On the show today, 2 experts share what it’s really like to run a membership site.
The experts, of course, are Corbett Barr and Chase Reeves (that’s me) 2 of the co-founders of Fizzle’s Business Courses & Community, a membership site that’s been live for almost 4 years at the time of writing.
There’s a lot of conversation in the world of online business about how valuable a recurring revenue model. Dependable recurring income that you can count on sounds very sexy if your business needs to be selling to new customers every single day.
So, is it as good as it sounds? Or, as a smart Fizzler put it in the forums: what don’t I know about running a membership site?
That’s what we lay out for you today on the show, diving in deep to a big list that Corbett prepared. Enjoy!
It’s better to listen on the go! Subscribe on iTunes
Chase: Today on the show, we’re talking about what you need to know about membership site business models. How did I do at that one?
Corbett: Nailed it. You didn’t even look at your notes.
Chase: It’s the pauses. It’s all in the pause.
Corbett: Yeah. Let me try again.
Chase: It’s the pull back that generates the force.
Corbett: Today, we’re going to talk about what you need to know about membership site business models.
Chase: Yes, I like it. It’s a little pedantic. What I need you to be doing is like shuffling papers around your desk like a news anchor. I don’t know. In certain name of a news anchor here who’s just casual and cool. This isn’t just a local …
Corbett: [Inaudible 00:04:05]
Chase: Of course. Who else’s going to be thinking?
Corbett: That guy’s put on some weight since I was a kid.
Chase: I don’t know who is. There are listeners in the Northwest who are just like, “Oh my God.” We are talking about the business models of having a membership site. What are the things you need to know? There’s a lot of info out there where people are going, “I want to start a business or do something where I can …” No, they’re saying like, “Hey, I want to make money without working. How do I do that,” and then they’re finding things like Pat Flynn stuff about niche sites or something like that. They’re finding things about passive income. One of the things that comes up about that is everybody will start talking, “We want to make you product that your selling your thing.” You’re like, “Oh good and that costs $200 and I do launches twice a year and I sell and make some money a couple of times a year.” It doesn’t take very for you to go like, “I wish I didn’t have to do this whole selling all the time thing.”
Corbett: Yeah. Launching all the time.
Chase: “Launching all the time thing and I could just have people paying me every month.”
Corbett: Right. Yeah. I think there’s thing feeling that a subscription based model is some panacea.
Chase: We think it’s going to solve all our problems because think about it. All you see is here is what I want to do. I want to have money come in every single month without me doing a heck of a lot of work. Can I do? I think that’s what most people think of when they of a membership site.
Corbett: Yeah. I think that a lot of people are also just legitimately looking at business models and thinking that not that they don’t want to do work but they look at the subscription based model and they think that there are some advantages to it and there are. You hear a lot about it because there’s this whole world out there that most of us aren’t participating in but it’s called SaaS, Software as a Service. Usually you pay for Software as a Service on a monthly basis. Most of us do this. We pay MailChimp. We pay Wistia and a bunch of others. You hear about that a lot because VCs talk about it and entrepreneurs talk about it because it is a really interesting business model. You find a customer. If you serve them well, then the hope is that they will continue to come back month after month after month and pay you for that product. When it works well, it’s nice because the revenue is very predictable from month to month. You also aren’t having to go out and find new customer all the time because you have a built in customer base.
You do on the other hand have to win your customer over and over again.
Chase: You have to win them over every month.
Corbett: You have to support them. We just happen to get a few really great questions about membership site business models or subscription based trainings.
Chase: This is in our forum of our membership site.
Corbett: Exactly. I think a lot of people come into Fizzle and they’re interested in what we’re doing and so they want to build something similar. They’re curious about it. Let’s start out with the first question from a member named Gregg. Gregg says, “Hey entrepreneurs. I want to create the equivalent of Fizzle within my industry. I know how to sell. I know how to build an audience. I know how to create content. I know how to do community building. Essentially I have all the hard skills required to make it a real thing and hopefully a successful thing. What I don’t have is the experience with this kind of business. I’ve never run or built a membership site or a subscription business. Here’s my question to any of you who do have this experience. What don’t I know? What are the intricacies involved in this business model that I don’t currently understand? What do you wish you knew getting into building a membership? I love to hear your insights.” He just posted this recently and I jumped right on it because obviously we have some insights in here. I think we can share many of those today.
Really the gist is we talked about this on an episode a while back. What don’t I know and that’s really what gets you …
Chase: I love Gregg’s question here starting with what don’t I know. You know what I mean? It’s just a smart question to ask. This is a trick for anyone no matter what business model you want to do, no matter how much you’ve thought about it or planned about it or read about it or studied up on it, right?
Chase: You could totally glean some things by talking to people who are doing that or have done it and say what don’t I know. That’s a great question. That’s what we want to do in this episode. What don’t you know about membership site stuff.
Corbett: I thought you were waiting for me to say it.
