter for a while. It takes no more energy to write a newsletter for 100 people than it does 10,000.

In the same way that it takes no more work to sell 10,000 copies of an information product than it does to sell 100 copies of an information product.

You really do have to ask yourself the question: Would it be simpler just to sell a series of related information products rather than creating a paid membership site?

The work load is similar.




There is a TON of work in running a successful membership site and the attrition rate on some membership sites can be exceptionally high.

Most people think that the majority of members they recruit will stay in as paying membes and in most membership sites it's the opposite.

With a great membership site you might lose 10% to 25%+ of your paid members each month.

Do the maths on that and you'll realize how much constant promotion you have to do to maintain your income.

What hasn't been mentioned in this post though is that there are many other ways to monetize a membership site.

The membership site fees is just one of them and in many cases is not the largest income for a membership site owner.

Kindest regards,
Andrew Cavanagh

[ragnartm]

Just thought I'd bring up the point that one of the Membership Income Model launches is all about making others do the work for you, jv with someone set up the site and have them do all the information it also mentions the attrition rate, saying 20% falloff per month is to be expected or something like that.. One of the things I noticed is that he makes it sound easy to get them to do the work for you and still get only 50% or at all, also I don't remember him saying anything about the massive effort needed to promote it.

I know a few people that have successful membership sites, and the ones that haven't outsourced support etc, are saying that yes it is a giant time eater, however if you manage to outsource most of the on site work for a reasonable price, having a membership site is a good moneymaker(or so they say). However some of them believe in simply using the membership model as a way to build their list virally with a product of theirs, as well as a place to set up OTOs. All of these sites are IM related though, don't know anyone that owns a non IM related membership site I think.

[Ernie Lonardo]

Ken you have made some excellent points, and yes they probably not as easy as some make them out to be.

But the bottom line is $$$.

And it just makes smart business sense to run a membership site because, you are going to make more $$ in the long run.

Here is a pretty simple scenario but, surely it will highlight the point I'm trying to make:

"You can either sell a $20 report OR sell a $20/month membership site. The person is most likely to stay on for 3 months, so that's $60 VS $20 from that 1 person.

However I know there are many variables...and it's not a cut clean case...

[Duff]

IMO setting up a membership site from scratch is hard work and i certainly found it harder than simply selling a $27 ebook. You have to make sure you have rabid buyers that won't think twice about paying $20, $50, $100 per month and as Amy said you have to provide massive value to make them stick around.

I do have plans on setting up another membership site in a different niche but i think I'm going to do it differently. I will take one of my sites that is already profitable selling a front end ebook and then merge the membership site into the funnel and offer it as a back end offer or upsell to the ebook. Firstly though i will email my customer list and give them the opportunity to get a discount lifetime rate and gauge their response as to whether a membership model will hold up in this market.

If so i will then roll it out to new customer. If it works great, if it doesn't well i still have a profitable site simply selling non recurring products.

[Lance K]

Originally Posted by John S. Rhodes

* autoresponder memberships

John, was it necessary to include that link in the list to get your point across?

[Frank Bruno]

One thing that you should realize is that the continuity business model is not only based on "membership" sites.

Continuity can be integrated in just about any business model not just membership sites.

Example

• You can have continuity program built into AWeber autoresponder delivering consistent content.
• You can have a continuity program built into a CD or DVD of the month club
• Continuity in a coaching program

I've ran membership sites off and on for years and I can tell you they can be quite lucrative if you're in the right market.

But when there is a big product launch with all the glamour of membership sites, it's merely offering sex appeal to naïve marketers.

Frank Bruno

[Debbie Songster]

Just thought I'd bring up the point that one of the Membership Income Model launches is all about making others do the work for you, jv with someone set up the site and have them do all the information

I'd like to address the quote above.

I JV'd with someone on a membership site recently. It consisted of a paid forum. The arrangement was as follows.
I build it and look after the tech support and she (because of her expertise on the subject) answered the questions and "entertained" the subscribers. We split 50/50

None of this was difficult - she was answering the same questions through individual emails previous to the membership site.

