How To Start A Failed Membership Site (Postmortem Case Studies)

by GuruGazette 19 replies
Since the year 2000, I have attempted to start 4 different types of membership sites, and eventually I closed each one for basically the same reasons. I thought it might be nice to write up a postmordem case study of sorts to share some of the lessons I've learned.

Attempt #1: The first attempt was back in 2000, and I had a very high traffic Palm Pilot website. I tried to start a subscription service offering software reviews - with screenshots, actual testing, and so on. At that time the goal was to create an online magazine of sorts. I was trying to stay reasonably close to offline magazine prices though, and that didn't work well at all.

The main problem was: even though the site got over 300,000 visitors each month these were mainly freebie seekers. And I tried to sell a service at $24.95 per year, which had me working my fingers to the bone every day.


Needless to say it didn't last long


Attempt #2: I think this one was around 2004, and I had quite a dedicated following at my Guru Gazette website. I was building websites like crazy and testing a wide variety of quick building tools, scrapers, etc. I decided to launch a private case study area, where I shared actual sites, domain names, niches, techniques, strategies, and so on.


I charged a one time fee (lifetime. BAD move!) for access to this area, and that was one of my mistakes. Everyone who paid to get access loved it, but I quickly discovered the other really big mistake: Too much information. It wasn't long at all before I saw people cloning my sites, scraping them, cloaking them, Google "bowling", hacking, and more.

That's when a nicely lucrative, hands free business basically went down the drain. Needless to say I was quite disgusted and pretty much shut down everything for awhile.

Attempts #3 & #4: About a year and a half ago, I decided I'd try a different tactic. I write prolifically and I enjoy providing useful tools and resources to other marketers instead of teaching, mentoring, or giving basic information. The idea was to help others take action instead of just reading and learning.

So I launched a specialty topic PLR article service. I chose a topic that I have 20 years experience in because it was unique, and it's time is finally coming round. I also felt it was unique enough to generate quite a bit of interest.

I launched it though, with 25 PLR articles per week and a cost of just $20 bucks a month. I was trying to overdeliver (yet again). And to make matters worse, most of the articles I wrote averaged 600-800 words apeice... and these were expert level articles with sources and everything.

That didn't do too badly... I got roughly 50 subscribers. That was only about $1000 a month income though, so I decided to do another PLR membership with less work and a broader market.

That's when the 4th attempt came in. With this one I offered 10 articles per week for $14.95. I thought this was much more reasonable but I still wanted to over deliver, so I made the mistake of adding more work for myself: I also included a monthly photo pack that fit the topic of the articles.

So I found myself not only writing tons of content every week, but I was also going out and buying things to take photos of, and spending multiple days wandering around my town taking photos too.

And even though this was a broader market, I only ended up with about 30 subscribers to it.

So two membership sites earning about $1500-$1600 a month, and I was killing myself keeping up with the content!

After several months of this, I had to make a change. I modified the first membership to only provide 15 articles each week instead of 25, and I raised the price slightly. By this time though, I was really starting to burn out on the topics AND it was still too much work for the amount of money I was receiving.

So the next step of course was to outsource at least some of the work. I quickly discovered though, that I had already set myself up for failure in this regard.

1: In order to get the same level of quality from other writers that I'd been providing, I had to pay them almost the equivalent of what I was earning from the memberships each month

2: Since I had expert level knowledge of the first topic, there weren't any writers around that I could hire who also had that same level of knowledge!

So, the lessons in a nutshell...

1. Manage expectations: Don't start your members out expecting the moon for next to nothing.

2. Manage your overdelivery: Overdelivering is an excellent way to both get and retain members, but you need to limit yourself to overdelivering on their expectations - which you've already helped create.

This is a personal huge issue for me because I take my knowledge and skills for granted, so I haven't been able to bring myself to put a high ticket price on a lot of it. Combined with my desire to "braindump" as much as possible every time, this creates major problems.

3. Plan as sensibly as you can: Even if you have to do all the work yourself in the beginning, make sure you have an out of some kind later. Don't set yourself up for failure when you're ready to outsource and/or expand. If you're not able to find anyone else to provide the same level of content and/or expertise that you can while still keeping things profitable, you're guaranteed to fail.

