MRR Mistakes of Membership Sites
The longest I’ve paid for a software product in my business is 2013. Right from the day The Conversion Co. started I had a Google Apps for business account for my email and online documents.
The longest-running software I have is a Flickr account I’ve had since about 2006 when I had my own little sports photography hobby.
But, I’ve left a membership site after 2 years – the longest I’ve paid for any information-type product.
Those aren’t rare examples, if you talk to other online training businesses who have gone to a membership model.
Why the big differences? I’ll get to that in a moment.
There is an obsession with the “unicorns” of software at the moment. They’re massively scalable, profitable, and they’re lusted over by the financial community as a result. If you can pitch your product as revenue-based software, your chances of massive investment shoot sky high.
Software businesses drive this obsession. Companies like Salesforce, Basecamp and Mailchimp are valued in their billions.
Then the content world got in on the act.
Netflix, Spotify and Amazon Prime turned their industries upside down. They pitched us with an endless stream of music, films and TV series at a fixed monthly price. Piles of CD’s and DVD’s ended up in charity shops as we threw away the idea of owning these products in favour of renting.
So, why have membership sites in the online training world done so badly in comparison?
Lets take a look back at our competition first.
Firstly, software. Software is a tool. When we buy a tool (as opposed to getting a workman in or borrowing one off a mate) it’s because we plan on using it again and again.
We use it again and again for the same thing. Even if we get better at using it, if we bought something half decent in the first place it will last us for years.
It becomes an ingrained part of our routines, and changing it becomes a pain in the butt.
Try getting me to swop my favourite set of bike wrenches and see how far you can get before I whack you with one of them.
The same for software. It becomes part of our daily routine and changing it becomes harder the longer we use it. We go way beyond the point where we know we should upgrade, just to avoid the pain of switching.
That’s what makes software so profitable. At a certain mass you hardly need to do anything to keep the bulk of customers you gained in the early days.
Next lets look at content.
Can you imagine ever throwing away your favourite songs? The day when you’ll admit you’re never going to watch your favourite film again? Can you imagine needing to “upgrade” your film collection?
No. Me neither.
There’s just an endless stream of content available to these companies. As long as they can get a critical mass of people to pay for each film or series, it gets made. Amazon has none of the expensive distribution costs of film in cinemas. They can spend way more on the productions themselves, and a lot of TV series don’t cost much.
In Spotify’s case they don’t even pay for the production. They’re just a middleman, only paying when someone consumes the artist’s product. Typically middleman businesses get screwed by the internet. Record stores and labels have suffered, but the middleman model works when you have a monopoly big enough that suppliers can’t afford not to use you.
But , there’s no “level” to content. There are only interest groups within their customer base, which is vast enough that they can cater to some superbly geeky minorities.
Before you get all snobby about it, Citizen Kane isn’t an upgrade from Police Academy 6. You don’t have to consume one before the other. It’s a matter of taste and how you feel that day
Now let’s look at our training sites and all the ways they fail to reach these criteria.
Imagine Netflix with only one series and you’ve got the content of most membership sites.
They can talk about the same topic from many different angles. They can bring in new actors, but at the end of the day you have to be fanatical about the actors to stay paying.
Netflix series are successful precisely because they are “pointless”. They have little dramas every week, but they aren’t working towards a know conclusion.
Think about this. Titanic would make the worst soap opera ever.
But that conclusion is what we’re looking from in a training site. We expect an outcome. More revenue in our business, better healthy eating, kicking a habit, a better relationship.
Whatever it is we have a goal, and when we hit it we leave, or when we fail, we leave.
Now, it is possible for the membership site owner to keep raising the bar along with their customers. But at some point that’s going to alienate the new members.
If you’ve ever walked into a Crossfit class when one of the competitive teams are training you’ll know what I mean. It looks scary and unattainable, so you leave.
So the typical solution is a series of layers for different levels of ability. This usually comes with increased investment for more intense attention.
But there’s a last hurdle as well.
No-one is going to buy training from someone who isn’t ahead of where they want to be. So if you want to be training millionaires, you need to be a multi-millionaire. If you want to be training multi-millionaires, you’d better be a billionaire.
That puts limits on the number of topics you can lead on. Probably one. A few people like Brendon Burchard manage 2 or 3 topics, but they’re usually part of a bigger picture, or they rely on a single skill at heart.
So, I’m sure that as businesses selling content we’re all looking at Netflix and Spotify with green-eyed envy. But if we don’t recognise the differences in the model and plan accordingly, if we don’t base our business plan on far higher churn and on multiple tiers of customer maintenance, we’re storing up problems from day 1.
If this is a model you are planning you need to be clear on:
1) What is the outcome you are promising?
2) What level is it aimed at?
3) What is your “next level” offering when people get there?
4) How are you positioning yourself as the “leader” at all levels?
5) How wide can you spread your topics before large parts of the audience lose interest?