Chase: I can do that again. What don’t you know about …
Corbett: Membership site business models.
Chase: Bam. Hey, I got a question. If the moon was made of cheese, would you eat it? If your fingers were made of sausages, would you eat them? It’s a simple question. A baby could answer it. We were both drinking last night at our friend’s party and I’m like halfway there in my brain. It’s 4 PM and I still haven’t even woken up. I don’t even know where I am. I got a chantey in my hand. I’m feeling all right.
Corbett: Chase’s unwind time starts at about 4:45. You’re on the downhill slope. If you’re just joining us today, we’re talking about what you don’t know about membership site business models.
Chase: Let’s get back into it.
Corbett: This question from Gregg, he wants to know what don’t I know about membership site business models. He wants to know what are the intricacies involved in this business model that I don’t currently understand and what do you wish you knew going into building a membership site.
Chase: All right. It looks like you’re answering this in the forums. It’s pretty good. Let’s get into it. Let’s just start diving into some stuff. Let’s assume that people who are listening to this read has read an introductory article about what is a membership site or something like that. Let’s get a little bit into the nitty-gritty of what it looks like to actually be doing this. What your life actually looks like.
Corbett: What maybe surprised us in this regard.
Chase: What has surprised you?
Corbett: The point that I made in the forums to Gregg … I just realized I spelled his name wrong. I spelled it with 1 G instead of 2.
Chase: I’m going to go in there and edit that for you.
Corbett: This is so embarrassing. We really were surprised at the amount of ongoing work that it takes to build a membership site. We started Fizzle as a team of 3 and we’ve hovered between 3 and 5 people on the team since inception. Even with that small team, we’ve still found it to be a bit of a struggle to keep up with all of the different ongoing work that needs to happen. For us specifically, our membership site offers training which means our members are expecting us to create new training modules for them, new courses. They’re expecting us to coach them in some way, to answer their questions. Our time ends up being divided between a bunch of different things every week. To figure this out, I just looked at my to do list over the past couple of weeks and realized here are the different things that we do. Customer support is one thing. Just answering basic questions. A lot of pre sale support as well. People writing in with questions about is this right for me. We also spend a lot of time on content marketing which we’re doing right now on both podcasting and blogging.
We publish every week. We’ve published a podcast every week for the past 3 years. Similarly, we publish a blog post every week. We create courses for members. A course for us a pretty significant undertaking. I remember early on we had a lot of enthusiasm and we also had no customer support, no marketing to worry about and so we were able to crank out a fair number of courses. When you start piling on all the other activities, you end up realizing that you just have a little sliver of your week available for creating the content that your members need. Creating a significant course for us like we just launched the “Start A Blog That Matters” course, the redo of it which is really great.
Chase: Pardon that D.
Corbett: The response to that has been awesome but it took us, I don’t know, like 3 solid months of scripting and writing and filming and editing and all that stuff. That was you and I both working on it pretty hard. We spend time coaching our members. Again, if you’re offering training this sort of thing, it’s like office hours. If you’re on a college course, you expect to be able to talk to your professor once in awhile to clear up some questions. We do that. We answer member questions in our forums. We have a big community there and we like to be active there to make sure that we’re fostering that sense of people are able to get answers there. We maintain and improve our platform. We has this whole software infrastructure, right? There’s the payments processing and the user interface and all that kind of stuff. You can outsource some of that stuff. We decided to custom build it and it costs us some time. Luckily, you are and I able to write the software and work on the user interface for the most part.
Chase: This stuff can be really complicated. There are some software that helps you out quite a bit. Plug-ins for WordPress or things like that. I never looked at one of these like out of the box type of course ware type of deals in some ways but with the membership stuff all built in and all of that. I don’t know how easy it can be out there but I know that no matter how easy it is, you’re still going to feel like your hands are tied in some situations. Things that you want to do you’re still going to need lots of customization if you want to do it a particular way.
Corbett: The customization’s always going to take you time or communicating with the support staff at some other business that you put your platform on. We also spend time working with partners who send members our way. There’s all the regular business stuff no matter what model, the legal, the finance, to hiring, all that stuff. I wanted to stress to Gregg that we do this with a team of 3 to 5 people and we still feel like we don’t have enough hours in the day to get it done. Whenever someone asks us about running this subscription based training platform as a 1 person team, we usually caution them because there’s a lot of work to be done. We see this a lot of times with people who will launch a new blog or a new podcast. If you’re a 1 person team, it’s easy to get caught up just in that piece of content creating let alone to create a new product. On top of creating a product, imagining having to sort that product week after week after week. It can be a challenge.
That’s really the main thing that I think we’ve learned just how much work it is and then the differences between running it as a 1 person team and a 3 to 5 person team.
