So we’ve come to the final chapter in our best online biz models, this one is about membership sites. This method is probably the best overall once you have it up and running. Why? Because it provides you with an income stream that you can forecast because it’s predictable.
By forecasting, I mean that you can predict how much money you will be making in the near future. For example, let’s say you’re fortunate enough to get your site to 100 members who pay you $35 per month, with that and some simple math you’ll be able to estimate (forecast) how much money you’re going to make in the coming month(s).
You will learn the percentage of people who typically leave your membership each month and how many new people join each month. With that data, you’ll be able to predict (for example) that 40 people a month cancel, and 60 people a month typically join.
Knowing that allows you to predict that aside from the 100 members you have, you’ll also be gaining 20 new members each month. That means you’re going to earn $35 x 100 members ($3500) plus and additional $35 x 20 ($700) on top of that each month. If you continue that growth through the end of a year, you should be at 340 members x $35, which is over $11,000 per month in revenue (amount earned before expenses). That’s pretty, pretty good! These are just examples, but they are achievable examples.
All you have to do is maintain that audience by creating high-quality content, and answering their questions, keeping the needs of your audience your top priority. But I think I’m getting a little bit ahead of myself, and what we should be discussing is what a membership site is, and how do you go about creating one?
As you’ve heard me say before, regardless of the business model, you need to pick a niche. You need to know what it is that you’re going to share with people, and what kind of content you’re going to create for them. The more you narrow it down, the better because you will be resolving a specific pain point for a specific group of people. That is where the value is for your audience.
Think of it this way. If a person has a cut, you can wash it with soap and put a bandage on it. That would be good for most people. But if it’s a person with a deep cut who needs stitches, washing it with soap and putting a bandage isn’t going to solve their problem.
For people who need sutures, they are interested in someone who can suture their wound. All that to say, you want to address people’s problems, specifically the need that they have, not a general solution.
So when you can provide the specific solution people need, they are happy to pay you for it. You might cover some general topics, but you always want to be focused on your audience’s specific needs.
The best way to get to know your audience better is by serving them. So the first thing you want to do is create content, and you want to put it out in the world. That’s YouTube, Instagram, your blog, and run some ads.
So if you’re running a niche site where you’re creating articles and building your audience that can easily be transitioned into a membership site. With a little effort, you can find yourself a small group of your members and offer them coaching and consulting services so instead of them paying you, $35 a month, they would now pay you $500 a month for a group coaching call, once a week, and you’ll talk on a zoom call and give them access to the recordings.
They’ll ask you all their questions, and you answer them and keep them accountable. From one week to the next, you assign them tasks that they need to complete for their business, and everyone in the group is committed to doing the work.
When the next week comes along, and there’s someone in the group who hasn’t done the work, now they are feeling the pressure because everyone in the group is kind of looking at them like, what are you doing? Why aren’t you putting in your work? If the person continues to do that, you say, “apparently, this group doesn’t really work for you. We’re going to have to ask you to leave.”
Then you make space for someone else to come into the group that’s actually going to put in the work. That whole accountability thing, it’s super powerful. It gets people to take action that they usually would not take. So, when you have people that are paying you a high ticket amount, and you have this accountability component, it is very powerful.
The members feel that they are getting a return on their investment because they go from not knowing and not doing what they need to do, to learning precisely what they need to succeed. In addition to feeling the pressure to go out and take action and get it done. That eventually brings them the results they seek.
In regards to your membership site, what you’re going to do is you’re going to create content in the same way that you would for a niche website. The difference is, it’s entirely focused on solving the problem for your specific audience.
You want to communicate with your audience regularly. You want to offer them Q&A sessions, whether its once a week or every two weeks. You don’t want it to get any further up than that, or they may feel that they are not so important, and missing them is not a big deal.
The whole point of them staying with you is that they have access to your knowledge and expertise, and so you want to create content that they can enjoy. You’re going to create content that will take them from step one to step two. Your job is to give them step-by-step content that will help them transition from where they are to where they want to be in a short period of time.
The other benefit they get from being a member is that they can ask questions of the group in general while trying to make that transition from step one to step two, and that is where the value is within your membership site.
