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I’ve read a lot of articles about membership sites at other blogs and websites. Many people who write in the online marketing space jump on the bandwagon and talk about the benefits of owning some kind of subscription based income stream. They point out the obvious, such as recursive income, the stability and significant money that can be made with only a few members.
Unfortunately, nearly every person I’ve seen write about running membership sites has never actually owned a profitable one. Despite how good the model is, most people never get off their butts and actually launch a membership site, or if they do, their site fails because there’s a fatal flaw in their execution or strategy. I find it hypocritical that people can “teach” how to make money with a membership site never having actually done so themselves.
I agree with what people say about membership sites, even if they make statements without having the experience of running one. They are not necessarily wrong, they are just repeating what others have said, so it’s hard to have faith in them as experts. Without proof, how can you really know about something?
I say the same things about membership sites that other people do; they are the best online business model I know of. The difference of course, is that I own two membership sites and have conducted many different types of membership site launches. There’s no greater insight gained about how to do something than actually doing it, so I’m in a position to pass on some real “insider” information about this subject.
Today I want to clarify something that has bothered me about other people’s commentary about the membership site model, especially from people who have never actually run such a site.
Some people have stated that my two sites, Blog Mastermind and Become A Blogger Premium are not “true” membership sites because they don’t have a subscription that goes forever. They are closer to online courses because they only run for six months and then members “graduate” without any more ongoing fees.
That’s a fair comment on the surface, but let me put this into context so you will understand the reality of running a membership site, which only a person who has experience in this area could tell you.
Most membership sites, including sites that have a permanent subscription (no predefined end date), do not keep members for very long. Although I don’t have specific industry data, based on conversations with people who have membership sites and other people who teach how to run membership sites with a proven track record, the typical lifetime of an average member is three months. This means that most members join a membership site and stay a member for only three months.
You’re probably thinking how can a membership site be such a stable income source if your members only stay members for three months? That’s a good question and in fact dealing with your attrition (people leaving your site) is one of the greatest challenges that membership site owners face.
Most people think that the key for success with a membership site is attracting members, but that’s not entirely true. Yes you do need to be good at marketing your site in order to fill it with members, but that’s only half the equation. It’s equally important to learn how to KEEP your members in your site.
When I first launched Blog Mastermind I had no idea how long the program would go for. I was modeling Andrew and Daryl Grant’s e-book membership site model, which had no specific end date, although I know that their members stay as long as 12 months, well above the industry average of three months. In my case, I decided to launch with no predefined end date, at $47/m and see what happens.
I conducted my launch and brought in a little over 400 members in a week, which was fantastic and proof that my launch strategy was effective (I’ve gone on to attract over 2,000 members across my two membership sites, so I know my launch strategy works). This was important to me because Andrew and Daryl didn’t use a launch strategy, so I was in a way combining their membership model with what I had learned from people like Jeff Walker, Rich Schefren, Mike Filsaime, Frank Kern and StomperNet about launching products online.
During the first month a few members left. Nothing too dramatic, but it was certainly a let down after the euphoria of launch week. Over the next few months it became clear that my attrition rate would be a problem and I was not happy with how many people left the program prematurely.
Andrew and Daryl suggest aiming for 1,000 members and charging around the $50 mark. That way, you are generating $50,000 a month, which for most people is an incredible amount of money. Even if you pay affiliates half, you’re still making between $25k and $50K a month. That’s a significant income stream and, if you decide to one day sell your membership site, you could potentially make as much as a million dollars. That’s a pretty darn quick path to becoming a millionaire.
I was hoping after making it to 400+ members in a week, it wouldn’t take too long to get to 1,000. Unfortunately I found myself going backwards rather than forwards after launch. I needed to do something about the attrition rate.
As I gained feedback from the people who left I started to realize why they were quitting. Although there were lots of different variables at play, many of which I addressed slowly over time (I cover these inside the Membership Site Mastermind course), there was one major issue. My members did not like that my program had no end date. I needed to make a change.
I decided that it would be smart to change my membership site to have an end date. This served me well as I had no desire to continue to produce new content forever, and my members then knew how long they would have to keep making payments before completing my training.
Andrew and Daryl suggest targeting 1,000 members at $50 a month and go for a 12 month retention rate as your big goal. That’s no easy target for most membership sites because they can’t keep their members in the program that long. Ask any membership site owner and I bet they will quote you an average member retention rate below six months.
I decided I would switch my program to six months, but double the price. I had already increased the cost to $77 and since I was adding more and more content I felt I was justified increasing it to $97 a month. This meant that 1,000 members in the program for six months was the same result that Andrew and Daryl were achieving with 12 months.
What I was hoping for was an improvement to my retention rate (less attrition) because the members were willing to keep paying to complete the entire course. There is some psychology behind this choice, since people are used to completing courses in six months (like university subjects) and feel a compulsion to complete things (we don’t like the feeling of open loops, that’s why it’s good to give people steps to complete a task).
My assumption proved correct and since then the majority of people who join Blog Mastermind go on to complete the entire program. This is of course good for me, but it’s also good for my members, since by completing the training and not quitting early, they gain the full picture of what it takes to build a profitable blog, the goal of Blog Mastermind.
There are no hard rules regarding how to run a membership site, but you have to realize the reality of your situation and adjust things based on how your members react.
In my case I gained the insight that having my membership site set up as an online course would actually result in a much greater profit than having it run as a traditional membership site with no end date. For education products, this is likely a lesson that will hold true across the board, however if you sell a standardized service on a subscription, for example web hosting or an email autoresponder service like AWeber, then it makes sense to have no end date on payments.
If you are paying attention and really thinking this through, you might be questioning how a membership site can become an ongoing, near-passive and stable income stream if you always have members exiting your site?
That’s a great question, and I’m glad you are really taking on board what I’m saying here and not just looking at a membership site as some kind of magical cash cow. The truth is, members leave membership sites and just because you get 200 people into your site during launch week does not mean you are set for life with $10,000 a month forever.
Attrition is reality and if you want to really succeed with your membership site, you need to learn how to both market your site and deal with attrition – and here is the kicker – you then need to learn how to automate the processes. Once you have automation in place that bring in a steady stream of new members that is greater than your attrition rate, which you work to reduce to as low as you can, then you truly have a real passive and stable income stream.
I bet you didn’t see this coming! If you want more insider details on exactly how to set up your membership site to the specifications I’ve laid out in this article and set yourself up with a nice $100,000 a year or more income stream that keeps coming, then you’re going to want to take my course.
Membership Site Mastermind launches soon and you can register for your free copy of my Membership Site Masterplan report and get yourself first inline for the course by going here -
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