Chase: You listed off a bunch of bullet points here. These are things that we have to do. Honestly, if we really fail on any one of these, our membership will sense that. The members will feel that. If we slack on customer support, if we’re not there for them when they email, people are going to lose confidence in us. People are not going to trust us quite as much or something like that. You’re going to see that on the back end if we’re slacking on making courses, if they’re not as good or if they’re not as frequent or if they’re not on the topics that I need or something like that. People are going to start to cancel if that cancellation that we’re always fighting against. I think one of the biggest metrics to find in a membership site or membership business is churn, C-H-U-R-N. Churn is how many members are cancelling every month or every week or however you measure it. Because the thing is for us with Fizzle for example, Fizzle’s only about $1 a day, $35 a month.
Really, really affordable compared to other products that are similar in some ways but also right along lines of things like Lynda.com or I don’t know what other … Like Treehouse training things where you’re like, “I’m learning a professional skill that’s going to earn me revenue.”
Corbett: I’m paying monthly.
Chase: I’m paying monthly. We also have a yearly membership where you get a handful of months for free. All that instead of paying $2,000 for one 6 month or 3 month course that you take with somebody.
Corbett: Ninety-seven dollars or whatever it is.
Chase: Exactly. The idea is this is an affordable thing that anybody can basically get into if they’re serious about starting a business. It’s literally the most affordable thing for professional training, actual support, group coaching, these things that you get every single week. Even though it’s all affordable, we still have to provide all of that value to every single member so they feel like it’s worth it. That’s the wait that comes with a job like this. I always envy my friends who just have a course for sale or multiple courses for sale or things like that where it’s just, “Now, I’m just blogging on this. I’m making this podcast. I’m doing this thing. I’m becoming a personality doing the thing. I’ve got a couple of courses to sell and people are just buying those and they’re going through it in their own ways.”
Corbett: This is the thing, the grass is greener on both sides. Whenever I sit down with an entrepreneur who has courses like that, somebody who’s established some big names out there, often they’re jealous about our business model. Here you are saying the reverse is true. The reality of having to earn your customers every month is really what directs the work that you’re going to do. That can be good and bad. For us, I think on balance we actually like that part of it because it really puts our head where it needs to be on making a great product.
Chase: For us, why does this work? Okay. Break this apart. Why did this work for Fizzle? For 1 major reason, Corbett had a started a blog called “Think Traffic” and had a really big following there. Large site. Huge email list of people going like, “I trust this guy. Send me everything that you write.” When we launched Fizzle, we launched it into that, a large group of people of which a small percentage were willing to pay for a greater access to you, Corbett, and to professional training in the form of courses as well as community. You’re not doing this alone. There’s other people who are enthusiastic bloggers and podcasters in the entrepreneurs of all shapes.
Corbett: Right there along with you.
Chase: Depending on who you talk to in Fizzle, some people will say, “The community is blowing my mind. It’s the only thing I ever really use in Fizzle and it’s super helpful.” Others will say, “I don’t really spend any time in the forums but the courses have absolutely changed how I look at business.” Some people will say like, “Yeah. It’s pretty good. I just like it. I like it that I can go in and I can end up searching in the forums before I go searching online to find an answer. Chances are there’s going to be an intelligent answer there.”
Chase: They just keep it around as like, “It’s nice to have when I need it.” There’s all these different people within Fizzle because I think we have a wide net that we cast saying, “Anybody who wants to do a small business basically.” Specifically as well business on the internet or using the internet at least as one of your main things there which is really wide. If you had a membership site just for designers who design email newsletters, that could be very small but very profitable as well in some ways or in that … I don’t know how much they’d be willing to pay for this stuff. The idea of being if you are a really focused and niche, Fizzle was just for bloggers and the whole thing was just a blogging membership site. It’d be more targeted. In some ways you wouldn’t have as much cross-pollination would you?
Corbett: Here’s the thing, you’ve started talking metrics, churn. Another one is average revenue per user or per member. What you can do is you figure out the average price that somebody pays you per month and the average amount of time that a member sticks around. You multiply the 2 of those and you get your average customer lifetime value. You can argue that with Fizzle let’s say for example, that people stick around for 6 months on average. You could multiply 6 times 35 and figure out that our lifetime value is $100 something, $200, something like that. You could argue that well, we could just sell a $200 product instead of selling this ongoing membership.
Chase: Two hundred and ten dollars and then on average have make money per purchase.
Corbett: Exactly. What you were just …
Chase: We’re talking today about what you need to know about membership site business models, right? We talked about a handful of bullet points of just all these tasked that we have to do that you might not know you got to do. We’ve got into the reality of you got to earn your customers every single month. I was talking a little bit about the difference between if you focus broadly versus narrowly in your topic or just whatever. There’s a lot of different ways you can shape your membership site.
Corbett: The next place I wanted to go with that was this idea that in order to make a membership site work well, you have to have something that … A problem that you’re trying to solve that is an ongoing, long-term pursuit, need. For example, you talked about designers who are setting up email templates. It could be the case that they have a short-term need. Really they need to learn some things and it only takes a month to do so.