4. Plan time for marketing: One of the biggest problems with all the work I was doing was that I didn't have time to actually build the membership bases. So I ended up stuck between a rock and a hard spot financially and productively.

5. Automate and streamline everything you can. I like to keep things more personal, so I usually manage my own most important lists. This isn't a major problem but it is more time consuming to deal with bounced email, removals, changes, missed product deliveries and so on.

I also don't believe in letting new members have access to everything ever released at no additional cost. For months though I simply removed the previous content after a certain period of time. Towards the end I started offering archived content at a special price to new members, and this created a little more income. I should have put that strategy into place from the beginning though, and had it more automated too.

I still plan to keep trying with membership sites. I love the recurring income model and I love the awesome potential that can be had with the right offer. I definitely plan to automate more though... Maybe by loading a year's worth of content into AWeber and letting subscribers start at the same point, or maybe by setting up a web based automation and management system.

In any case, there's probably lots of lessons I'm forgetting to mention here, but hopefully this helps someone somewhere
- Kathy
#main internet marketing discussion forum #case #case study #failed #membership #membership sites #postmortem #site #start #studies
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  • Profile picture of the author Brian Cook
    Kathy,

    Thanks for sharing that info. Lots of good advice
    (just wish it was easier to read!)

    Brian
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    • Profile picture of the author GuruGazette
      Originally Posted by Brian Cook View Post

      Kathy,

      Thanks for sharing that info. Lots of good advice
      (just wish it was easier to read!)

      Brian
      Yeah I don't know what's going on with my editor today, all the formatting is screwy and I can't get it to switch from the basic text to the advanced or vice versa (grrrr)
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  • Profile picture of the author Kyle Tully
    If this thread was a membership site I would cancel because I can't consume the content
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  • Profile picture of the author Sarah Harvey
    I guess that is always the major concern of membership sites... you will eventually run through most topics.

    To be honest one person cannot do all that alone- all the time.

    To be frank I think you had the right ideas, you just needed people to help you.

    In my own efforts I find it easy to get a group of people together, start a project etc, but find the hardest part for me is getting traffic.

    I have exceptional abilities myself when it comes to design, organizing events etc, but some things I am just not good on. So lesson- always try and find a partner or two to help you!

    Even if they do not understand the subject as well as you do, you can delegate tasks. After all, you know the subject best.
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    "Find the problem and provide the solution."
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    • Profile picture of the author Michael Oksa
      Thanks Kathy,

      I can relate to a lot of what you are saying. Membership sites are not as easy as most people think, at least not good membership sites. I run a memebership forum, but it is on a topic that is broad and specific at the same time. As far as I can tell, there is no danger of running out of topics.

      I set it up in a way where I deliver a lot of fresh content on a near daily basis, but do not have to invest so much time in doing so that it becomes counter-productive.

      So, how will your membership site #5 be better - for you and your members?

      ~Michael
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      "Ich bin en fuego!"
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      • Profile picture of the author GuruGazette
        Originally Posted by Michael Oksa View Post

        Thanks Kathy,

        I can relate to a lot of what you are saying. Membership sites are not as easy as most people think, at least not good membership sites. I run a memebership forum, but it is on a topic that is broad and specific at the same time. As far as I can tell, there is no danger of running out of topics.

        I set it up in a way where I deliver a lot of fresh content on a near daily basis, but do not have to invest so much time in doing so that it becomes counter-productive.

        So, how will your membership site #5 be better - for you and your members?

        ~Michael
        Haha now that's the million dollar question isn't it?

        I've actually been brainstorming and testing a lot of different things lately. I tried an ecourse setup where I had a year's worth of content preloaded into AWeber for weekly delivery, but it was a complete bust so I'm reworking the content into stand alone stuff.

        I'd love to start something that lets me incorporate my photography and writing together. A weekly featured travel article with photos would be ideal for example, but that brings me back to the problem of "1" as Sarah mentioned. Without having thousands of subscribers, I can't jetset around the world for different exotic locations each week :p

        I've also thought about creating a membership based version of my ADPS software, creating other PLR article sites, creating report and/or product memberships, etc. Haven't yet hit on an excellent combination though so I'm still working on it
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        • Profile picture of the author Kyle Tully
          OK that looks better, can read it now!

