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How Not to Make Big Money with a Membership Site

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In this session, a member asks how to gain members quickly and get regular income from a membership site. We discuss the growth of our membership site and then answer the question “what I would or wouldn’t do if I were to start my business all over again”.

Video Transcript

Member: Well, I sent you a bunch of questions. Do you have any… remind me a little bit please.

Rick: Okay well, my favorite question of yours, it was the one about the you know, easiest way to get 100 people to sign up for your site at $10 a month. You know…

Member: Yeah, easiest and maybe best and quickest and… go ahead.

Rick: You know, I know there are people out there that claim to know that answer but I’m not one of them.

Member: Well, I think you are and here’s why. You run a membership for person who wants run month to month is $10 a month and you’ve acclaimed over 1000 members according to your site. And I would think that you have a pretty good idea and I think all of us are in here because we trust you.

Rick: Well, the thing is though that yeah, we have almost 1800 members but we currently only have 300 and some odd paying members. So the membership count starts when people signed up the very first time and unless they physically cancel their account, they never drop off the roll. So our number keeps on growing. You know, all time we’ve had… let’s see, for all time we’ve had… So 36 and 59 and 174 and 2 and 17 and 29, 15, 54, 47 and 12 and 2. You know, we’ve… I don’t know. That’s a great question. This is not a big money making venture, I’m sorry to tell you. I wish I could say that it was you know, a wildly successful financial enterprise. But 36 + 174 + 17 + 15 + 47… oh, I’ve been saying enter all that time. 36 + 174 + 17 + 15 + 47 + 12… so I currently we have 301 paying members and all time, we’ve had 447 paying members and that’s over the last… just over 2 years. So we are, just now actually starting to make close to enough monthly basis to survive. And you know…

Member: I’m glad.

Rick: So it’s… we didn’t do it very quickly and you know, in our first year of operation, we grossed about $8,000 which was substantially less than it cost us just to operate the way we were operating. So you know, our first year of operation, we didn’t make any money at all and all the time that we spent on it we just you know, we had to make a living elsewhere. And this year, I think… I mean, the 2nd year of operation I think, maybe we grossed… I don’t know. I probably shouldn’t even say this but something like $42,000, $43,000. You know, we spend $1500 to $1700 a month keeping the site, paying our employees, paying the expenses of the site and that sort of thing. So you know, this is the year hopefully, our 3rd year is the year in which we think that we’ll you know, comfortably make a living but we haven’t done that yet. And it’s been… we worked really hard at it for a couple of years.

Member: I want to interject some thoughts here, okay? First of all, I want to thank you very much for sharing your statistics. They’re very revealing and I want to thank you for that. Secondly, because of what you’ve gone through, you’re in a very good position to answer the question, “If you had to do it over again and you were going to proceed, what would the best route for you to be?” Those are the kinds of answers I’m looking for from you. But before you get that, let me also put in, hey, I’ve been at this for about 6 years and all we’ve sold is 2 $19 ebooks and how much we’ve got invested? About $75,000. So that’s a big ouch.

Rick: Yeah.

Member: So obviously, it’s who do you trust and to follow in this business. And some of it’s been enjoyable such as… because I enjoy copywriting and so I’ve narrowed it down to who to listen to. I would say I would be a good expert who to listen to and who not to listen to on certain areas. And copywriting is my forte but your kind of stuff is interesting. It’s hard for me to understand but in that, going back to answering that question, I’d like to know what you would do knowing what you know now to answer that question.

Rick: Okay so knowing what I know now… you know what? On some level… I mean, I was really fortunate because I was able to work as an architect part-time and even though the economy was horrible, I was able to make enough money working as an architect part-time that I could do this full-time and at the same time and not make any money doing this against the possibility that it would become of you know, a reasonably profitable financial venture at some point in the future. And I wouldn’t be doing this at all if I didn’t have that because all during that time, I still did have to pay bills. I still did have kids in college. I still did have to make a living.

What I would have done differently… well, I think the way to be successful at this is to know something that’s important to a viable market and to have a way of communicating that. That’s what this is really is I started this business assuming that I could raise enough interest from local area businesses who wanted to… business owners who wanted to create their own small business websites and want somebody to teach them how to do that. And so I thought when I started this business that my business model was going to be teaching live classes in auditoriums where people had their computers in front of them and we would go through the process of setting up their site in a course of 8 hours or 12 hours or 16 hours. And you know, each person would pay a few hundred bucks to be a part of that and you know, and we do that and then our hook was that they could come back and watch the courses, watch that same course for nothing you know, later online. And so I was confident in the first plan, confident that there were enough small business owners out there who would pay $300 or $500 or whatever to go to a live class and go through the process of setting up a website. I was confident enough in that that I started off with building a website first and having the course material in video format so then I could use that as my marketing hook.