Chase: Why have a membership site?
Corbett: They’re not going to stick around.
Chase: Actually I’d really be curious about … Okay. “Start A Blog That Matters,” this course that we just renovated, we just completed updated, you launched that originally several years ago as a standalone course with some support along the side, right?
Corbett: A little bit. It was $97. Customers were able to leave comments on lessons but we didn’t have ongoing coaching or anything.
Chase: Okay. Got it. What I’m curious is in a few paragraphs, how would you describe the difference between selling that? Because it sounds like that’s what you’re getting at, the difference between … They’re telling that 1 time thing and doing the ongoing, now the membership thing that we do.
Chase: Right? If you had to describe the difference, what made you … First of all, describe the difference as you see it, just what it feels like to be the entrepreneur each of these and then what made you choose and decide to go the membership route?
Corbett: A couple of things. One, with “Start A Blog That Matters” being a $97 course, we had wild swings in revenue from month to month. Sometimes you’d partner with somebody and you’d make a ton of money and the next month, it would just go down to a baseline of whatever your content marketing efforts were bringing in. It would fluctuate quite a bit. That’s always hard to build a business around. The other thing is we had built other courses. We aren’t just talking about “Start A Blog That Matters” in isolation, we had built other courses and so from a customer standpoint, it became a little bit confusing as to which one should I take first and why doesn’t what I contribute in the comments to this course apply to the other course and so on. Customer support was different for each of them and it just became a little bit messy. We wanted to bring that all under one roof. Now, running Fizzle, obviously the revenue is very stable as I mentioned before which is really nice.
It also allows us to do sometimes smaller, little chunks of courses that wouldn’t be a good standalone and that we would never invest enough time to do in standalone but nevertheless they’re really important to people even though they’re short and sweet. Again, there’s pros and cons.
Chase: When you’re talking about that just to give the listener a little bit of, I don’t know, something to chew on about that. For instance, we have this course “Start A Blog That Matters.” We have this course “Growing Your Email List To 10,000 and Beyond.” We have this course “Essentials of Web Design for Business Builders” for non-designing business builders, just what you need to know about design. All these are very standaloney courses. Anybody could jump in. We can sell them individually for any number of prices. We have another that’s like “Business Archetypes and Minimum Viable Income” which is a small piece but a really important piece of every entrepreneur’s journey. Nobody would buy that individually but if we place that into the roadmap at the right place, we can get you thinking about questions you didn’t know you should be thinking about. In a very effective way, making simple decisions and informed decisions up front so that when it’s time for you to make your first product, you’ve already answered a lot of these questions.
Those questions that you answered awhile ago, they informed your business decisions that you made since then so that your product is way more likely to succeed in your audience the way you’ve been building it.
Chase: Right? Little things like that that we’re able to do because we have this roadmap. Hopefully with people who are members and are digging it, it’s an indeterminable amount of time with them. We can say, “Listen. Building a business doesn’t take a month. It doesn’t take 3 months. It takes 5 years.” If you’re around and you get answers to your questions promptly and they’re solid over the first year, 2, 3 years of that, basically you’re going to do your business in much less than 5 years. You’re going to make a lot more progress faster. You’ll be earning money faster which means you’re paying for Fizzle but eventually that becomes a sound investment when it starts paying off.
Corbett: Yeah. There’s no question that the value is incredible inside of Fizzle …
Chase: I think that’s a big thing that maybe we … You’ve got to create that value. That’s a part of this needing to convince your customers every single month.
Corbett: Absolutely. Back to the pricing question and the customer lifetime value, again, you could argue that it’s the same … You could either sell a one off product for the customer lifetime value that earned from the membership site or you could run it as a membership site. The 2 are roughly equivalent but the difference is that a customer gets to decide how much value they’re getting from the product and then they based on that. It’s almost as if you’re offering products at a bunch of different price points because on one hand, somebody can jump in Fizzle. Try it for free. In fact, if you’re a podcast listener, you can try it for free for 5 weeks by going to Fizzle.co/try5.
Chase: Which is a long time. You could go take all of “Start A Blog That Matters” which is a very priced … Could be a very pricey course if we sold it individually.
Corbett: On one hand, you have customers who paid nothing and then maybe they decide Fizzle isn’t right for them. On the other hand, we have customers who have been with us since the beginner and have probably paid accumulative over $1,000 for Fizzle over the past 3 or 4 years or whatever that adds up to. The customers are paying for the value that they’re receiving hopefully whereas if you just offer “Start A Blog That Matters” at one price point, then everybody’s paying the same no matter how much they’re using it. You’re game becomes just trying to get people pass the refund period whatever that might be. That’s what a lot of these high priced products do. If you’re paying $2,000 for a course, there’s probably some crafty little catch in there about the refund period being X days or 2 months or whatever and you don’t get all the stuff that you want until after that. Maybe there’s something that you have to do in order to qualify for the refund which we didn’t want to hassle with.
