My background in the deep and distance past was in Continuity Marketing. That is where perceived expensive products are sold on a monthly basis. You order the product, say a set of encyclopaedias, and each month you are sent the next volume until eventually you have a complete collection.
I started late in February 1981 when Prince Charles announced his marriage to Lady Diana. What we had was simply this … postage stamps from all around the world that would celebrate this Royal wedding. I worked for a company that produced stamps on behalf of many smaller countries and the chairman of the company saw the huge opportunity that had presented itself. Without hesitation a deal was done with Stanley Gibbons International for a new company to promote Royal Wedding stamps to the world.
Now I don’t remember all the figures but over just a few months we recruited over 60,000 people to join the programme and what’s more everything was sold pro-forma. Yes, paid for in advance!!
If my memory serves we right about 32,000 people took up the programme and continued spending somewhere between £25 and £30 each month for many years until they had a complete collection. I think the basic collection had over 40 units in it.
Remember back in 1981 these were substantial sums of money. Thousands of members also took up other collections of First Day Covers, Stamp Pairs, Non Commonwealth collections etc.
I left the programme after a couple of years and repeated the concept with other thematic postage stamps, collectable toys, books, cd’s and many other products. Businesses like Book Club Associates were big business back in the 80’s and 90’s although they changed their way of operating later as it became more difficult to get customers to commit to buying complete sets of books. I was very privileged to be mentored by the founder of Book Club Associates.
What is powerful about the concept is this. Imagine - 32,000 people are invoiced for £29, a total of around £928,000 each month. We knew that 95% plus would take up the offer and at the time of invoice we had not even purchased the product. The money would flow in and be banked. The product would be ordered and delivered and paid for after 30 or 60 days. This made large additional revenues from simple over night investments of bank funds.
The success of the project was mainly down to the celebrities involved. The future King of England is perceived as a worthwhile investment. Lady Diana even more so! Now we have another Royal wedding, also a future King of England, but this time the interest will be different. The market has changed, people view it differently and although a market does exist, it will be much smaller this time.
But why this story?
Well this programme and all the others I was involved with are nothing more than simple membership type programmes. You effectively take out a membership, pay each month and in return for your payment receive a product or service. Most of these types of continuity programs are based around physical products such as stamps, toys, collectables, books, records etc, but that has now started to change. Information has become a major collectable product. By information, I mean organised and correctly presented information that is valued and can add value to the person who owns it.
A couple of years ago I worked with Rob Winnett (another BlackStar) in developing the concept of a Continuity Marketing Centre. This was a complete service which would enable people to sell their information products via books, CD, DVD and video on an ongoing cyclic basis. It had the hallmarks of success but faced major development costs to launch especially as the downturn had started. As a result the idea was shelved and that turned out to be a good thing as time has marched on and now we have much better ways of delivering content in the form of online membership sites.
I rekindled my interest in this area late last year and started to look at the potential considering the availability of facilities such as YouTube (for video), iTunes (music and podcast downloads), blogging software and the ever increasing number of social networking sites providing a quality route to market. Software for membership sites now exist and some of it is top quality and can be leased at reasonable cost.
So what can be achieved today?
Well let’s say that we could find a profitable niche that would benefit from a quality membership site. Let’s say that we want to keep it very special so we set a monthly membership fee of £49.95. We would like to recruit a maximum of just 500 members and will run the site using a product such as MemberGate which provides all the main facilities we need. Members will be encouraged to recruit other members and will receive a monthly affiliate payment for each person recruited equivalent to 50% of the monthly fee.
Once the membership level is achieved any further applications will be put on the waiting list. Members not paying will be replaced by waiting members. Experience has shown that a site of this type and size would probably need one or possible two full time customer service people to manage the day to day working.
With 500 quality members participating in the site, creating content and helping each other, we would be providing real value to those members. Once the membership is fully recruited this site would generate around £8,000 per month (£96,000 pa) after all costs. The owner would use some of that income to add further value to the site, arrange events, promote other products and services etc. The potential is huge. Once you know how to do it with one site, why not have two or ten or even twenty?
The secret of course is simply this:-
You must provide real value! Just another networking site won’t work anymore. You have to ensure that the members are using the site and receiving real benefit. Chris Farrell on his membership site offers free hosting to each of his members for as many sites as they wish. This is real value and encourages them to stay as members.
I know a gentleman who runs a private member club offline which has over 22,000 member’s world wide, each who pay him $120 per year (plus postage) to receive his TEN newsletters that he sends out. They contain real value in the content which is only available to those members. Now I accept that he is rather unique but it shows that if you provide real value then there is always a real market.
A close friend of my family has a private online club which has a tiny membership of just 200 people, the maximum he will permit. Each member pays a simple monthly fee of £49 to be a unique member of that site. If they fail to pay, they leave and the next waiting person gets the membership. My friend makes over £4,500 per month after all costs, doing something that he loves. He told me that there are over 500 people on the waiting list.
Finally it is worth saying that you could plan to have a membership club with 20,000 members each paying £10 per month. The issue here is that the more people you have, the more difficult it is to provide real value and justify a high monthly fee. It would be better to have ten clubs of 1,000 members and charge £20 each or even have 25 clubs and charge £49, £77 or even more each month. Never judge the market!
Over the next few months I will be developing this whole area of Online Membership Clubs and will be blogging about the idea again. In the meanwhile you can have a look at a great example of the idea at the website of my friend Chris Farrell. He provides a host of free stuff and interacts with members via video as often as possible. His objective is to get people to join his site as a paid member (which costs just $49 per month), not by keep blasting them with messages but by building a real trusting relationship first. He provides real value and knows that if he fails to do so, then he will lose members and his reputation would be tarnished. His super hook is the free hosting, that encourages members to remain as a paid member. This works really well because the membership effectively become free after you are hosting a handful of websites, and the contribution of the membership is of real value to you.
You can visit the site through this link:-
Chris Farrell Membership Site
If I can assist you in anyway in relationship to Online Membership Clubs then please let me know. Please look out for future blogs on the subject. I will be creating a newsletter list shortly and will invite you to join so that you are kept right up to date.
Regards
Jim
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