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The Truth About the Membership Site Model

Membership sites or continuity programs (same thing) are very popular among Internet marketers. In certain circles it’s almost mandatory to have some type of continuity program to add as an upsell to whatever the latest product is, that you’re launching. And of course, there are also tons of product about how you can get incredibly rich by creating membership sites.

But among all the noise, what is actual fact, when it comes to the membership site model? To find out, I decided to create a survey.

Here are the results:

Survey Results Video


Note:

The questions in the survey concerned information-based membership sites. The same results do not apply to software/service based products with recurring fees (e.g. hosting, autoresponders etc.).

The Membership Model Lie

When you look at how-to-make-money-with-membership-sites type products, there’s always one big fat lie they perpetuate and that’s the idea of never-ending payments from each member. Inevitably, these products will have some bogus calculation on the sales-page, showing how much money you can be making if, say, 100 new members join the site every month. After a year, that’s 1200 paying members, right? And it just keeps getting better!

Except that it doesn’t, of course, because no one stays a member forever.

In fact, what you need to consider with any type of product, product line or membership is the customer lifetime value.

If you have a series of products for $50 each and your average customer buys 2 of them, then you’re looking at a customer lifetime value of $100.
If you have a membership site for $30/month and on average, each member stays for three months, you’re looking at a customer lifetime value of $90.

That’s the reality of a membership site. You’ll have a certain, average “stick rate” and with it a certain total average income from each new member. The income is simply spread out over a longer period of time.

Membership Pros

Having said that, there are also some advantages to the membership site model, if it’s done right, as mentioned in the video.

From a marketer’s perspective, I’d say an info- and community-based membership makes sense as an addition to a product range, because you can win over the smaller segment in a market that actually prefers this model over the one-time payment model. It’s probably best placed as a back-end offer, rather than an upfront offer. And most vitally, you need to really take care of the members, keep the site fresh and relevant and not join the ranks of sites that end up being a disappointment for it’s customers.

All the best,

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Shane
 

I'm Shane Melaugh and I'm the guy writing most of the posts on this blog. My goal is to provide you with useful, straight-forward insights on how to grow your business by creating compelling offers, driving traffic and increasing conversions.

Click Here to Leave a Comment Below 19 comments
tom - November 25, 2010

I was involved in two membership sites. In both sites the person who created the site was totally absent and depended upon subscribers to help “new subscribers”. So older subscribers would offer some free help and also charge for services.

When I unsubscribed from one site the creator e-mailed me back telling me I should offer to “sell” services to newbies and that this was the benefit of being a member. The last content that he had actually put on the site was close to two years old. All of his recommendations were way out of date.

The other site was cheap and I stayed subscribed without even bothering about it much. That person has since gotten involved in an MLM scam and pretty much ruined their reputation. On that site there was nothing new added for over a year and not much interaction with members.

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    Samith - November 25, 2010

    Wow Tom sorry to hear you didn’t have much luck with finding a good membership site. Even though the site lacked new content did you get much out of it or learn skills?

    Reply
    Shane - November 25, 2010

    Whoa, that’s all kinds of bad!
    Prime example of “the model has been abused”, I’d say…

    Reply
Samith - November 25, 2010

I’ve always wondered about the effectiveness of membership sites from a consumers point of view. I would agree with you Shane that from what I’ve heard most people only stay for free months. However, would it be true than unlike a product you’d get lower refund rates because people are willing to give it a go?

As a consumer I prefer a product with a lively forum. Surely having a flock of followers and treating them well and then offereing more products would make sense from a marketers point of view? I guess I’d have to test that tehory… :P

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    Shane - November 25, 2010

    I agree that a community can provide great additional value to a product. On the other hand, a community alone doesn’t cut it, for a good membership site.
    Generally, treating customers well and offering more products must be the oldest and most effective marketing tactic in the book. Definitely works, as we all like to buy from people and places that have provided us with positive experiences in the past.

    Reply
Jan - November 25, 2010

Hi Shane,

Thanks for presenting the outcome of the survey. I had a membership option in mind as a backend for my info products. I realized suddenly I’ve done a survey 1 1/2 year ago for my customers and almost nobody was interested in a membership. For me it’s better to focus at creating a good backend and additional offers to increase customer lifetime value.

Cheers,
Jan

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    Shane - November 25, 2010

    Hi Jan,

    Yes, that’s about the same conclusion I’ve come to, as well. The answers to the first question made it clear that most people would rather pick and choose among a range of products than have it all served up for them in one package.

    Reply
Peter Charalambos - November 25, 2010

Hello Shane

I had a membership site for 18 months. Each month I would add 14 full pages of health information…that’s 14 different illnesses, ailments or diseases. Fresh content straight from the Doctor’s mouth or recently announced research ..plus a small competition and section where members could have their say.

I believe that my mistake was to begin with a free membership with half the info and an option to upgrade to paid. Not enough members upgraded but of course I needed to create the content for those few that did. Maybe 7 pages was enough so the free members were satisfied??

18 months later I decided to stop as it was costing me more that it earned. Many members are still with me as subscribers and have some nice things to say but sadly my fingers were burned.

Moral?…..you tell me.

Peter

A lot of research and a lot of editing to make some of it understandable. It was priced at $19.97 per month so not too expensive.

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Shane - November 25, 2010

Yes, that might have been a case of giving away too much.

I can tell you that I’ve been experimenting with “free line” concepts for a while now and it’s… well, it’s complicated.

Purely from a marketing perspective, you have to be very careful about giving away lots of valuable stuff for free. If it isn’t positioned right, all it will do is devalue your content and actually cause people to wander off and look at something else before you get around to making them an offer.