After 2 months of doing this and having quite a few subscribers with more joining all the time - she decides its too much for her and quits.

Here's the part that sucks - I've done my job. I built the site and did tech support with the current members. The bulk of the project in the beginning was my job so when she decided she didn't want to do it anymore guess who was out all that hard work??
Yup - Me!
What did I learn? Plenty.
The next one I do will have a payout clause. If someone flakes on me again like that they will owe me the price of constructing the site.

I've done plenty of partnerships like that (mostly with ecommerce stores) - most work out ok but on the membership sites, people just don't realize how much work is involved.
The sad part about that case was her membership site was an easy money maker and she threw it all away.

[Tsnyder]

Originally Posted by marcanthony

I couldn't agree more.

Here's my take...

I think that the whole continuity program wave is just another sign of the times. Now I'm not suggesting that these types of programs are anything new. But in the IM world, continuity programs have been getting more attention lately.

This is has been the cycle:

1. Popular marketer does a video telling us how they have a program that is going to change our lives.
2. In the video they brag about how their system has already helped others and that it's the very same system that they personally use.
3. They call their other popular marketing buddies to JV with them.
4. We start to receive multiple emails that have 95% of the exact same content. The other 5% of the email is a bonus product that normally sales for hundreds of dollars any other time.
5. After a week of watching promo videos and getting emails, the product is launched.
6. Now it's time for 50,000 people to fight for 500 available spots.
7. After the 500 spots are filled the doors close.
8. Then miraculously the doors re-open and a few hundred more spots are then filled.

This exact same process is then copied and pasted by 10 other marketers each of which will do the exact same thing 2 or 3 times in the same year.

This happens over and over again each year. The same exact program is delivered with a new facade and slightly new material. The improvements are comparable to the enhancements made from Madden 07' to Madden 08'.

It's such monotonous cycle. Although, some memberships are better than others. Like porn memberships... I've never been unsatisfied with any of those.

Overall, it's a very smart and effective way to do business if done properly.

But that's just my take...

Marc...

You forgot one very important step between product launch
filling the 500 seats...

The server crashes and a flurry of frantic emails go out
whipping the theretofore non clickers into a frenzy... lol

Tsnyder

[GlenH]

Totally 1000% spot on..Marc and Tsnyder.

I seem to remember about a year ago there was also a bunch of products released about the membership site model.

And the same thing back in 2006.
.
--Glen

[AndrewCavanagh]

Originally Posted by Ernie Lonardo

"You can either sell a $20 report OR sell a $20/month membership site. The person is most likely to stay on for 3 months, so that's $60 VS $20 from that 1 person.

Assuming "The person is most likely to stay on for 3 months" is the biggest mistake people make.

They will in some exceptional membership sites.

But in the average membership site you should probably expect that half the people who sign up won't stay past the first month.

You really have to work your arse off to create a membership site where people will stay longer than that.

Kindest regards,
Andrew Cavanagh

[AndrewCavanagh]

Originally Posted by marcanthony

I couldn't agree more.

Here's my take...

I think that the whole continuity program wave is just another sign of the times. Now I'm not suggesting that these types of programs are anything new. But in the IM world, continuity programs have been getting more attention lately.

You're so right when you say continuity programs aren't new.

I have book club ads with $1 book offers and even book sets with fancy bookcase for $1 going back decades.

And online continuity is not new either...think of one of the biggest money earners online...porn sites.

But it is a model internet marketers seem to be experimenting more with these days.

The idea that a membership site is "set and forget" is stupid and misleading in my opinion.

You're going to have to work really hard to provide value to members and you'll also have to work really hard to get as steady supply of new members just to replace the ones who don't renew.

It's just another form of marketing that suits some niches and lists perfectly and others not so well.

Kindest regards,
Andrew Cavanagh

[Chris Lockwood]

Some interesting comments in here... I'm going to be on a panel on this topic at a conference in about 2 hours.

Of course membership sites involve work. Does anyone really think otherwise? But you the site owner do not have to do all the work yourself.