          Originally Posted by GuruGazette View Post

          I tried an ecourse setup where I had a year's worth of content preloaded into AWeber for weekly delivery, but it was a complete bust so I'm reworking the content into stand alone stuff.
          You only need 1 weeks worth of content when you launch. No need to do a years worth until you've tested it and proven it will be profitable to do so.

          Originally Posted by GuruGazette View Post

          I've also thought about creating a membership based version of my ADPS software, creating other PLR article sites, creating report and/or product memberships, etc. Haven't yet hit on an excellent combination though so I'm still working on it
          Rather than starting with the product in mind, what about starting with how you want to live your life... decide how much work you want to put in, and what type of work, then work backwards.

          Given how you want to do things, what product can you create that fits that model?
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          • Profile picture of the author GuruGazette
            Originally Posted by Kyle Tully View Post

            OK that looks better, can read it now!



            You only need 1 weeks worth of content when you launch. No need to do a years worth until you've tested it and proven it will be profitable to do so.



            Rather than starting with the product in mind, what about starting with how you want to live your life... decide how much work you want to put in, and what type of work, then work backwards.

            Given how you want to do things, what product can you create that fits that model?
            For some reason my board editor is whacky today. I can't do quick replies and I can't switch between basic/advanced editors either. No clue why >:|

            On the pre-loading: I wanted to be absolutely sure I had enough good content for a full 52 weeks before launching. I started by brainstorming ideas and topics for each. By about the 4th round I finally came up with what I felt was a good mix. From there I created an outline, and that led to me creating essentially a full book style proposal like those authors send to print publishing houses. (I did this to reinforce whether I had a viable plan)

            From there I started making notes on each point, which led to drafting most of the issues. I then polished and enhanced the first few and launched.

            So technically the work wasn't 100% done but I did cover my butt quite nicely first in an attempt to avoid some of the mistakes mentioned above

            On lifestyle: That's actually what has powered the motivations behind my membership site attempts For years I enjoyed a fairly hands free income from residual affiliate income and automated websites. That crashed as I mentioned, and at the same time I moved to a backwater, demotivational, half dead area of the country (I did it for my kids and it worked wonders for them) which has left me working in more isolation for the last 4-5 years than ever before.

            And that's another major motivation for starting membership sites: They stimulate my brain

            I have 800-1000 stock photos listed at a variety of distributer sites online for example, and they generate a small amount of recurring revenue each month. This is a step in the right direction for my lifestyle desires, because I'd love to just spend most of my time taking pictures It doesn't help for motivation and brain stimulation though, because although some of those are membership site models, I do not get direct contact, feedback, suggestions, or otherwise from buyers. I also don't enjoy paying such a large cut of the sales to the distributers, and I don't like being paid on their timeframe terms.

            I also have to take into account what others want to buy of course. So yes my lifestyle desires are part of the mix, as are my skills and knowledge, as is what types of things are being subscribed too most often.
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            • Profile picture of the author Ross Dalangin
              Thanks for sharing your story Kathy. This is very helpful for those who want to start their own membership sites.
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              • Profile picture of the author Joe Coon
                Thank you Kathy for sharing this. I'm am hoping to have
                a membership site so I'll keep this in mind for sure.

                Joe
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                • Profile picture of the author JonnyAndrews
                  This info is pure gold! I'd like to ad another little "twist" to a failed membership situation:

                  Billing software. Not going to name names but I recently discovered a software issue between one of my sites and the merchant account. What this came down to was I had a few hundred members NOT paying subscriptions.

                  That sucked and is something I will never let happen again. Watch your membership management stuff!

                  On your "Over deliver" Point... wow, the revelation about hitting them on their terms rather than yours is massive. I've done the same thing. Had a site a while back where it was all on my shoulders to produce the content, the training... ick.

                  Since then I've learned it's best to find the happy medium. Deliver, over deliver... but make sure it can be farmed out!

                  I think we should keep this thread up as long as possible because with membership sites being all the rage lots of folks could use the info
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                  • Profile picture of the author GuruGazette
                    Excellent feedback and information here everyone, thanks for sharing

                    On the outsourcing stuff: This can't be stressed enough. I was used to "outsourcing" to scripts, and I didn't fully translate that over to "people" outsourcing well enough or early enough. It does make a world of difference!
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            • Profile picture of the author Mark Riddle
              Kathy,

              This is an excellent real world example of why not only membership sites fail, it also shows why "Lone Ranger" business fails.