Now, if you’re thinking about starting a membership site and you’re looking at the business model and you’re thinking, “Man, this just looks too good to be true. I get a customer. They pay me every month. I don’t have to look for new customers. This is great.” A lot of that comes from what we see in the software world. I have to tell people that the software world is radically different. The metrics in the software world are radically different from what you are going to see by offering training as a …
Chase: This is what we come up with all the time, right? We’re talking about the grass is greener. Something that Corbett and I have talked about a lot is how green the grass looks on a SaaS business where you are MailChimp or Squarespace or some little thing that does some little tool that people are willing to pay $5 a month for even. Something very small potentially.
Corbett: Here are the dynamics that are different in that world. When a customer signs up for an ongoing software product and it becomes integral to the operation of their business like if you’re hosting your website on software of you’re using them as a mail provider or whatever, it becomes very difficult for you to switch providers over time. You’re likely to stick around much, much longer than you would with training. Because with training, I have to do something in order to receive the value. It’s work for me. Whereas with software, ideally I sign up. I pay every month and then the value happens to me. It’s given to me in exchange for dollars. It’s very easy with a software product to just let it continue to run and we pay Wistia $300 a month or something to host our videos. We do that every month gladly because they’re all up there and it provides valuable service.
Whereas with training, the moment your life gets busy or you change your mind and this thing isn’t as important to you anymore, learning how to play tennis or whatever it is that you’re paying for, then that’s one of the easiest things for you to cut. The churn rate that you were talking about before in SaaS, the really good SaaS, they end up being in the low single digits, 2%, 3%, something like that which just means that a customer sticks around for multiple years as opposed to with training, a customer sticks around for several months. The other thing about that is that in software, oftentimes the more value that a customer is getting from the software, the more they pay. Because on MailChimp, we now have X tens of thousands of subscribers, we’re paying a lot more than we did a long time ago and we’re happy to pay that because we’re getting more use out of it. With training, it doesn’t necessarily work that way. You look at Lynda.com or Treehouse or Us, it’s a flat flee no matter how many courses you’re talking. Those dynamics are a lot different.
I think that should temper people’s expectations when they’re thinking about the subscription model being this like unicorns and rainbows scenario.
Chase: Absolutely. Far up to know, it’s just been like this general sense of like, “All right. I want to do a membership.” If you want to do a membership site, there’s more work than you think there is. Some of those categories of work are customer support, marketing. We do content marketing and blogging and podcasting. I think a lot of the membership sites that people are probably thinking about are education based, you know what I mean, because for those who can’t do teach. That’s why we’re here.
Corbett: There are also all of the product subscriptions like getting the T of the month or the Trunk Club stuff.
Chase: I find less and less getting interested in doing that because it’s so much hard goods inventory costs, you know what I mean, shipping and inventory and all that other stuff whereas teaching and training, being like, “For $20 a month, if you’re trying to be a marathoner, we have a marathon membership squad or whatever. It’s $20 a month and we do coaching every week. There’s a library of coaching calls based on … Answers to questions and things like that.” That could potentially be really valuable. What’s great about that idea is if it’s $5 a month, how many people have subscriptions that you paid for that you don’t really use that much. There like $5 to $7 to $15 a month that are under that radar. Pricing your thing is tough. That’s what’s interesting. That’s what’s so hard about pricing of membership sites is you’re putting your stick in the mud in a pretty strong way when you’re like, “This thing’s going to be $10 a month,” because it’s hard a year from then to up the prices in some way. It can be. We’ve done this a few times.
We’ve changed prices a little bit over time. Everybody who signed up early got the cheapest version. We just grandfathered them and they’ll be paying that the rest of their life but that took some custom code and some optimization figuring out how to do that. It’s not impossible to change the price of things. If you start out by going it’s $5 a month and then we’re just doing coaching. I’m recording each of the calls. I’m paying someone to take those calls and cut those videos up by question and then add them back into the Q and A section so it’s like everything has its title like, “What kind of shoes should I wear? What kind of this should I get? How long should I practicing or training before I start my first marathon?” All those questions are broken down and now there’s 150 questions in there. You could find anything you’re looking for. Five dollars a month, right? That’s not a problem.
You could probably do that but if you wanted to make it more serious later on and go like, “Now, it’s going to be $50 a month for serious people because I’m done just doing it for people who want to just occasionally who up.” Then it might be hard to change into that thing. You might have to do something completely separate. Actually I’ve never really thought about this idea of doing a small … We always talk about minimum viable products. There are small, tiny bite size little ways that you can test the product idea. That’s really hard with a membership site because in some ways you’re going like, “The purchase is not just this month. It’s every month to come. It’s your promise to me that you’re going to have this available for me at $5.” Thinking on ways how you could do a small version of the membership site and just be really valuable for the first year even though you’re not making much money and then you can raise the price over time when you figure out the technology and the tools that you need and stuff.
