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

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