I had the pleasure of interviewing Mike Morrison from The Membership Guys a little while back. We talked about pricing, keeping members and growing your email list.
For those who don’t know, unlikely for you who don’t know what it is that you do, and what The Membership Guys do. What’s your experience with membership businesses or membership websites?
I’ve been building online communities for well over 15 years. I was that nerdy kid who, when we got the internet at school I was looking at and saying “This is so cool; how do I build websites, how do I build forums and stuff like that?”
I’ve been doing that for 15, 20 years or so. For the last 10-12 of those, I’ve been running a digital agency. We started focusing in on the sort of work that we enjoy doing, the sort of projects we like, and that was memberships.
As the years went on, we ended up increasingly specialising in membership sites or clients, helping them with the tech and with marketing strategy, as well. Then, ultimately that ended up being all we did.
The only stuff we did was working on memberships, and then, when my partner, Callie, came onboard, we ramped that up and planted our flag in the sand as The Membership Guys. We’re fans of literal names, and we’ve got the privilege of working with hundreds of different memberships.
We’ve taken some from literally nothing all the way through seven figures, high six figures, and all that sort of stuff. We’ve had a lot of fun doing it, and these days we don’t actually work with clients anymore.
This seems to be a very common point: your email list. Why is it so important to grow an email subscriber list for a membership site business?
You need to build on your own turf.
I think with the growth of social, or since 2005, 2006, onwards, people running businesses, marketers get so obsessed with these vanity metrics, and it’s how big is your Facebook page, how many followers do you have; but they’re not doing anything with them. Until HSBC accept Twitter followers, unverified blue ticks for mortgage payments, it doesn’t mean a thing … It means jack shit.
You need to build on your own turn because Mike Zuckerberg likes to change things.
He likes to mix things up, and normally he doesn’t give a shit about you, he doesn’t really care about your business unless it suits his needs to do so. I’ve been around this space too long to put any faith in “we’ve got a great Facebook page”. The fact is, they pulled the biggest bait and switch in online history when they convinced all of us to build our following and audience on Facebook, and then now they charge us to reach them.
You need to build on your own turf. That’s the only way that audience actually is your audience. From there, then you can develop and nurture that relationship. Then, you can figure out what these guys want and actually interact with them, and share your membership, your online course, your service-based business, whatever it is. You can’t provide a solution until you want to solve the problem, and the only way you’re going to solve the problem is by actually engaging with an audience that “belongs” to you.
What is it that my membership business needs to remember in order to actually start growing that list?
You need to remember that it’s people behind the email address, and people are different. Everyone’s different, their needs or situation, their problems are different, so having the same broad strokes approach for every single subscriber on your list, in terms of emails you send them, whether you just send them a regular newsletter, or the marketing funnel or the sales funnel you put them through, the first step I think everyone needs to be doing, and thankfully, more and more people have thought about this, is actually diving into the makeup of their audience and segmenting their email list accordingly.
Just starting with that, that’s going to take your relationship and your ability to serve your audience just to that next level. If you can identify three to five key segments in your email list, and make sure that if you’re sending out your piece of content it’s going out to the people who it’s actually relevant to, and not just going to everyone.
When you’re putting people through the sales funnel, you’re looking at things like, “Okay, where did these guys come from?” Just using our own website, Membership Guys, themembershipguys.com, if you go there, we actually do this in a very practical sense, and I’ll be honest: we modelled this on Pat Flynn, with Smart Passive Income.
You go to his website, and he actually point-blank says: “What are you here to do?” There’s five, essentially, core things that people are there for: people who are just at square one, and they’re completely new to this world of online business, all the way through to the people who are maybe doing six figures, what have you, and they’re looking for that next level up.
It’s like, hold on: if I just read an article, “Here are 10 steps to get more Twitter followers” with the social thing, then surely the opt-in that I should see should either be a checklist for the 10 steps, or “Here are 10 more steps” that you get from … It shouldn’t be “How to make your website faster” because you’re not there for that. You didn’t come because of that information that led to the opt-in. Segmenting your audience, and that starts with understanding the dynamics and the needs of your audience, and the best way to do that, it’s just asking them.
Let’s say I’ve now got members, that the site’s out there, I’ve got members coming in. Should I, as a membership business, should I focus on getting new members, or keeping current ones?
It’s both. It’s a balance of both, with a little sway towards retention. This is probably one of the things most people screw up when it comes to memberships, because they think of memberships in the same way we’ll think of an online course, which, there are nuances, there are differences between them. Then go one-off programme and an ongoing, recurring membership.
They mess this up: they think that they’re selling a service like selling a product, but if you’re selling a 2000-pound or 20,000-pound website contract, or you’re selling a piece of software, getting that sale is the finish line. With a membership, it’s the starting. That’s where the actual work begins, because, great, fantastic, you got their first monthly payment. How are you going to get that second one? How are you going to get a third one? How are you going to get that 327th one? The real value in a membership site is that recurring revenue, so you need to give people a reason to continue paying month after month after month. It’s no good bringing all these people in through the front door if they’re all just slipping out the back. You need to have that retention strategy.
What’s most important, then, about keeping my current customers happy?
It’s delivering ongoing value. If you expect people to pay you on an ongoing basis, you need to deliver value on an ongoing basis, and that really comes down to showing up and giving a shit.
Going up and serving your community, finding ways of helping them achieve what they’re joining a membership to achieve. Nobody joins a membership site to stand still.