Corbett: Of course. If you’re talking about the difference between $5 and $50 a month, then that means you need 10 times as many customers to earn the same. It really just depends on the reach that you have. Theoretically, selling a $5 product should be much easier than selling a $50 product but is it 10 times easier? Are you going to have a 10 times better conversion rate? Probably not.
Chase: What’s interesting with these membership stuff, I’m looking at the world and just realizing how much … It seems like the original media or the original business model for broadcast of any kind, blogs, podcasts included in this as well as the beginnings of radio, the beginnings of TV. We’ve got a show and it’s sponsored by Clorox Bleach or Parliament Cigarettes. Shows originally were started as like “The Parliament Cigarettes. Howdy Doody Cowboy Hour.” It was brands who paid for all the content being made. Now, the content’s being made and that’s on the creative in a network and the advertisers have to … We’d have to entice those end advisers because we’ve enticed the people in some ways. There’s this model of you’re trying to reach the masses. I looked at Marc Maron. Marc Maron could have charged $5 for his podcast a month from the beginner. He’d have a smaller audience but he’d have a ton more money if it got big. That’s the question.
Corbett: That’s the thing.
Chase: That’s what we don’t know if it would have gotten big. There’s this payoff of like I think it make sense. Find the things that you can do in the world that are real work, that are free or barely monetizable if you can have the membership site. I love the way that we get to blog and podcast at Fizzle and make those things really, really good because we always have a product for sale that we believe in.
Corbett: I think there are benefits to both the free content and the membership or the paid content. Businesses that only do one or especially businesses that put everything a pay wall, they struck really hard. We’ve seen a lot of big names try it over the past several years. People who say, “I have this private newsletter now and it’s $5 a month or private website or whatever.”
Chase: It’s because you’re cutting off your whole ability to grow organically. You do still have a referral like people are going in and joining up on your private newsletter that cost $1 a month or whatever and they might tell their friend, “This is so great. Oh man. You’re not doing this? It’s so great.”
Corbett: It used to work better. I think it was because there wasn’t this proliferation of free content. It’s almost an arm’s race to give away …
Chase: I hate that the only people who are winning are advertisers. Do you what I mean? Marc Maron is winning. He’s making money. He’s doing the thing and he’s very confident for the first time and it seems like forever. It’s really cool to see that, right? Louie CK though is doing something very … How is he growing? He’s selling individual $5 specials or $3 an episode like play that he made, “Horace and Pete.” Weird stuff that he’s trying.
Corbett: He’s growing because he’s on network television.
Chase: He’s growing because he’s Louise CK. He does have a show. He’s on network television and he’s one of the largest celebrities to a certain group of people. We’re talking today about what you need to know about membership sites and these business models of the membership site which why I bring up Louie CK because he’s just a great example of someone who’s not doing the membership site thing at all. [Inaudible 00:38:52]
Corbett: It was great.
Chase: What else do we need to talk about here? There was some questions that were brought up. Before we get into those, I want to make sure that we’re getting to Gregg’s question because I think it was good. We talked about what do you not know right now? You’re hopeful about doing a membership site. What don’t you know? There’s a handful of bullet points that Corbett listed off, customer support, making content which is our version of marketing. It’s basically like if you had to categorize these, it’s making sure your customers are happy, your existing customers are happy and finding new customers. You’re constantly doing both of those.
Chase: You can break those down into multiple sales inside of there by making sure they’re happy is like I’m answering their questions when they’re asking me questions. I’m making the things that I promise them I would make them. One of the things that you said in your answer to Gregg which I think is really strong is just be careful what you promise that you’re going to make on an ongoing basis.
Corbett: It’s much easier to add things than it is to take away.
Chase: It is. It really is. I know the feeling very well of really wanting to convince people to join. Really wanting to say all sorts of things that you’d love to be able to say.
Corbett: We’ll come to your house.
Chase: You just want to say it all to get them in. Some people are like that. I’m one of them but now, you got to live with … The thing that matters most is that they’re getting in and being impressed. They’re being delighted and they’re trusting you. They’re going like, “Oh yeah. This is at least as good or if not, better than what I expected from the sales pitch.” That’s what I think is really important.
Corbett: Absolutely. An example of that just being cautious about what you commit to. It’s easy to want to offer regular coaching, to create new material on a regular basis, to create material that is multimedia video, audio, written, all that stuff. Just from watching people who run membership sites successfully as 1 person, they really pair that down. They release less on a regular basis. They maybe offer some content that is text only and they don’t worry about video and audio. They don’t do weekly coaching. They do monthly instead. They don’t participate in the forums. That’s for members order thing. Start with a baseline and really just focus on the core value proposition. Why are people here? It’s probably to learn how to do some very specific things. You can do that mostly with course material and then a little bit of Q and A. If you were smart about it, you could just collect questions and then have a FAQ and then people should be asking fewer and fewer questions about each of the courses.
