In the last two posts in this business strategy series, we’ve talked about the monthly membership business model and the innovating-without-a-net business strategy as they play out in the offline world. In this final post in the series, we’re taking names, busting more myths and moving these business strategies online.
Some of you caught on to what I was really doing in the last two posts…
In our conversation about the monthly membership business model, I took what is often held up at the ultimate low-risk, cash-flow positive, set it and forget it business strategy and showed how it often creates a false sense of stability that lures you into complacency, leading to a slow, insipid decline.
Then, I took one of the most fear-inducing business models—innovate-hustle-pray—and showed how, done really well, it can be game-changing, highly-profitable, and far exceed the potential of the set-it-and-forget-it model.
But, truth is neither model is without it’s risks and challenges.
Both business strategies can be executed in ways that make them either powerful or pitiful.
It’s all about what you bring to them that makes either work or not work.
Fact is, the monthly membership business strategy can make it a whole lot easier to sleep at night AND build a tremendous business IF you keep your eye constantly on theinnovation ball and proactively work to avoid the complacency trap.
And, the innovating-without-a-net business strategy can be disastrous and lead to non-stop stress IF your business is built largely around a commodity service or item that doesn’t rely all that much on innovation (though, if that’s the case, you’ll inevitably end up in a margin-killing price war at some point anyway). Or, if the thought of constantly coming up with ways to blow peoples’ minds doesn’t sound fun to you.
So, let’s bring the conversation and the business strategies online now.
And, look at a few examples of online monthly membership models, see what new challenges arise in addition to complacency, take a deeper look at a few that actually work well and explore how.
After that, we’ll move over to the “innovating without a net” side and look at how that often unfolds online. And, we’ll explore a new platform that’s allowing pretty much anyone to set up an a la carte menu of courses that can be taken either standalone or as part of a certification or other credential.
And, maybe, just maybe, we’ll end up somewhere in the middle…
Online monthly membership websites: the good, the bad, the truth
When we move the monthly membership model online, the innovation/engagement challenges remain, but are expressed differently.
New challenges include:
- Technology integration,
- Forum moderation/constant engagement,
- Feeding the content/feature beast,
- Opportunity for access often creates an expectation of access that’s unrealistic
- Easier to duplicate/rip off than offline models because price of entry so low.
But, along with those challenges come new opportunities vs the brick and mortar membership biz:
- No physical space to maintain,
- System wide upgrades all the time,
- Opportunity to expand market reach globally
- Ability to scale in a fraction of the time
- Ability to scale with a fraction of the cost
- Substantially lower fixed costs/overhead.
- Low up-front investment
- Lower risk of loss
In the world of online membership sites, there are two major divisions:
- Education and
- Services/technology solutions
On the education side…
Every year, thousands of people launch membership sites promising to deliver constantly-updating training materials within a particular niche. The vast majority of these sites quickly fizzle under the unexpectedly massive burden of content creation and member engagement.
It’s very easy to underestimate what it takes to feed the content and engagement beasts.
The people I know who’ve seemed to really figure it out have moved away from indefinite commitment based sites and:
- Capped the membership period to a fixed term – instead of offering a perpetual membership experience, they offer an X month course. From a psychology of persuasion standpoint, this makes sense, since people are generally more willing to commit to something with a defined start and end point. Plus, it makes the content delivery and engagement burdens easier to identify and keep up with on the owner side of the equation.
- Switched to a library & syllabus model – While most of those folks started with monthly billing, time-released content delivery and ongoing forum moderation, many have now switched to a library & syllabus style of content delivery. They offer access to a library of content upfront and provide a syllabus to help navigate the content, while preserving ongoing support and engagement in the linked forums. The downside of this used to be that someone could download the content from the full course in the first week, then stop paying. And, that is a risk you take, which is one of the reasons most who use this model also…
- Switched to a one-time up-front payment – Many have switched from a monthly subscription payment model to a one-time up-front payment…which probably says something about retention when payments were monthly, too.
- Teaching Sells – Teaching sells literally teaches you how to build a business around what Brian calls interactive learning environments.
- SEO Book – SEO Book teaches you how to drive a lot more traffic to your website via organic search.
The content libraries are updated regularly and interaction is provided continuously. And, both now operate on a one-time (or limited installment) fee structure.
In fact, I’m having trouble thinking of more traditional online membership sites that have:
- Stuck with the monthly content delivery and pay structure,
- Endured for extended periods of time with fresh, high-value content (more than 1 year), and
- Aren’t scammy get rich quick sites.
I’d offer up the example of ThirdTribe.com, but even though I am really enjoying and finding value in that community, it’s too early in the game to fit the above criteria.
If you guys know of some that satisfy the above 3 criteria, feel free to share links in the comments (but don’t outright spam if they’re not really qualified).
