Fixed-Term vs Perpetual Membership Business Model?

12 replies
I'm planning on starting a membership site soon because I'm sick of continuously having to sell to get people to pay me. I'd much rather add all the value I can into one place (a membership site or endless autoresponder series) than worry about where December's money is coming from.

Other guys out there running their own businesses will know what I mean. Even if you're an affiliate, depending on the products you promote, December and January can be quiet months as people spend their money on gifts instead of Clickbank

So I've already decided the next step is to create a monthly income - that's decided and I'm not changing my mind - but now I've just read about fixed-term memberships (Membernaire) and I'm wondering which model is better? A fixed-term membership of, say, 12 months or an endless subscription?

All-else being equal (monthly pricing, etc) I'm inclined to go for the endless subscription but I realise that there's such a thing as subscription drop-off and people might well cancel after 3-4 months. Where fixed-term seems to come in to fix that is that, if you know you're on a 12-month course, and you're already 3 months in, you might justify to yourself to stick it out for the rest of the course because there's an actual end in sight.

With a never-ending subscription, that's not necessarily the case.

One way to fix this could be to automatically "upgrade" or "graduate" your students to the next "course" at the end of each 12 months. So it's still a 12-month course with an end in sight, but the billing model is monthly until canceled. And, perhaps, if they cancel, and re-subscribe later, they have to start at the beginning. That could work - what do you think? What other ideas can you come up with?
#business #fixedterm #membership #model #perpetual
  • Profile picture of the author wfhblueprints
    Hi,

    It depends entirely on the niche.

    Somethings have to be of a fixed nature....depending on the course content, whilst others are more suited to long term continuity.

    If you go fixed term at the end of the term offer them an irresistible offer to go on your next course....if you offer insane value the uptake should be excellent.

    With long term continuity you need to ensure you offer enough to make them stick around......if its crap they will leave

    The best way to stop people from leaving is making sure you have a plan to improving your stick rate.....good content, letting them know what is coming, unannounced bonuses are all good ways of ensuring they stick....

    Hope this helps

    Chris
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  • Profile picture of the author noriodesousa
    Thanks Chris

    I currently offer a website service where you pay once-off for the whole year so I was thinking of offering that but on a monthly subscription basis (like hosting - except that I want to sell the website as a "bonus" for signing up for the marketing material subscription).

    This way, I'm hoping to lock them in because they'll need their website. Thoughts?
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    • Profile picture of the author wfhblueprints
      Originally Posted by noriodesousa View Post

      Thanks Chris

      I currently offer a website service where you pay once-off for the whole year so I was thinking of offering that but on a monthly subscription basis (like hosting - except that I want to sell the website as a "bonus" for signing up for the marketing material subscription).

      This way, I'm hoping to lock them in because they'll need their website. Thoughts?
      Work backwards.....

      What do your customers need?

      If its the website they need sell them that upfront.....

      And then offer them the marketing material as an upsell on a continuity program.

      Remember its the customers that will dictate what you sell....

      Giving the website as a bonus of the marketing material might put off a whole load of people...

      The other way you sell the website......(Make the offer irresistible) and make the upsell on continuity......which increases your bottom line and provides value for the customer... Win Win

      Hope that makes sense.

      Chris
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  • Profile picture of the author mvirtual
    It is hard to keep members on your membership site longer then three to four months. You can do it if you offer them really good content. Even when they get great content most of the subscribers will cancel their membership within one year or less. It is good idea to setup fixed term membership for example six months and give tem excellent content. That way you can create content at once and you don't have to update your membership site every month for only few members that stick with your membership.
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    • Profile picture of the author wfhblueprints
      Originally Posted by mvirtual View Post

      It is hard to keep members on your membership site longer then three to four months. You can do it if you offer them really good content. Even when they get great content most of the subscribers will cancel their membership within one year or less. It is good idea to setup fixed term membership for example six months and give tem excellent content. That way you can create content at once and you don't have to update your membership site every month for only few members that stick with your membership.
      I know people who manage to retain loyal customers for YEARS....

      It's all in how you approach your business.....and how you treat your customers!

      Regards

      Chris
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  • Profile picture of the author noriodesousa
    Thanks Chris, great advice

    I fully intend on lathering my clients up with value. (Gosh that's gross but it's descriptive too )

    What you spoke about... regarding selling them the website and then up-selling the marketing subscription makes sense and ties in with another idea I had.

    Basically the idea was to "finance" their website so instead of paying a large lump-sum upfront, they can pay a monthly fee. It gives me a nice annuity income for 12 or so months and, if I upsell them the marketing, it doesn't die after 12 months, it just gets a little less.

    Of course I would outsource the website creation to make it really profitable.

    Thanks for the advice! Very much appreciated.
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  • Profile picture of the author Tricerra
    Fixed term memberships work best when you are teaching a course of information to your subscribers. If you were going to teach say SEO you could plan it out over 12 weeks sell the membership and then offer lifetime or yearly access for a much lower fee when the class was over. In this manner you will gather a few extra dollars and still have input from old students to the new students. Your old students would get a yearly or quarterly update to keep them interested and you spend time bringing in new students for the 12 week course.

    Information sites that work with constantly changing ideas or fields offer a great way to have ongoing memberships. Sites that offer PLR, recipes, specific marketing ideas for the month, lesson plans for teachers all do well at holding on to members for a long time. You really have to plan who your market is and what you are going to provide them.

    David
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  • Profile picture of the author noriodesousa
    Thanks David, some food for thought in your post. Appreciate it.
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  • Profile picture of the author LBspeaks
    Actually, test both.

    In some cases, one solution would be better, and in other cases, other solution.

    You can't really tell which one is more profitable without testing. So test both. The only opinion that counts is that of the market.

    LB
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  • Profile picture of the author noriodesousa
    Very true LB and something Tim Ferriss also talks about in his 4HWW.

    Thanks for the reminder.
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    • Profile picture of the author craigpullman
      Hi, not sure if this is relevant but I used to work in a rental business where long term relationships with our customers was paramount to the survival of the business. Customers were on long term contracts (Fixed term 3 years) to purchase household goods. Yes, it worked out to be more expensive than purchasing the item outright (monthly/fortnightly billing; easier for customers to afford = lower return rate) but to ensure customer retention we had targeted cross sells at certain times during the contract.

      For example; if a customer was renting a 50" Plasma TV then we might offer a product to complement the TV eg: audio system, gaming console or another category of product like a fridge or washer (now got the customer into a different market). The times these offers were made varied but they DID work.

      I had some customers that stayed with the company even after I left (after 9 years!) and they continue to do business with the company today.

      My point is we tried to do whatever we could to keep the customers on our books. Sometimes we offered discounts, free products, free upgrades (at no penalty), rent free periods(up to 3 months) to customers just to keep them. Quite regularly our customers thanked us for rewarding them for being long term customers. (Try getting a discount or rent free period out of your phone or electricity provider!) We even asked "What can we do to keep you as a customer?" Some customers asked for very little and some asked for a lot. But we would not know unless we asked!

      Fixed term works but you need to get the retention offers right. Perpetual will work but you also need some great offers (ask your customers, they will tell you what they want.)

      Hope this helps

      Craig
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  • Profile picture of the author noriodesousa
    Thanks Craig, that's excellent advice!
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