Chase: I like this other question. Membership conversion stinks. How to get things buzzing again a year after launch because I like this idea of you’re a year in … Okay. Right now listener, you’re like, “I want to do a membership site. I want to do a membership site. Okay. Okay. I’m listening to these guys who are telling me there are some things that I didn’t know that I didn’t know but I still know I can do it. I’m confident.” Okay. Now, let’s teleport a year in the future. You’ve launched the thing and it’s up and running. It’s been running for awhile. You’re finding yourself in the situation that Stephanie’s in where she’s like, “How do I get things buzzing again?” It’s died out. Tell me a little about what Stephanie’s situation is.
Corbett: Stephanie’s situation is she has been at this for a year or so and when they first launched, they had a couple of really great enrollment periods where they offered 50 spots at a time and they sold out. They grew to 100 or so members. Twelve months went by. Their email list is growing but they’re not able to convert many people from that email list to join the membership again. There’s a bunch of stuff at play here. Stephanie points out that her membership conversion stinks and that she feels like the conversion stinks because her product isn’t attractive enough. Now, there’s a question here that I had which I didn’t get from Stephanie which is is she able to convert anybody or is she just not able to grow the overall membership? Because what happens at a certain point with a membership site is people are going to be leaving on a regular basis because they get to the … There’s this, we talked about earlier, the average customer lifetime or the average customer lifetime value. They stick around for a certain number of points.
Once you’ve been up and at it for awhile and you have a decent number of members, then a certain percentage of your membership is going to be leaving every month. In order to grow, you need to be adding more people every month than you’re losing. I don’t know if Stephanie is at that situation or if she’s just not able to add any people at all. She said that her conversion rate stinks because her product isn’t attractive enough. She had a couple of good waves. Got people in and now she’s feeling like even though her email list is growing, she’s not adding people. I can imagine a few different reasons for this. The first is, she wanted to know how to get things buzzing again. When you imagine in the beginning when you first create this thing and you open a limited number of spots, there’s a lot of inherent buzz in that thing. It’s new. There are limited options. I want to jump in and see what this is like.
If you want to get things buzzing again, perhaps you should work the magic that you worked before and give people a reason to want to join. Another thing that we found that works really well is releasing new courses and making a big deal about it not just quietly releasing things to your members but making a big hubbub about whatever it is that you put in there that’s new to drive new interests. The question about conversion rates though, I think it’s easy to assume that people aren’t converting because your product isn’t attractive enough but there are other things at play. You mentioned earlier pricing. It could be that your product is attractive but that not at that price. That’s an issue that she should explore. Another one is it could be the wrong audience that you’re attracting. Her email list is growing but she’s not converting those people into buyers of her membership thing. It could be that she’s giving away something, promising something to the email subscribers that isn’t compatible with what she’s selling on the membership site. They could just not be looking for this thing.
They don’t have the problem or the need or the desire she’s trying to fulfill with the site.
Chase: I definitely hear that question when she’s like, “I don’t think that my product is attractive enough. That’s what her hunch is, her hypothesis.” Good job using that word, Stephanie. Great work. We’re trying to teach everybody in Fizzle and outside that your business idea is just a hypothesis and you’re a researcher. You’re not an entrepreneur. You’re not a magician. You’re not a genius or palm reader.
Corbett: You’re a God damned scientist.
Chase: You’re a scientist, running around wondering, could this be the case? Is this going to work? How about this? Because you don’t know. You don’t know what’s inside of other people’s heads even if you know really well what’s inside of yours and you’ve seen it also in your uncle and your aunt before. You’re like your business idea is a hypothesis. This mindset helps you to not just think about this current experiment properly but the next and the next and the next and the next. Whereas if you’re like, “I had a business and it failed, I’m a failure.” That’s what I love her using that word. I love that as a hypothesis. Okay. Question, is this valuable enough? I’m looking at her website which is Foodcoach.me. I’m wondering if it is … Because it is for a very particular group of people.
Corbett: Right. Absolutely. My suggestion in this case and for a lot of these when you have this hypothesis is you have to think a hypothesis is something that has to be tested. You have to ask yourself how am I going to test this? One good way to test this is by talking to customer directly. You have this assumption that people aren’t finding it valuable enough. Why aren’t they finding it valuable enough? Are they just not aware of the value? Is there something else at play? Is it too expensive? Do they not even have this problem to begin with? By having customer conversations, by interviewing customers, I know we’ve talked about this a lot before but it really is a solution to a lot of these problems. Just call up 10 customers or email 30 of them and ask if you can get on the phone with 10 of them. She has a big enough email list that it would be really easy for her to do that especially because she could offer some customized advice or whatever. She might have ideas through those calls for new courses.
Chase: Absolutely. That’s totally what I would do. If the question is membership conversion stink, how do I get things buzzing again a year after launch, I think one really solid answer is talk to your customers. Create an organized strategy for talking to at least 10 to 20 of these customers to hear what they have to say directly. Stephanie and anybody else out there dealing with is, you’ve got to take the “Customer Conversations” course in Fizzle. If you’re not in Fizzle already, go to Fizzle.co/try5. Is that our website?