I know people who own sites that make 5 figures a month who spend very little time on the sites (at least on the content side) since they outsource almost all the content creation.

A site doesn't have to involve any more work than you want it to. It doesn't have to be a full-time job.

And yes, of course, all members don't stay forever and you need to keep marketing if you want to keep a constant level of members.

How is either of those different from other ways of making money online?

Show me the methods that make money with no work involved and don't require you to keep marketing to keep the income flowing.

I don't think making a set amount (say $10,000) per month from a membership site needs to involve any more work than it does to make the same amount another way.

If you sell $20 products, you need to sell 500 every month to hit that target. That takes work and requires you to keep marketing every month.

How many of the people who buy your product this month will buy another next month (as they do with a membership site)? Probably not many.

Even if the average member only stays 3 months... how many people have a business where their average customer buys 3 products? Not a few customers, but the average customer? Very few, I'm sure.

So how again is it that membership sites are such a bad model?

[Ken Preuss]

Hey all,

Some really great comments in this thread.

I won't have time until later to post more, but it's fascinating how some have chosen to construe my original post as saying that "membership sites are bad" or that "membership is a bad model."

On the contrary - membership can be an amazing model and one of THE most lucrative in existence...

If and only if:

1) Your membership model is congruent with existing customer behaviors within your niche - hardly anyone has hit on this from my OP - it is vital

2) Your membership site provides what the customer actually wants and is willing to pay for

3) Your membership site delivers perceived value equal or greater to what the customers have agreed to pay monthly/quarterly/yearly/etc. - if there's one thing I've learned in this business, perception IS reality

And finally

4) You, the membership site owner, are prepared to work much harder than you realize - YES, even if you are using other content contributors as I've had plenty of experience with that too

More later as I want to address some of the specific things brought up in this thread.

Chow for now,
Ken

[dv8]

Originally Posted by Ken Preuss

2) The attrition rate with most membership sites is high

This is a biggie and is rarely if ever discussed on a sales page nor highlighted enough in the training materials themselves.

The attrition rate - the rate at which customers cancel or fall out of the membership - is quite high with most membership sites. Why is this?

Well, truth is there are a ton of factors. Maybe the content wasn't good enough in their view, maybe there wasn't enough interaction, maybe the membership itself is not at all consistent with the premise under which they purchased in the first place.

Whatever the case, the idea that "you never have to look for more customers" in a membership model is complete and utter bunk.

On the contrary, to maintain a consistent and thriving income you ALWAYS need to be attracting new customers. That's because your existing customers will be dropping out at a much higher rate that you may think.

Sure, there are things you can do to offset this attrition and good courses will always cover this.

However the fundamental element of human nature will always be present - so regardless of what you do a certain attrition rate WILL exist. There's no getting around it.

I'm sure you are referring to a certain "guru" who just had a launch with his continuity program.

He goes over the attrition rate issue. While I don't remember if he said "you won't have to ever look for new customers again", he did mention the issue of losing members and how to gain new ones.

The key thing I think you, and others, are forgetting is the front end product. If you are CONSISTENTLY selling a front end product, you then put the buyers into a forced continuity program. Which is a whole other topic.

But, that is how you get new members without "looking for them". They become members because they bought a product from you. They bought that product because they found your site via SEO, AdWords, banner ad, etc. It's not like you tried to get them strictly for your membership site.

[pjs]

Originally Posted by John S. Rhodes

You're making some outstanding points but you're also making it
seem like memberships are evil. They can be wonderful. They can
be relatively low work, especially in relation to the ROI.

~ John

Good point. I own a membership service and there was a lot of work up front but I built it with "automated" in mind so now most of my work for the service is the marketing for it.

[chris_surfrider]

I have found that promoting subscription-based utilities, rather than coaching/educational courses, has had a better residual effect.

Things like hosting, exclusive scripts or tools, autoresponders, and so on - where the user is at a serious and actual disadvantage without them.