The community that is fostered around your members is a big deal. They become friends and share their wins and losses with each other in this one place. So what that ends up creating is a strong community, and that makes them stay longer.
One of the things you’ll see with membership sites is that, on average, they have a six-month timeframe that people stay before canceling. With great content and great customer service, you can foster a warm community that can stretch out memberships for years.
So it can be highly profitable and, as I said before, highly predictable. On average, a membership site will have a monthly turnaround (also known as churn) of about 30%. If it’s higher than that, then you’re doing something wrong.
But there are lots of membership sites out there whose churn percentages are 10% or less because they take care of their community. They’re very present within their community, and they provide high amounts of value.
I’ve been a part of membership sites where there’s this personality who knows a lot about the topic that I’m interested in, and they draw you in with their marketing to join the membership site.
Then when you go to the membership site. The person is never there, you know? It’s always some moderator or other members who are doing all the heavy lifting, answering most of the questions.
That’s a place where most people aren’t going to stay because part of the draw is that they’re going to have access to the personality who drew them in. Right? So if you create a membership site and want people to stick around, you want to make it so that they have access to you.
I’m not saying that you have to live there, and I’m not saying that you have to check it every day, but you do want to be there so enough so that when people, over the course of a week, put out a question, they get an answer.
Answering within 24 hours is best; after that, people start to feel disenchanted because they’re thinking, “I’m paying all this money every month, and I have to wait for days before I get an answer, if at all.” In my mind, people shouldn’t wait for more than 24 hours to answer their questions.
They have things to do. They have lives to live. For you to make me wait 24 hours to get an answer to a question when I’m paying money each month is unacceptable. The larger the community gets, the harder it is to get to everyone’s questions. But you want to make that your priority, you know?
One of the ways to overcome this is with a regular flow of questions answered on video. For instance, if your member site gets a good flow of questions (successful member sites will get an overwhelming amount), you can categorize them as you notice the same issues presenting themselves again and again.
If you take all these questions and categorize them, eventually, you’re going to have a top 50 questions list. Then you make the answers to those questions into a series of videos. Then it’s so much easier for your team to say, “we have a video just for that issue. Here you go, if you have more questions after that, let us know.”
Now you’ve answered the question one time on the video, and it’s you that did it, the personality that people are paying to hear from. You create the video for them with a short, five to ten-minute answer, and you never have to answer that question again because now it’s been answered, and it’s available for everyone in your group to access for years.
It doesn’t matter if your team members change or if your moderators change. They still have this video in the library that they can very easily provide to your members. You could just make an FAQ section, and drop all those videos into the FAQ section for your members.
Before they even pose the question, you can direct them to look at your FAQ and see if they find the answer to what they’re looking for. That’s something that I feel a lot of membership sites fall short on because when people start to make money with their membership sites, they tend to lose their hunger, and when they lose their hunger, they get lackadaisical.
It’s very common to see that in boxers. Boxers are hungry to go out there and want to fight everyone. They put in all this hard work, and then they win a championship or two, and all of a sudden, you don’t see them having that same fire to continue winning boxing matches.
They want to enjoy their money. They want to enjoy their status, but the truly great champions continue forward with what got them to be champions in the first place. A Michael Jordan, a Tom Brady, guys like this are super competitive. They just want to continue to win, and that’s the kind of attitude you have to take when you are creating your business.
If you want your business to be sustainable over the long haul, you need to be like Jordan and Brady. I think that a lot of people get some money because their businesses are successful for a short amount of time and then they let it die, and then they go to the wayside. It becomes secondary. They get beat out by younger and hungrier competitors, and they’re never able to pick it back up.
That’s a shame because if you put any effort into building a business that wins, you should be able to keep it going until, you know, 20 or 30 years down the road. That’s a lifetime in internet years. But if you already have the advantage of a position where you were able to win and become successful, why wouldn’t you keep it going?
There was a guy by the name of Chris Farrell, and he had a membership site that he charged about $35 a month for. Meanwhile, there’s a lot of membership sites out there with two to three thousand members, sometimes five or six thousand members, and they’re charging $49 a month, $69 a month, and $650 a month (yes $650).