Corbett: Did it just sound weird? Was it like when you say a word you’re like satchel. Satchel.
Chase: Limit. That’s one of those words man. You go to Fizzle.com/try5. You get 5 weeks for free. That is plenty of time to take the “Customer Conversations” course then don’t quit. You won’t get charged again if you quit but don’t quit because that’s not the end of your journey like knowing how to talk to customers and getting the actual insights that you need directly from their lips. Now, you’ve got to implement that action. That’s for Fizzle in the community is going to come in handy for you I think. I love that question of you can start a membership site going like, “I think is going to work.” A year later, you’re like, “It’s not working.”
Corbett: You’ve stagnant.
Chase: That’s what’s so important about a membership site. Give me a membership idea. I can sell that. I can just fill in the limited spots that we have available upfront. Will it still be selling on its own a year from now is a big question. That’s a really honest question to ask yourself. Almost impossible to answer.
Corbett: I would wondering if she was able to sell out those spots so easily in the beginning, what was she promising then that she’s not promising now? That isn’t being communicate to people now? Either the pitch and the value has changed or the customer has changed.
Chase: This is a great example of this is a solvable problem if the need is great enough. Find a need that’s great enough. That’s the answer to all of these business questions. All of these things are solvable problems if the need is great enough out in the world. Go see if it is. If it’s not, find another one that is. There are out there. There’s lots of those. There’s lots of those. Today, we’ve been talking about what you need to know about …
Corbett: Membership site business models.
Chase: We’re giving you our open the kimono which to me sounds like a little bit of a creeper’s thing to do. You know what I mean? There’s a reason why it’s only dudes in restaurants, in dark restaurants or boardroom meetings, that say that to each other.
Corbett: Open the kimono.
Chase: We’re going to open up the kimono a little bit.
Corbett: You just think about a creepy dude with a trench coat.
Chase: Jesse over there in the corner from marketing is just cringing every time she hears Walter say, “I want to just open up the kimono and lay it all out there.”
Corbett: Which reminds me of a film I saw one time. I don’t remember …
Chase: Did you see it at the cinema?
Corbett: I did. No, I think it was on VHS. This is a long time ago. I don’t remember what movie it was. Maybe a listener can help us out. A person, one of the stars of the movie, was sitting in a car and a flasher comes up in a trench coat. Opens the trench coat and says, “What do you think?” Person says, and I don’t remember if it was man or a woman, I think it was a woman, she said, “Looks like a dick only smaller.”
Chase: We’ve got a lot of questions left to go. I guess one day we’ll tell you more and more about membership site stuff but these are the basics. These are the essentials that we want you to know today about the work that you didn’t know that this is going to take. About what it looks like a year from now when you’re membership site that you took … It was amazing to get up and running, starts fizzling out or plateauing and you’re like, “How do I get it to buzz again?” These are great, great introductory questions to get you thinking smarter and more informed about creating one of these kinds of business models that can be a really effective, really, really straight up terrific way of doing a business. It’s like straight up terrific, dog.
Chase: It’s absolutely neat. Super.
Corbett: Just amazing.
Chase: Neat. I like neat and terrific and super so hard.
Corbett: What about swell?
Chase: Swell feels a little affected to me.
Chase: You know what I mean? It’s like a little …
Corbett: Like geewilickers.
Corbett: It’s like too much of a …
Chase: Give me butter whistles over geewilickers any day. Butter whistles.
Corbett: Leave it to Beaver stuff.
Chase: Oh mom. I wanted the orange stuff.
Corbett: Butter whistles.
Chase: Butter whistles. Darn it. I wanted to come up with a funnier thing than darn it and I just rushed right through it.
Corbett: The state you’re in.
Chase: All right. I got nothing else to add. I’ve been Charles Wardman Reeves.
Corbett: I’ve been Corbett Bar.
Chase: We’ll see you there.
Chase: We’ll see you-
Corbett: -see you on another time.
Chase: -on another time.
Corbett: We didn’t really coordinate on that very well.
We appologize for any innacuracies in this transcript. We are still looking for a transcript vendor that can, let us say capture our unique way of doing things :)
“2 experts share what running a membership site is really like!”
The Top 10 Mistakes in Online Business
Every week we talk with entrepreneurs. We talk about what’s working and what isn’t. We talk about successes and failures. We spend time with complete newbies, seasoned veterans, and everything in between.
One topic that comes up over and over again with both groups is mistakes made in starting businesses. Newbies love to learn about mistakes so they can avoid them. Veterans love to talk about what they wish they had known when starting out.
These conversations have been fascinating, so we compiled a list of the 10 mistakes we hear most often into a nifty lil' guide. Get the 10 Most Common Mistakes in Starting an Online Business here »