Recurring Revenue: Is A Membership Model Right For Your Business

Vacation or prison? A membership-based online business can feel like either, depending on how you design it.

Why am I writing about memberships this week?

Because I’m considering one for my business and wanted to share my thought process for deciding.

Many solopreneurs and creators hear about recurring revenue and think, “yes please!”.

That’s understandable. If you do it right, it dramatically increases your odds of success.

But if you do it wrong, you create a business that is like an inclined treadmill: you have to keep working to stay in the same place.

Why consider a membership model?

There are three main reasons to consider a membership model:

1. Memberships can be better for your customers/clients. A deeper, more relationship-based delivery model can result in better outcomes or a higher success rate for your members compared to one-time courses or programs, which many never start, let alone finish.
2. Memberships can be easier to start. Rather than having to build an entire flagship course or program, you can begin with just the first few elements of your membership, what Stu Mclaren, a membership expert, calls a founding member launch.
3. Memberships can deliver the holy grail: recurring revenue. Instead of constantly finding new customers to sell a one-time product to, your goal is a steady stream of new members WHILE retaining existing members. This can deliver substantial growth as the lifetime value of a multi-year member can be quite high.

Most of the benefits (and the pitfalls) come from those three areas: customer outcomes, delivery advantages, and recurring revenue.

Pitfalls of the membership model

There are main pitfalls of the membership model to design around:

1. If the main selling point or value is a constant stream of new content, resources, or sessions from you personally, then it risks becoming a prison you can’t escape without losing your members and revenue.
2. Retaining members can be difficult without a constant stream of value or resources. If you can’t retain members, then you are back to having to always be attracting new ones—the inclined treadmill.
3. If your answers to 1 and 2 are that part of the value will be the members helping each other or member-generated content, then you may have the slow start problem where there isn’t much “community” when you only have a few members in the beginning.

Successful membership examples

In my research, I’ve found several different models aiming for the benefits without the pitfalls.

Josh Spector, author of the For The Interested newsletter, calls his the sessions system.

It’s a simple model where he creates one master class or micro-course each month. You can buy each individually for $50 or become a member and get access to a year of them for $250.

It does require a stream of new courses, but they are very reasonable to develop.

Jay Clouse, the founder of Creator Science, has an annual membership with a community-focused model where he caps the number of members and has a higher bar for membership, then they all help each other.

Jay augments with his own content but without setting an expectation of constant net new content.

He does commit a lot of his time, but he’s mentioned that he wants to remain a practitioner and then report on his experiments and results.

I’ve also been a part of other memberships where it is a follow-on or continuity after a flagship course or program.

Amy Porterfield is a good example, as she has wildly successful online courses and then a follow-up membership called Momentum.

Designing my membership

For my potential membership, I’m planning to leverage a few aspects of my current business and the needs I see in my audience.

First, my main business is done-for-you services. Our content repurposing service is growing rapidly. Our program, where we help creators build their entire business from scratch, is also popular.

We are in the trenches every day learning and building, which gives us a ton of content, stories, and lessons to share.

Second, I’m committed to this for the long term as I like the people, topics, and challenges of online business. So I’m not afraid of committing to ongoing content creation.

Third, not everyone in my audience is in the position to hire help, even our affordable fractional teams or service packages. Others may already have a team and need to fill in some gaps. So providing a membership and a more DIY or DWY model will help those segments (and of course, some will want to move into DFY when ready)

Here’s the rough outline of what I’m thinking…

Member Content

The core content will be “implementation sessions”. Like Josh Spector’s model, the goal isn’t courses with 153 modules and mile-long PDFs.

The goal will be the fastest possible implementation of the essential elements of online businesses.

In our DFY program, we have the nine foundational elements all online businesses need (ex. sales funnels, website, content, etc.), so we’ll have implementation sessions for all of those.

For established businesses, we also have the nine systems needed to reach 7 figures such as process management, marketing, and support.

The sessions will focus less on theory and more on “provide this input, do these steps, and get it created in the next few hours”.

Our model already has an inherent success path and order to it, so folks coming into the membership would start at whichever element they are missing.

Member Tools

Tools and tech are a big part of what we help with, so we will be taking many of the things we use day to day and building them into the membership.

One tier of the membership will likely include the entire tech stack creators and solopreneurs need so that for one low price, they will have all the information AND all the tools they need for success.

Member Support

This one I’m still working on. The basic membership tier will have a private community and occasional training sessions or Q&A.

In the main membership tier, I’m deciding how much to commit there—certainly group coaching sessions, hot seats, and formats like that.

In addition, so that I’m not bearing all the load, we’ll also have other experts helping out as well.

How do we differentiate?

As I read my plan back to myself, there is the clear challenge of differentiating. The above “sounds” like a lot of other similar programs out there.

This is a HUGE step not to miss in your own planning. In every niche, you will be competing with already existing memberships.

In my case, the differentiation will largely be tied to our done-for-you experience. Most of the gurus teaching these topics are just regurgitating what they did starting ten years ago. Many of their techniques don’t work in today’s market.

Since we’re helping people in-depth and in real-time, I think we’ll have an advantage there.

The other is that most programs shy away from one of the biggest challenges: the tools and tech. They pick the highest-paying affiliate program they can find, then punt their students over to that and leave them to figure it out themselves.

We’ll be going deep and simplifying all of that and in some cases, providing turn-key platforms, so that’s an area we’ll be leaning into.

Finally, the focus on implementation over information will be the biggest differentiator. Stu Mclaren has said the primary reason people leave memberships is overwhelm.

The flip side would be people will stay if they are steadily moving toward their goals with the help of the content and support in the membership.

Take Action

Hopefully, this high-level view of a product planning exercise will help you.

Here’s a quick summary that you can use in your planning:

1. I chose a model to evaluate: the membership/community model
2. We looked at the benefits of the model
3. We looked at the pitfalls of the model
4. We searched for examples that brought the benefits without the pitfalls
5. We picked one of the examples and modeled our plan after it
6. We reviewed the result and asked a key question: how will we differentiate

Where do we go from here? I’m going to do another more detailed round of all of the above and then decide if we’re going to move forward.

If we do, we will pre-launch with a trial offer and the first implementation sessions.