Ask Ali: "Should I start an online membership program as part of my business?" - Glambition Radio

Ask Ali: "Should I start an online membership program as part of my business?"

Question: Hi Ali, I Love your newsletter! I’m still building my website business and think I should have a membership site, can I integrate with my current site?
–Tracey Hurst, Information Empires, Solihull, England
Ali’s Answer: “Hello Tracey, and congrats on building your business. There are many types of membership site formats and I do hear good things about WordPress ones. Most important though, let’s consider if you really should have a membership site.
Membership or “continuity” programs allow people to join your program anytime or drop out at any time, and typically pay a monthly fee. It’s a membership revolving door. Think of the original “Book of the Month Club.” One example of a continuity program is my Success Club. It’s a low-priced entry-level program that I offer for just $9.97 a month, and it includes monthly calls with me on business and success topics. You can join anytime or drop out anytime.
I see many people getting seduced into starting these types of programs. The benefit is it’s ONE sale that gives you monthly recurring income. That’s the fun part, I will admit, when you wake up and see a bunch of repeat orders in your inbox each month.
But, here are three things that most people in growth stages DON’T realize about continuity programs:
1. The high number of members they need in the program to actually make a decent profit.
2. The high number of members they need to continually bring in to combat what we call “attrition” — the gradual and natural reduction of members. A continuity program is a revolving door that you have to be managing all the time.
3. The customer service required to handle the orders when you start getting a few hundred people in your program. You won’t think of this at all at first. Suddenly, there will be credit card declines and people losing their passwords and having questions. They didn’t get their CD. They want to change their address. Their credit card declined. You don’t think this will be a big deal, but it’s going to turn into you likely needing a dedicated team member for these types of things, and it will probably be full time. It is a business unto itself when you start growing the numbers that you need for it to be profitable.
NUMBERS EXAMPLE: Let’s say that Susie Coach has a list of 5,000 people. She just heard about continuity and thinks, “I’m going to start a continuity program. I’m so excited. I’m going to do this monthly telecoaching thing.” She has a list of 5,000 people and sends out invitations and promotions for her programs. Let’s say that 10% actually click in the link in the email to learn more. That’s 500 people. They go read the sales letter. Let’s say 5% of them sign up, which is actually an extremely good conversion rate. That’s 25 members.
Let’s say her program is $47 a month. 25 x $47 = $1,175 a month. Now she’ll need a virtual assistant (VA) or staff member to run the program. Let’s say that’s 20 hours a month at $30 per hour. That’s $600, so once you deduct that, Suzie Coach is only netting $575 a month and is ready to run away screaming.
AND this example doesn’t even take attrition into account. Suzie Coach and/or her VA also has to be continually marketing her program in order to keep bringing folks in on a regular basis.
The even bigger PROBLEM I see is a lot of business owners starting these programs, getting sucked into them, and then starting to neglect the higher-profit areas of their business. They’re pulling their hair out trying to make this continuity thing work. Then it migrates from being a financial issue to an ego issue. They don’t want to let it go, and they don’t want others to see that it “failed”.
But, there ARE three situations when I DO recommend my clients launch and commit to these continuity programs:
1. You can rightfully charge a high fee for it. To do so, your information needs to be specialized. Let’s say that you have special information to help dentists market their practice. You could charge several hundred dollars a month for that, and I know people in the industry who easily get that. Why? Because it’s specialized information for a niche market.
2. Your objective is to use that lower level to give people a taste of what you have then quickly move them up the ladder to your higher offerings. That’s called an “ascension model.” In that case, your lower-level tier may be what we call a “loss leader.” You don’t make much money. You may even lose money on it, but it’s designed to bring people into your world and get them to sample what you have.
My current Success Club is a perfect example of that. At only $9.97 a month, I don’t really make money on it, but it’s an ideal way for people to get a taste of “Ali World” so they learn more about everything I have to offer.
3. You are a serious traffic magnet. This is if you know how to get serious nonstop traffic, this is your full-time job, or you have a whole staff working for you that get crazy traffic to your website on a specific niche topic. Let’s say you have a membership program on a specific type of stock trading. You’re getting thousands of members. That’s a full-time business. Even if you’re only charging $47 a month for this, if you have 1,000 members, that’s $47,000 a month. Now we’re talking!
I hope this information — based on my own many years online as well as coaching hundreds of clients — is helpful in making your decision!” — Ali

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