              You have already proven that you have more than enough skills to deliver you products and skill to get members.

              The next skill (step) is to take yourself out of the production loop and into the leader role.

              When in the leader role, you stop thinking about delivering "products" and value every aspect of the business based on outcomes.

              The fatal flaw that many make is they still think in terms of money for time, money for goods, and money for services.

              When in fact it is about money for outcomes

              Who ever said time is money, were getting paid by the hour.
              At least in their minds.

              Mark
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              Today isn't Yesterday, - Products are everywhere if your eyes are Tuned!
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              • Profile picture of the author David Neale
                Kathy,

                Thanks for taking the time to recount your membership site experiences. I've been trying to get something going with this business model since mid 2006, I even own part of two MemberGate licenses that were purchased with offline partners.

                I have been a member of several very good "how to" membership and e-learning sites but still I've never got something launched that I could actually market.

                So you are well ahead of me and probably most.

                When working with partners with the MemberGate projects the problem was content. My partners were going to provide that and I would handle all of the Internet related work. In both cases the partners failed to produce the content.

                After that I decided no more content partners. The Internet related component I can handle, site setup, development and ecommerce (even without MemberGate my company has developed three private membership sites for others from scratch that generate almost $200,000+ per month) as well as the Internet marketing (I also manage all of the PPC and SEO for these clients) but content stops me cold. Not because I don't know how to produce it but actually finding the time to produce first class content is daunting. I've just never been able to manage my time well enough to get it done.

                Reading your account of your experience was very interesting. It's refreshing to read some fact and truth rather than a thinly disguised sales pitch or marketing drivel.

                My personal view after all of my time and research in this area is that membership sites of the future should best be thought of more in terms of e-learning courses. That the concept is not to think you will have members for years and years but that a member signs up for a fixed amount of time for his e-learning course. From there future courses follow creating a type of membership model.
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                David Neale

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                • Hi Kathy,

                  Thanks for the post. Very incitefull. I think the fundamental problem was your business model. You never found a way to extract yourself from the business to focus on marketing. Perhaps charges too little and didn't offer content in an area that allowed you sufficient range to keep generating new things with ease.

                  Cheers

                  Steve
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                  • Profile picture of the author brian99
                    I think you undervalue your services. I know of membership site's that run as much as 298.00 a month. Was your model to have a thousand members at 24.95 a month? Would it better to have 200 members at say 59.00 or 99.00 a month? Could you then offer a higher level of service and personal attention to your clients? It may be better to have fewer people charge a fair price and give them access to you.

                    just my 2 cents

                    Brian
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  • Profile picture of the author Kim Standerline
    Originally Posted by GuruGazette View Post

    Since the year 2000, I have attempted to start 4 different types of membership sites, and eventually I closed each one for basically the same reasons. I thought it might be nice to write up a postmordem case study of sorts to share some of the lessons I've learned.

    Attempt #1: The first attempt was back in 2000, and I had a very high traffic Palm Pilot website. I tried to start a subscription service offering software reviews - with screenshots, actual testing, and so on. At that time the goal was to create an online magazine of sorts. I was trying to stay reasonably close to offline magazine prices though, and that didn't work well at all.

    The main problem was: even though the site got over 300,000 visitors each month these were mainly freebie seekers. And I tried to sell a service at $24.95 per year, which had me working my fingers to the bone every day.


    Needless to say it didn't last long


    Attempt #2: I think this one was around 2004, and I had quite a dedicated following at my Guru Gazette website. I was building websites like crazy and testing a wide variety of quick building tools, scrapers, etc. I decided to launch a private case study area, where I shared actual sites, domain names, niches, techniques, strategies, and so on.


    I charged a one time fee (lifetime. BAD move!) for access to this area, and that was one of my mistakes. Everyone who paid to get access loved it, but I quickly discovered the other really big mistake: Too much information. It wasn't long at all before I saw people cloning my sites, scraping them, cloaking them, Google "bowling", hacking, and more.