Attrition is far lower in that case - because the value remains continuous and in many cases the value and dependability will only increase with time, as with autoresponders, hosting, etc.

But like Ken was saying, you should ONLY EVER build a membership site if you already see that model alive and kicking in your niche. It's just too much work to set up on a hunch, regardless of what big shot marketer may tell you...

Here's another point to consider:

Honest to God, one of the "biggest" moneymakers in other niches where continuity is used is when the monthly fees are small enough that the user just doesn't care.

If your monthly rebill is only $4.95 or something, some customers would actually find it to be too much effort to cancel than it would to just "wait" or "do it later".

This is why you see so many "tag on" offers with a low rebill option attached to many mainstream mass-appeal offers.

Because it's basically an excuse to easily pull down a consistent monthly income with little maintenance and much lower attrition than usual.

Just something to consider...

-Chris

[PPC-Coach]

As someone who has run a fairly large and successful membership site for over a year now, I totally agree with the OP. These sites are not set and forget projects. You either have to really be motivated to help your members everyday or you need to outsource the work to someone skilled enough to handle it.

Those programs that promote membership sites as easy, hands off ways to make money with 2 minutes of work are very deceiving.

[dv8]

Originally Posted by chris_surfrider

Here's another point to consider:

Honest to God, one of the "biggest" moneymakers in other niches where continuity is used is when the monthly fees are small enough that the user just doesn't care.

If your monthly rebill is only $4.95 or something, some customers would actually find it to be too much effort to cancel than it would to just "wait" or "do it later".

This is why you see so many "tag on" offers with a low rebill option attached to many mainstream mass-appeal offers.

Because it's basically an excuse to easily pull down a consistent monthly income with little maintenance and much lower attrition than usual.

Just something to consider...

-Chris

I forget where I heard it, but I heard of a site some guy had that was only $5 a month. He had over 6,000 members. Over 2,000 of them haven't logged into the site in over 2 years.

So this guy is making between $30-$40K every month and a good portion of his members don't even use the site.

His membership fee is so cheap that, as you said, people don't feel like going through the effort to cancel.

[Chris Lockwood]

Originally Posted by dv8

I forget where I heard it, but I heard of a site some guy had that was only $5 a month. He had over 6,000 members. Over 2,000 of them haven't logged into the site in over 2 years.

Just because $5 is too cheap to cancel doesn't mean it's the optimal price. What if he charged $10? Or $15?


Going back to the original post, I can't agree with the conclusion that real estate investors won't pay for a membership just because one person couldn't figure out how to make that work. Anything that people can make money from could be used as a topic for a membership site, but you have to be able to deliver what they are willing to pay for.

Just because free content is available doesn't mean the topic is a bad one. Look how much free info there is about Internet marketing. I guess nobody would pay to join a site about that, eh?

[Ernie Lonardo]

Chris (Lockwood), I completely agree with everything you've said in this thread.

Memberships are no more work than any other type of product, the only difference is, you get multiple payments each month instead of a once off payment.

I think if people spent more timing focusing on marketing the one membership site, instead of hopping from product to product, they would be better off.

[dv8]

Originally Posted by Chris Lockwood

Just because $5 is too cheap to cancel doesn't mean it's the optimal price. What if he charged $10? Or $15?

I NEVER said it was the optimal price.

[Ken Preuss]

Originally Posted by Chris Lockwood

Going back to the original post, I can't agree with the conclusion that real estate investors won't pay for a membership just because one person couldn't figure out how to make that work. Anything that people can make money from could be used as a topic for a membership site, but you have to be able to deliver what they are willing to pay for.

Just because free content is available doesn't mean the topic is a bad one. Look how much free info there is about Internet marketing. I guess nobody would pay to join a site about that, eh?

Chris,

I understand what you're saying but you're missing the point completely.

Just because a membership site CAN be built for a certain niche does not mean their existing behavior is congruent with wanting to pay for one.

How about this - go into the RE investor market right now and offer a membership site the way most of the courses teach (with articles, forum, etc.)....let me know how it goes my friend.

