The Fundamental Flaw with Membership Sites

I was on the phone last night talking to a good friend of mine and he asked me about whether or not he should put effort into growing and expanding his paid membership site.

I said no.

You hear a lot of hype about membership sites and other clubs etc. that produce continuity income.

And most of the time you see an expert pushing his latest membership site silver bullet, they make it seem like a slam dunk business success.

I think continuity income is a great idea. Who wouldn’t like to have such a leveraged business model creating steady income without a huge amount of ongoing work?

But I think creating a membership site for your customers isn’t a smart long term strategy to grow your business.

In fact, I think there’s a fundamental flaw with content based membership sites.

Here’s part of the reason:

Consulting: How to Be a Fallen Angel

I’ve been consulting for quite a few years now. First in technology, then (once I got an inside look at businesses and realized I could add value) in marketing.

There’s a funny little thing that happens in consulting with a client if you aren’t prepared for it. Here’s how it generally goes:

1. Client retains your services.
2. Client is excited and tells you how great you are. Thinks you are the best thing since sliced bread. You don’t disagree
3. You begin to work with client.
4. Client is happy with your work and results.

And then it happens.

5. Inexperienced consultant decides to stick around and work even CLOSER with client.
6. BAM. All of a sudden, consultant seems oddly normal.

I have run this little loop more times than I care to admit. And that’s why these days, I know it’s smart to get in, add value and get out.

Because doing otherwise and expecting my business to grow is going face to face with the beast I call human nature.

The longer you stick around, the more normal you become, regardless of just how valuable your skills are.

So what does this have to do with membership sites?

Everything. In a membership site, you’re fighting the same beast.

Why Do Entrepreneurs Start Membership Sites Anyway?

I’m sure there are plenty of reasons business owners start a membership site. But in all the years I’ve been working online and consulting with clients, I pretty much only hear one reason:

To make a lot of money without doing so much work.

And that, I think is the real problem. Because it leaves out the only thing that will support a long and profitable business: happy customers.

Do your customers care about your goal for ever increasing profits with smaller and smaller amounts of work? Of course not.

Have you ever heard an entrepreneur say, “I’m going to start this membership site because my customers NEED this value delivered this way.”

I’m sure it’s happened, but probably not very often. I know I’ve never heard it.

If you’re reading this, chances are, you’ve subscribed to a few (or many) membership sites.

I have too.

Virtually everyone I’ve ever subscribed to has been cancelled pretty soon thereafter.

Why?

Because of my expectations. They aren’t rational, but they are real.

Here’s a chart of what happens to my expectations when I subscribe to a membership site. As time goes by… I expect more.

This isn’t something I’m thinking consciously really, it’s just a feeling that says, after a few months go by, “I’m not sure this is worth the money…”

So I cancel.

Leveraged Profits vs. Customer Happiness

If it’s natural for the unique to become normal over time… and it’s natural for customer expectations to rise over time… then the traditional membership site where you keep adding content and hope it’s enough to have your members stick around is not a stable way to build your business.

Because you’re fighting a losing battle in my opinion.

As a business owner, you want leveraged profits. More profits for less work over time.

The customer, of course, doesn’t care about you. They want more value for less money over time.

Or at least they want the same value for the same money over time. But for some reason, logging into a membership site and seeing the same content doesn’t translate into “I’m getting the same value for my money.” It usually seems like you’re getting less for your money…

I’m guilty of this myself. I created a membership site that’s still alive today. I don’t actively promote it any longer because I built it bass ackwards… I created a site where the member puts in work first for possible payoff later. Instead, I should have focused on creating a tool that delivers real value today. When I say real value I mean that they get some concrete value now. Not the stupid “this information is worth $10,000″ type of marketing crap you read all the time.

A Better Model for Continuity Income

I think a better model for generating continuity income is to create a tool that your customers actually need.

Think about an autoresponder service. I don’t expect their service to be all that different next month than it is this month.

Each month, I use it and I pay a fee. I just want it to work.

Why are my expectations different than they are if I subscribe to a content based membership site?

Because if I don’t read and use the content and produce a result that I like, then no value is delivered. I don’t care what the marketing copy says. If the customer says value isn’t delivered, then it isn’t delivered. Period.

Here’s another advantage to creating a tool that your customers actually want and need.

Tools can be created to become stickier over time. That means they become more valuable to your customers over time, not less valuable.

How many AWeber customers or 1Shoppingcart.com customers wouldn’t try another service provider if it wasn’t so difficult and clumsy to transfer information from one service to another?

But it’s just too much of a pain to really do it.

So what are your opinions about this? Do you run a successful membership site that’s been thriving for years? Why is it so successful?

Have you tried to create a membership site and had it flop? Or die a slow and painful death?

Leave your comment below, and thanks for stopping by.

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