Well, that first premise is wrong. At least, I didn’t appreciate the market or I wasn’t able to reach the market. Or for whatever reason, I wasn’t able to get people willing to pay $300 or $500. I actually couldn’t even get a full class of people free. And somebody said, “You know, well if you can’t give it away for free, you’re surely not going to be able to sell it.” And you know, I wasn’t able to give it away for free and so this business really kind of came out of that. So I’ve spent all this time developing these videos. Now what do I do with them since I can’t even give away a class on how to build a website, let alone charge for it?

And so, I don’t know if that answers any of the questions. So the trick is to find what you like to do and what you know and find a way to connect with a group of people that have that interest and in one way or another, can spend some money to get that information from you. And…

Member: Can I say something?

Rick: Yeah, absolutely.

Member: I’m thinking more you have that interest. You have that market. How would you cultivate the membership site so that you could capture people paying $10 a month? I guess there’s got to be some way to ignite their interest or measure their interest. There are simple things like you know, write your post so that when you get to the more tag, it’s so juicy they just want to know more. And they get there, they got to be part of the membership. I know we have 3000 Twitter followers and even though we haven’t been selling anything, my wife has a pretty good following on her garden site. Actually, she’s got a lot of chefs following her too, New York chefs who actually gave recipes and stuff to her. I’m surprised. But I’ve been trying to figure out if you have devotees following you who might not do as I said.

Rick: Well, at that… I think that’s a probably fair observation that if you have something that’s interesting and that people find valuable, is there some way to turn that into a way to make a profit. And you know, I guess obviously, part of my problem was is that I had a very limited… I had to rely on Google to sell the product because sitting here in my basement doesn’t give me access to a lot of people. And so the way you get your message out in front of a lot of people is to either pay for advertising so that people who are looking find the information or to develop a site that gets found. And you know, my guess is your wife’s site is a good example of a site that’s kind of waiting for somebody to monetize it you know, waiting to find a way to make money out of it because I’m guessing that your wife’s site gets a reasonable amount of traffic and it’s got some good followers. And that if it had the right nudge, it could probably make money either through advertising or through selling your own products. And the trick in your case then is just to find the right information products to sell and because that’s what all of us are doing. We’re selling information, things that we’ve learned. Your wife knows just so much about organic gardening and that you know, it seems to me that there’s bound to be a way to package that information for sale, even if the organic tomato ebook is not the way, there’s got to be a way.

Member: I agree. Let me ask about… interject another question. I was thinking about what you said and what you did. Have you ever taken a survey asking your members how did they find you so that maybe, that might give some clues to you finding other people like them?

Rick: Well, no. I mean, I’ve tried surveys a couple of times especially in the first part of the life of the business. But you don’t really get very many answers. I have thought about trying some automatic survey stuff on the site you know, little pop up things for people to give you a little bit of information when you go to the site. I’ve thought about that but I haven’t acted on that thought.

Member: Would those answers be important to you if they did fill it out?

Rick: Well, I use… I’ll tell you what I have done. Rather than using surveys, I have used analytics. I’ve asked myself, “You know, where does my traffic come from?” You know, so in terms of where does my new visitors come from, that’s what this graphic shows me. And if we switch to source for a moment you know, this last month, 84069 have visited my site for the first time based on a Google search. So if I want to know you know, what the… and I can tell that you know, 2.22% of those people have converted. That is, they’ve converted in the way in which I define conversions which is spending enough time on my site or signing up for a free membership.

And if I take away Google for just a second and I ask where does the rest of my traffic come from, you can see that Tips and Tricks HQ, my number 1 referrer really, is the company that sells WP eStore. They are the number 1 source of traffic back to my site. The 2nd one is DIY Themes coming from forum answers and the 3rd one is YouTube. And so you know, if you look at Tips and Tricks HQ and you… well, for just a moment you know, wonder how they do in the goals you know, in terms of free register you know, 1.34% of the people that come to me from Tips and Tricks HQ for the very first time register as a free member. And if we look at goal set 2 then 1.72% of those people that come from there spend at least 15 minutes on my site. And that’s for new visitors and if I switch from new visitors to all visits then… which is also a useful piece of information you know, if I switch to all visits then it’s 633. So obviously, a bunch of people come to my site twice from Tips and Tricks HQ. And then I have a higher conversion rate and a higher percentage of them spend time on the site. So I can tell by looking at my traffic you know, those places where I need to spend time.