I would also add this. The nature of the membership site makes a big difference too.

Having been in that competitive market (real estate) for some time and doing very well in it, I can tell you that the type of membership these folks will pay for is one that is far more exclusive and, ironically enough, much higher priced.

Please don't misconstrue my OP. The lesson is is not that membership models don't work or that they don't work for certain industries....the lesson is to not be seduced into thinking they automatically will.

Best regards,
Ken

[jbsmith]

True enough Junaid, but there certainly could be a market for a Monthly Relationship Advice type continuity with a focus to getting someone back or seducing someone new.

In most markets there is a continuity model that works, challenge is to find out what it is and link your knowledge to that opportunity.

In my case, I have seen many more successful membership sites built by people who are already selling products and services into that market and determine from customer demand, the desire behind a continuity offer.

In my own case, I sold information products and delivered personal coaching for almost 4-years before seeing a clear opportunity for continuity - it was a no-miss because my customer base had been asking for it for years.

Jeff

Originally Posted by Junaid Gamieldien

I'm sure that it really is market specific. For example, who would subscribe to a "How To Get Your Ex Back" membership site?

But I suspect that the price point would be market specific too and is a big determinant in the potential success of a membership site.

I suspect that in some niches it would probably be easier to reach 1000 subscribers at $10 per month using a $5-$10 front-end funnel than it would to get 500 at $20 per month using a more expensive (or even the same) front end.

Just thinking out loud...

[talfighel]

Originally Posted by Ernie Lonardo

Ken you have made some excellent points, and yes they probably not as easy as some make them out to be.

But the bottom line is $$$.

And it just makes smart business sense to run a membership site because, you are going to make more $$ in the long run.

Here is a pretty simple scenario but, surely it will highlight the point I'm trying to make:

"You can either sell a $20 report OR sell a $20/month membership site. The person is most likely to stay on for 3 months, so that's $60 VS $20 from that 1 person.

However I know there are many variables...and it's not a cut clean case...

Ernie is totally right. You can have a person cancel after 3 months and you still made that extra $40.

Tal

[jbsmith]

Ken is 100% correct - I've coached numerous clients that have 1) started membership sites with opportunity mentality without knowing their market well and therefore, fail miserably and 2) clients who built their business first, then identified an opportunity for continuity and ran with it - they (by and large) operate 6-figure + continuity programs.

Jeff

[jbsmith]

That's a very short-sighted view of this business.

A better approach would be to sell the $20 Report, move 20-30% of the most serious customers into a higher-end training package - say for $97-$597 depending on your topic, knowledge level and market.

Then, move a large majority of them into a continuity program that will help them achieve their end goals - could be a coaching club, membership site, monthly newsletter, etc...

Understand that in any market there will be lots of tire kickers that will buy the $20 report, but there will be a sweet spot of 20-30% that are really passionate, serious customers who should be turning into 1yr to lifetime customers.

With a one-time sale of $20 report or membership site that keeps them for 3-months, you miss out on the monetization of the biggest opportunity within your marketplace.

Another quick point - in any given market, there are customers that would rather pay $397 for a home study course than to pay $27/month for the same information - it's just reality, so it's good to offer a range of higher-end options.

Originally Posted by talfighel

Ernie is totally right. You can have a person cancel after 3 months and you still made that extra $40.

Tal

[Ernie Lonardo]

Jeff you raise a good point, but there isn't any reason why you cant have a membership site, and also sell a high end product $397 course to them.

In fact Jimmy D Brown does it with his $10 listandtraffic membership site and it makes sense.

Get a whole bunch of members in your funell at $10/month and let them get a feel for your content and then sell the high end product to those paying members.

[Kyle Tully]

Originally Posted by BlogBrowser

Conclusion: membership sites can be good money makers but they're also tons of work to keep up with.

Conclusion: membership sites can be good money makers and the way your friend set his up made it tons of work to keep up with.

[David_Thompson]

This is by far one of the best threads of the week...I'm all smiles...LOL

Absolutely awesome insights coming thru, keep them coming guys...