They join because they’ve got a goal in mind, an outcome they want, a transformation they want. Even if the outcome they want is simply to be entertained, and some of the great memberships, you know, Netflix. Nobody’s there to lose weight or to make more money, they’re just there to be entertained. If you don’t deliver on what people come for, then they’re not going to stick around.
But it’s not just about piling on more content, is it?
More stuff, stuff isn’t the answer, but content is a conduit, it’s a vehicle that gets people to where they want to be, so if you can solve my problem with a five-minute video, you’re doing no favours by stretching that out into a three-part dripped course that takes 20 hours purely because you think that’s the way to keep me hooked. It’s about value, it’s quality, not quantity.
This is the question that I’m most constantly asked when we’re building these sites is “How much do you think I should charge?”
Listen, with so many things, there are formulas, there are approaches that go into it. You go for the margin above cost, so if you’re making a hamburger and the raw materials cost you a dollar, then you would charge $1.50, it’s clear, but memberships don’t actually have that much costs, so most of them are almost pure margin, so then it becomes a case of how much … Find the balance between how much you want to charge and how much people will pay.
Very little about pricing is logical; so much about it is psychological, and it makes no sense. Put a $50/a month membership out there on its own, and someone may sit and scratch and think, “Is it worth it?” Put it next to the annual option, where it’s, I don’t know, $500, and they’ll look and they’ll see the big number and the small number, and they’ll be more likely to go for the small one. Apple do this as well; it’s all sort of logical. Apple used decoy products. They don’t want you to buy their cheapest one, so what they do is they make the price difference between the cheapest version and the next version up very small, but the feature difference massive.
I think there’s a couple of rule of thumb things that’ll help you out. Business to business, we’ll typically pay more when business to consumer, because B2B, they’ll see it as an investment; B2C will see it as an expense, a bill.
Let’s say I’ve got an idea for a course or membership site. What do I need to do to start?
Validate it. You have to test that idea.
The biggest, single biggest problem, number one mistake I’d say people make, they have this idea. They think, first, that they’re the person to have that idea. We all think our baby is the most, the best-looking, the most talented baby in the world, and let’s face it …
Let’s face it…
Most of them aren’t. Some people are blunt enough to tell their friends that on Facebook, but in most cases nobody will tell you that your idea kind of sucks, and so they have this idea and they rush straight into the single most irrelevant question that anyone asks about memberships: “What plugin should I use?” They think about the tech, then they dive in and they hire a developer, or they try and do it themselves, and they create all this content, and they put in months and months, and all this money and time, sweat, energy, lost sleep, all of that. They open the doors, and it’s just crickets. It’s like, it’s crickets riding on the back of tumbleweeds, floating across a desert of despair because nobody gives a shit, and it was a terrible idea to begin with. I think, I mean, Kevin Costner’s got a hell of a lot to answer for with the notion of “build it and they will come”.
It’s kind of like, “I’m going to open this membership site, and people are somehow going to sense that this new, amazing thing is being birthed on the internet.” It’s not. This isn’t Star Wars, no one is using the Force to detect it, “I sense a disturbance in the internet.” It just doesn’t happen that way, and so it all kind of goes back to validating: that was a market validating, that was a market that cares about your idea.
A particular pet peeve of mine is shiny object syndrome; however, it is also my favourite question to ask. What’s the most important tool that you think membership businesses need to look at?
You need something that will give you an overview of your figures. If you want …
I keep asking for bloody tools, and I’ve had the same thing five times. I think it might be a sign.
You know why? It’s because most people who build membershi p sites, it’s on WordPress. Most membership plugins, I think there’s only really three of note that come with any form of reporting, and the reporting is not what it needs to be. It’s possibly the single biggest underserved area of businesses, but it’s also the thing that people don’t realise they need until they hit a certain point, and they’re kind of like, you ask them, “What’s your average personal lifetime value?” And they’re like, “What’s that?” “What’s your churn rate?” “What?” It’s a difficult one, because a lot of people will also use PayPal. PayPal doesn’t integrate with a lot of the best tools in this area, so you definitely need that.
It’s a missed big opportunity. Someone who brings out … I’m not going to do it, because I have served my time as a developer. Whoever brings out a kick-ass reporting tool specifically for membership sites, because right now, like where … We use ProfitWell, which is very cool. We’d like to use something like Chart Mogul or Baremetrics for our stats, but we offer PayPal and Stripe, and it just won’t handle both. I had to hack the shit out of the little custom API thing we use to get it to work with ProfitWell, and even then not all of the stats are relevant because it’s for software as a service.
Wrapping it up, now: what’s the number-one piece of advice that you give to a membership business, that says, “Yeah, I want to grow. I want growth within my business.”
You need to know your audience. This is going to become the theme. You have to know your audience, you have to be willing to let go of ideas if your audience show you that they’re a bit shit.
You need to be willing to try new things out, and remembering what I said before, the membership that you launch with isn’t the membership that you’ll have a year, at the end of year one, at the end of year five, and so on. Your members will shape where you go. You have to remember that. We talk about niches and marketing niches for the …
Thank you so much for taking the time out, particularly on a Friday, because we’re all kind of winding down. How can people reach out to you?
You can find us, and a lot of good stuff, at themembershipguys.com.
Connect with us on social @membershipguys on Twitter, and we’ve also got a free Facebook group for membership site owners, we’ve got about 3260 at last count. Head to talkmemberships.com. That will redirect you to the right place, and that’s a tip, by the way. Free Facebook groups are awesome for growing a community. If your small business is going to be on podcast or video, buy an easily pronounceable domain name so you can just say “go to talkmemberships.com”.