On the service/solution side of the monthly-subscription business strategy…
Moving away from pure educational content as the basis of online membership sites, technology solutions are tailor made for this type of business strategy. You can allow people access to a hosted solution that allows 24/7 access from any browser. And, this format actually facilitates innovation, because you can constantly improve the solution without having to worry about compatability and tech issues that can be major drags with traditional “installed” software upgrades.
37Signals is a great example of this. A number of you brought up the example of 37Signals and their highly-successful monthly-billing business strategy in the comments. 37Signals created a set of online productivity and collaboration tools that have gotten rave reviews. I’ve used some of them myself. And, they’ve also become known for consistent, envelope-pushing innovation and features, while always keeping their user interfaces super clean and easy to work with.
Thing is, when you move over to the solution side, we aren’t really talking about “membership” sites any more, we’re just talking about subscription billing.
It’s a subtle difference, but one that signifies a very real shift in the burdens involved. Because, when you remove the content delivery and engagement burdens of more traditional “educational” membership sites, that allows for a lot more time to be spent on internal innovation that often facilitates the introduction of additional or enhanced solution features.
What about innovating without a net online?
There are a million ways to sell one-off products and services online without monthly-billing. That conversation is way too big. So, let’s stick to the high-value educational content side of the equation, so we can make a more apples to apples contrast.
The alternative to membership sites for high-value/educational content has largely been:
- Paid ebooks,
- Fee-based webinars and teleseminars,
- One-time pay, single or multi-session trainings.
And, a lot of people make a lot of money with them. But, it is becoming increasingly difficult, because so many people now give away those same offerings as part of a lead generation funnel for larger products, like membership sites, services, events or fuller courses.
In the early days, much of the free stuff was garbage (and that still holds true today), but increasingly, companies are giving away very high-value content as a way of proving value, building credibility and priming the reciprocity pump in anticipation of paid offers.
A great example of this is ClickEquations.com, a paid search marketing firm that gives away some really high value information and training videos on PPC marketing in anticipation of then selling you the good stuff.
So, these days, to really shine with one-off online content, it’s got to be extremely well positioned, provide extraordinary value and preferably be launched into a large, existing community.
ArtoOfNonconformity.com blogger, Chris Guillebeau, has ton a tremendous job of this over the last two years. He’s built a hyper-loyal community, then served up a series of what he calls Unconventional Guides, which are a blend of high-value/low-priced ebooks and mixed-media courses that solve very specific problems.
- Frequent Flyer Master – a ebook-based course that teaches you how to score a treasure-trove of airmiles, often without setting foot on a plane
- Art and Money – a mixed-media course that teaches you how to earn a real living as an artist, and
- $100 Business Forum – a 28-day private forum based course that teaches you how to launch a small business on a shoestring budget
If you’re not following how Chris is building an empire…start now. You’ll learn tons.
On the “playing big” side, there’s also Institute For Integrative Nutrition.
Started as a live training and certification program in NYC for health counselors with a focus on nutrition, demand for the school’s programming exploded. This led them to launch a highly-innovative distance learning variation that blended mixed media courses with scheduled online discussions and forums. Doing this expanded their reach dramatically, opening up their training and certification program to a 24/7 worldwide audience.
And, here’s a secret, I am now in the process of developing some very cool new training to be announced very soon. At first, I was looking at online membership sites as a prime business strategy.
But, there a new kid on the distance learning block you may want to know about that can make presenting your paid content easier.
Prfessor.com, launched in 2009, boasts a turnkey distance learning platform that any content creator (that’s you) can use to host, register, manage and deliver online courses for a fixed monthly fee ($49.97 as of March 2010). And, it’s pretty slick, because it let’s you not only roll out individual courses with a variety of content formats, it also lets you set up what can essentially become an online institute or certification program with a complete listing of courses. Or, as they call it…an instant academy.
I’m very tempted to use this platform for my next adventure, so stay tuned.
In the end, what I’ve hoped to convey in this 3 part series on business strategy contrasting the membership/subscription versus one-off models is:
- There is no one perfect model for every venture
- With every seemingly perfect model, there’s always an underbelly. If you can’t see it, look harder. Be sure you know and are willing to dance with the challenges before you build a business around it
- Think seriously about whether you’re comfortable spending your time on consistent innovation, content creation, member/client engagement and solution evolution. Different models shift the burdens between these elements.
- Either way, it’s getting harder and harder to justify the investment, risk, market limitations and oversight needed to operate a brick and mortar business IF there is an online analogue available.
Stay tuned for some upcoming series’ on small business, persuasion, marketing, copywriting, launch strategies, sales and more.
And, if you missed the first two part of this series, you can find them here:
As always, would love to learn from your thoughts and questions in the comments below…
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