--David

[obiswill]

1. Memberships sites are a great way to build a consistent income online
2. You have to build a site offering different/better information than what is freely available
3. Membership sites (the truly successfully ones) takes hard work and long hours because nobody wants to pay for free information.
4. If your membership site is really good...few will know and want to share. hahaha!
5. If your memberhip site is crap, everyone will know quickly and drop you and tell everyone it's crap.

I got this from polling members of my membership site. The funniest reply: 'Why would I tell my competitors things they don't know to compete with me?'

lol! That made my day.

[quiescen]

Hello everyone,

I run a membership site that teaches ... get ready for this - New Age piano lessons. And it's pretty successful.

Been doing it for over 6 years now and have over 100 lessons and growing. The reason it's successful is because I offer something nobody else does. It's very specific, the information is one of a kind and this is exactly what you need to succeed with membership sites.

When I first started this site, I charged $6.95 a month for access. But now that I have over 100 lessons I charge $19.97 a month.

The offer I have is an amazing one as well to get them inside. I offer total access to the site for a full month for just $1 dollar which also includes a free workbook and other bonuses.

Of course, you can't have a membership site without long term subscribers. I've had people stay with me for over 4 years. Yes, you heard it right.

So, what are they really buying when they sign up for this course? They're buying MY expertise - which they can find no where else.

My site is at quiescencemusic.com Notice that there's no long sales letter. Just a sample lesson. If they like the lesson and want more, I offer attractive terms to get them in. And then the fun really begins.

And by the way, I only add new lessons every 3-4 weeks and this is very easy to do.

----------------------------------
Edward Weiss
quiescencemusic.com

[jbsmith]

Hi Edward - good example, any market where there is an ongoing support, service, lessons, tutoring, consulting, ongoing development of content or tools makes a great opportunity for a membership site.

In my case I had an info product business with a high-end 1:1 consulting program, the people who wanted ongoing information and support in the middle (without paying for customized help) were left out - that's where the membership site comes in.

Jeff

[JJ-Undercover]

I agree with David... great thread here.

[Melody]

Ken - did you ever try running the site as a FREE site with other ways to monetize? I ask because I just sold one of my community/membership sites - with a member list of about 4500 - for $35k because it was generating a nice steady hands off Adsense/CPA income. And seriously - it was about as hands off as you could get - I sold it to free up some capital for another project, but in the beginning I did the usual things to get it ranked for key terms, and when I learned early on that this was a freebie, not a buying crowd - I threw the doors open and found other ways to make some money on the traffic.

I have now followed the model in 4 other niches....and it does seem to work where you have a group that want to pick each other's brains - but don't want to pay for the privilege of doing so!

This also works in any niche where people gather to gripe, moan, groan or complain in general about an issue, problem etc. I use an opensource community script (Dolphin is good) so they have the community features if they want them.....add a few articles, and then let them create content through posts etc

In a fairly short period of time, you can usually get the revenue up to a couple of grand a month, and since it really takes minimal time to set up - you can do as many as you can think of ;-)

Wash, rinse and repeat!

[David_Thompson]

This thread his so much info the newbies might get info overload...lol

Something kind hit me while reading this is the fact no one talks about
the traffic or how the membership site owner position his membership site
to the starving crowd?

We did all the market research and found out what they want, develop
the content so what's next?

Finding the starving market and create the content for them is only half
the battle but it is a big part but how do position it in front the on coming
traffic?

To me this seems to be one if not the biggest problems with most websites
what you guys think and how to solve this?

--David

[Richard Daniels]

The time spent on running a membership site depends on a number of things - but much of the work can be managed by outsourcing.

1. We run 3 membership sites and all the content is written by experts. We tell them what we want them to create content about, buy exclusive rights to that content and add it to the membership site. We can then concentrate on the marketing.
2. We then take the same content from the membership site and create a newsletter/ magazine and sell subscriptions to those people who do not want to join the membership site. Some people prefer monthly newsletters, either emailed or sent by direct mail.

Same content, different format and delivery.