And then the other thing I can do to tell where people come from is I look at my landing pages. And so if I look at content and look at my site content and look at landing pages you know, everybody who comes to me from Tips and Tricks HQ actually comes to this Subscribe to Our Site page because Tips and Tricks uses me as an example of using WP eStore. And so their example that they use is essentially my you know, Buy Now page. It’s just nice.

But then you know, number 4… well actually, if we go to new visitors again, I really like to watch new visitors as opposed to returning visitors. If we look at new visitors, one of the latest ones is this Build an Online Store Using Shopp. I’ve got 100… I mean, it’s number 6, my number 6 referral of new visitors or my number 6 landing page for new visitors is this online store using Shopp. One of the things that I have learned is that when I teach a free class like this, my traffic really goes up.

Member: And look at the page visit and the amount of time they spend on the site.

Rick: Absolutely.

Member: And your bounce rate is low.

Rick: So teaching this course free has drawn a lot of traffic to the site and has… and remember that I’ve only been teaching this course for a month. So it’s only had a really short period of time in order to have an effect. But nevertheless, it has had an effect and I presume that it has an effect on sales because sales have been fine. You know…

Member: You have a way to measure that?

Rick: Yeah you know, that’s kind of what I was talking about with Susan. You know, this is exactly the question I was asking myself here this weekend which is you know, okay I really got to settle down and try and figure out how to measure my sales and measure where sales are coming from.

Member: I got an idea. Had you had a bump in sales since showing that course?

Rick: I’ve had a… yeah actually. You know, December was our best sales month ever and January is on track to be a better sales month than December was.

Member: So you don’t have to test that theory out. You have to try another course to see if it carries through.

Rick: In fact we are. We are teaching… we’re starting in February. I haven’t announced it yet but we are starting a new course in February because this course is over with, airing next on Monday. So we’re starting a new course in February on… just essentially redoing the Start Building Your Website Here series. But you know, I know a lot more about what I’m doing than I did back then and it’ll be a live course and it’ll be a free course. And it’ll be… well anyway, I would be interested to see how that results in traffic.

Now when I taught the course in the summer, the How to Build a Membership Website course, that was a time period when we also had a big increase in traffic and a decent increase in sales.

Member: So that’s an important key for you then.

Rick: Right. So I think that is an important key for me is… and that was… I lost my train of thought when I was talking about this earlier but that is really what I think is I would do differently had I realized. And that is I would continue to teach classes free for the length of the class, take that material and turning it into a product that people pay for. And then using… so what I do is I essentially combine marketing and course creation into the same block of time.

Member: Here’s what I get out of this. Basically, you’ve used a lot of bait and using the Google Analytics, you’re seeing which bait is working the best and then repeat the bait that’s working the best. When are you going to do a homeowner’s association in a membership like…

Rick: Well, that’s a good question. You know, that might be a good choice for this spring.

Member: There would be a simple one to do, I hope or think.

Rick: Well, it’s… I don’t know. I don’t know if it’ll be simple or not. I mean, my guess is it probably isn’t simple. That it’s probably a little bit more complicated.

Member: Here’s an idea for you. If you kind of let us know in advance, I think some of us would want to market your… as an affiliate would seek out the people in those sites like in homeowners. You know, just contact a bunch of homeowners and say this and this. And I think they would jump in there just to find out.

Rick: Well, I mean it’s true that I have not… the only thing I’ve ever done for affiliates on my sites is give them badges and a way to login and get one. I have never really attempted to make their job easier by giving them something specific to market.

Member: I’m thinking not so much specific to market to know in advance of what’s going… what bait you’re going to be broadcasting then they could focus on that market. I think that would be important in any… to market any product.

Rick: You know, you’re absolutely right. I mean, I think it is something that would be useful to them and also useful to me because whatever is useful to them is useful to me.

Member: You know, indirectly, you’ve answered my question as what would you do in here. I appreciate that. It’s in here, I think.

Rick: Well, I’ll post this video online and then you can listen to it again.

Member: I think I’ve got a copy of it this time. I think I’ve figured out my…

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