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Alex - November 25, 2010

Another angle on all this is the concept of the fixed term membership.

what bugs and frightens people off and has them racing for the unsubscribe is the prospect of the membership payment reaching faaaaaaar into the future!

If you offer a 6 month training that offers an end point, it offers clarity and to use a modern word…closure.

I think it was Jimmy Brown who pionnered this model in I.M.

Of course it is how all offline courses are run. I used to be a teacher and we offered courses for 1 term or 1 year and not “forever”.

Most I.M folks just don’t get this because they are looking at cashflow and not customer experience.

Alex

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    Shane - November 25, 2010

    Oh, we can’t be doing stuff like that, Alex!
    That would require actual preparation and planning!

    On a serious note: I hadn’t thought about that and now I wish I had added a question on fixed-term memberships to the survey. Thanks for the input!

    Reply
    Jan - November 25, 2010

    hi Alex,

    You’re right. I was in Jimmy Browns Membernaire. That was about learning about setting up a fixed term membership site. 52 weeks for almost $20 a month (this way I’ve paid almost 240 bucks. For a ebook containing the content of the 52 weeks I would never have paid this price).

    I totally forgot about this. I even did set up my own membership program this style, only had prepared the first 9 weeks. I did set it up as a forced continuity program. However, it was a failure because the front end product didn’t work.

    Reply
    Michel - November 25, 2010

    I believe a fixed term membership is a good compromise. It’s what we are currently producing, a basic language course over 16 weeks. That gives us and the member a clear frame when and what will be delivered.

    Generally, I think that the more specified someone is, the more he knows, what he needs and prefers specific single products to solve a certain problem rather than open ended and “broad” membership sites.

    Reply
Neil - November 26, 2010

I think it really depends on what you are offering and the subject matter. Obviously if you are teaching something with a definate ending ie a language course then it is very specific and it makes sense for a fixed timescale membership.

However if the concept is say ‘internet marketing’ the concept itself is vast from creating a website through to creating a successful web presence.

I personally get tired of searching through all the so called guru’s and experts. It still feels like a giant jigsaw and you gain a bit here and there but generally have to piece it together yourself.

What I want and suspect many others would want is a site that provides clear and easy to understand info, where you can learn firstly, how to market online and what options are available from your own product development through to clickbank and then how to create an effective web presence. Battlemap starts to tackle this latter point with some good easy to follow info but of course it is only part of the picture.

I can see the merits of both products sales and membership for internet marketing and one site I have only just recently come across does seem to deal with the points I was making in the previous paragraph. The site being Niche Profit Classroom which offers membership from $67 per month. Its far from perfect but I personally think if you Shane produced something like this with your own approach it would be well worth $67 per month.

Imagine having your SECockpit built into it plus battlemap and a whole host of other stuff that you could produce. Your videos are already good quality and therefore the training side for you would be no problem.

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Steve Odette - November 26, 2010

Fixed Term Membership sites are, in my opinion and experience, a much better approach to continuity income than traditional open-ended memberships. I wish you had considered this in your survey Shane.

My success and the success of my clients with FTM’s has been much more predictable than any of my clients who try to create these monolith membership sites or portals or communities that really have no point of reference… like a forum community.

Forums as membership sites are a real challenge both to maintain and market… especially in the beginning when there is no momentum.

A FTM course on the other hand, on — say — how to write effective articles that grab readers by the…. eyeballs… and make them want to click your well written authors box to visit your site in 12 easy, step by step, video lessons with practice worksheets and feedback from the site owner and other members… with a weekly live Q&A… etc. is HUGELY valuable and we find that marketing programs like this are very easy and lucrative if done well.

Caveat: If done well emphasized.

The challenge is, as you mentioned Shane, FTM sites require planning and preparation.

FTM’s as courses are powerful… the key to keeping long term members is to overdeliver, charge a fair price, be unique and — plan out multiple courses that you can chain together sequentially, one after another, in a logical or connected way.

For the article course (FTM membership) maybe you’d follow up with additional single sale products or other drip feed courses about:

*How to write powerful authors boxes that get readers to click-through to your links
*Syndicating your articles the right way – is software really the way to go?
*Press Releases are just a special kind of article – learn how to…
*You’re writing killer articles now – but, why? What products do you own that you are using articles to promote? Product review, creation, and conversion – in three easy steps… blah, blah
*Headlines for articles? How to stand out in a crowded market or niche…

Etc.

You could even go into the “How to make money writing articles for others” course materials and offer a dozen different FTMs or levels on building an article / content creation business.

All – well received and retained by buyers with almost no attrition if you do it correctly.

In a way, maybe it’s good you didn’t include FTM’s – that leaves this secret business model wide open for insiders like us to really take advantage of offering very high quality content, products, programs and services. :o)

Of course I’m a bit biased – the FTM model makes me and my clients such a solid living, that I’m creating my own software just to manage them and make these online gold mines easier to create and promote.

Good article however, well done video.

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shei - November 29, 2010

Thank you for sharing this piece of info! Very insightful!

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Abraham - December 9, 2010

How do I subscribe to your blog? I want a daily email or something like that, when you write new posts.

Thanks =) I love your blog man, you do nothing but to give QUALITY content, and you care about us noobs on IM. Thanks.

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    Shane - December 10, 2010

    Hi Abraham,

    Thank you very much!
    For e-mail updates concerning blog-posts, you can sign up using this link: Subscribe to IM Impact by Email
    For my newsletter, where I write about IM stuff that I don’t publish on the blog, you’ll have to sign up to one of my freebies (see “Free Stuff” tab).

    Reply
      Abraham - December 20, 2010

      I subscribed to the RSS Feed =D Thanks Shane, I look forward to read your posts in the future.

      Reply

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