    That's when a nicely lucrative, hands free business basically went down the drain. Needless to say I was quite disgusted and pretty much shut down everything for awhile.

    Attempts #3 & #4: About a year and a half ago, I decided I'd try a different tactic. I write prolifically and I enjoy providing useful tools and resources to other marketers instead of teaching, mentoring, or giving basic information. The idea was to help others take action instead of just reading and learning.

    So I launched a specialty topic PLR article service. I chose a topic that I have 20 years experience in because it was unique, and it's time is finally coming round. I also felt it was unique enough to generate quite a bit of interest.

    I launched it though, with 25 PLR articles per week and a cost of just $20 bucks a month. I was trying to overdeliver (yet again). And to make matters worse, most of the articles I wrote averaged 600-800 words apeice... and these were expert level articles with sources and everything.

    That didn't do too badly... I got roughly 50 subscribers. That was only about $1000 a month income though, so I decided to do another PLR membership with less work and a broader market.

    That's when the 4th attempt came in. With this one I offered 10 articles per week for $14.95. I thought this was much more reasonable but I still wanted to over deliver, so I made the mistake of adding more work for myself: I also included a monthly photo pack that fit the topic of the articles.

    So I found myself not only writing tons of content every week, but I was also going out and buying things to take photos of, and spending multiple days wandering around my town taking photos too.

    And even though this was a broader market, I only ended up with about 30 subscribers to it.

    So two membership sites earning about $1500-$1600 a month, and I was killing myself keeping up with the content!

    After several months of this, I had to make a change. I modified the first membership to only provide 15 articles each week instead of 25, and I raised the price slightly. By this time though, I was really starting to burn out on the topics AND it was still too much work for the amount of money I was receiving.

    So the next step of course was to outsource at least some of the work. I quickly discovered though, that I had already set myself up for failure in this regard.

    1: In order to get the same level of quality from other writers that I'd been providing, I had to pay them almost the equivalent of what I was earning from the memberships each month

    2: Since I had expert level knowledge of the first topic, there weren't any writers around that I could hire who also had that same level of knowledge!

    So, the lessons in a nutshell...

    1. Manage expectations: Don't start your members out expecting the moon for next to nothing.

    2. Manage your overdelivery: Overdelivering is an excellent way to both get and retain members, but you need to limit yourself to overdelivering on their expectations - which you've already helped create.

    This is a personal huge issue for me because I take my knowledge and skills for granted, so I haven't been able to bring myself to put a high ticket price on a lot of it. Combined with my desire to "braindump" as much as possible every time, this creates major problems.

    3. Plan as sensibly as you can: Even if you have to do all the work yourself in the beginning, make sure you have an out of some kind later. Don't set yourself up for failure when you're ready to outsource and/or expand. If you're not able to find anyone else to provide the same level of content and/or expertise that you can while still keeping things profitable, you're guaranteed to fail.

    4. Plan time for marketing: One of the biggest problems with all the work I was doing was that I didn't have time to actually build the membership bases. So I ended up stuck between a rock and a hard spot financially and productively.

    5. Automate and streamline everything you can. I like to keep things more personal, so I usually manage my own most important lists. This isn't a major problem but it is more time consuming to deal with bounced email, removals, changes, missed product deliveries and so on.

    I also don't believe in letting new members have access to everything ever released at no additional cost. For months though I simply removed the previous content after a certain period of time. Towards the end I started offering archived content at a special price to new members, and this created a little more income. I should have put that strategy into place from the beginning though, and had it more automated too.

    I still plan to keep trying with membership sites. I love the recurring income model and I love the awesome potential that can be had with the right offer. I definitely plan to automate more though... Maybe by loading a year's worth of content into AWeber and letting subscribers start at the same point, or maybe by setting up a web based automation and management system.

    In any case, there's probably lots of lessons I'm forgetting to mention here, but hopefully this helps someone somewhere
    - Kathy
    Top class post Kathy and very useful for many I would imagine

    Why don't you go for the 12 month model, very few people spend more than that with one membership site anyway, so you can prepare 12 months worth of products, and set it to deliver hands free. (Its a nice model)

    I'd love to know whether people are more inclined to join and stay if they know there is an end in site

    Kim
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  • Profile picture of the author adarwish
    Kathy,

    Great write up! Thanks so much.
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