Maybe the strategy there is they have fewer members who pay a higher rate than a membership site that charges $35 a month. I can see that. However, Chris Farrell was able to build up a membership of 35,000 paying customers!
It’s probably higher now, but it was 35,000 members paying him $35 per month. The content was very good for his target audience. They’re newcomers to internet marketing and doing business online.
I feel that he does a good job. He has lots of experience. People look at him as the king of membership sites. Which goes to show, growth comes from caring for your audience. In other words, he’s supplied what his audience was looking for.
So my recommendation is that when you get to the place where you’re building out your membership site, you should do the same. There are many courses out there and lots of people who do this for a living. They make their customers a priority, and that provides them with a long term income.
I think that it’s an excellent business model, especially from the perspective of its predictability. Being able to know where you are and to project where your business will be in six, twelve, and eighteen months out is pretty awesome.
Just like all of the business models we’ve discussed, you don’t have to be an expert in any of them. This is very important to note. None of these business models need you to be an expert.
Here’s why, if you’ve ever gone to a martial arts school, you’ll go in for the first time as a white belt, assuming you don’t have any prior martial arts experience. You go in as a white belt, and they’re going to assign you someone with a yellow belt or green belt, maybe an orange belt, depending on the art and what their ranking system is. But they’re going to assign you someone who’s maybe one or two levels above you.
In other words, they’re going to take you who is a complete newbie, and they’re going to give you to a rookie, someone who is also new, but maybe three or six months further down the road than you. Then they’re going to teach you what they’ve been learning over the last three to six months, cause that’s all that they know.
You’re going to learn from them with some oversight from the black belt or the brown belt. They’re going to have some oversight. Maybe they’ll point out some things that need to be refined that the yellow belt or the green belt isn’t showing you correctly.
Overall you are going to be learning from someone who knows just a little bit more than you. That’s exactly how you need to approach this. You’re not trying to teach or sell courses or knowledge to Brown belts and black belts. You’re trying to teach and share your knowledge with white belts, and all you have to be is a yellow belt.
Meaning all you have to do is have enough knowledge to share with someone who has less knowledge than you. You may say to yourself, “I don’t have any knowledge,” but you do. The very fact that you’re reading this article shows that you already have an interest in becoming better at doing business online.
Fast forward four weeks from now, you will have gained enough information that someone who starts to read this article eight weeks from now is a full month behind you in knowledge. Now you probably have enough information to teach them something and leave them impressed just like they do at dojo all across America. Just like teachers in a lot of schools, as long as you read the lesson the night before you give the class, you qualify for being the teacher of that class.
You don’t need four years of college to teach kids. I know that if you’re a teacher out there or someone who works in education, you might get your feathers ruffled. Whenever I talk about homeschooling to people who became teachers and spent years of their lives learning to be a teacher, they get upset.
However, I have the results to prove it. I taught my kids’ homeschool, and after my kids stopped being homeschooled because they wanted the social interaction of being in a “normal” high school. They went on to be members of the national honor society. All three of my boys, so it wasn’t a fluke or just one outstanding kid.
My point to you is that when you are homeschooling a child, your job is to guide them. Your job isn’t to do the work for them. You have to make sure that the work is getting done. And in that same way, if you’re going to go out and run a business where you’re going to be teaching people. You don’t have to know everything. What you have to know is enough to guide them along.
In my case, I have the advantage that I’ve been doing this for a very long time. I can assure you that I can teach people who can then go and teach other people, and the person who was being taught at the bottom would never know the difference unless I want to specify that there is a difference. You will never know because the people who don’t know anything aren’t going to ask you questions that you can’t handle. Even if they do, all you have to do is take the time to research it and come back and give them an answer.
Generally speaking, you aren’t going to come across people who are going to stump you with questions because they just don’t know enough to stump you. Because 99.9% of the time, you are already further up the road than they are. I hope that makes sense.
With that, I’m going to close this out. If you should have any questions, be sure to leave them in the comments and share this with your friends.
I hope this has been valuable for you. I hope you realize all of your dreams and goals in this online business journey. Until then, God bless.