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The Roadmap to Start a Membership Site From Scratch

ByMark Thompson,
business.com writer
|
Sep 25, 2019
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> Business Basics
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Do you want to create an informative, engaging subscription site with a loyal member base? There are some specific steps you'll need to follow.

Never in the history of the internet has it been easier or more lucrative to start an online membership site.

I'm talking about a place where passionate, like-minded people get together to learn, share and interact with each other – and yes, pay you every month for access.

Step 1: Selecting a niche

Niche selection is one of the most important things you can do. The wrong choice can mean you spend a lot of time and money chasing a goal that won't materialize. The right choice, coupled with solid execution, can catapult you to success almost overnight.

Irrespective of what people may believe, there are bad niches that will limit your growth because they are too small or don't have enough buyer intent. For example, custom butter sculptures may be an interesting concept and get a lot of attention, but it's doubtful you could build a large business in that niche. Conversely, personal and business finance is a niche that gets a lot of attention and money.

So how do you settle on a niche that can help your membership site reach your goals? There's a two-pronged approach:

  1. Go deeper into popular niches to find ones with potential.
  2. Further evaluate the ones with potential against X criteria.

Drilling down into popular niches 

Countless niches are available today, but they're usually a segment of a larger market. The most common niches are wealth, health, beauty and entertainment.

If you were to create a membership site around health in general, you would be competing with giants such as Men's Health, WebMD and Jenny Craig, and would have no clear focus because the niche is too large.

Instead, you could choose a subtopic such as healthy eating. At this point, you've gone one level deep into the major niche, which is a good start.

What you want to do now is go another level deeper. Instead of just healthy eating, target a specific kind of healthy eating, such as paleo or low-carb diets. Now the niche is getting a lot more defined, and you may be able to go after it like that, but I suggest you still go a little deeper or find a unique angle – for example, paleo dieting for women or for busy professionals. This is a good idea because it'll help you develop better marketing materials and gain traction more quickly. You can expand the purview of the website over time.

Shortlist the niche ideas you like and move on to the next step – further evaluation.

Evaluating the niches with 4 specific criteria

After you've shortlisted a few niches and angles, it's important to do further research. If the niche holds up favorably to these criteria, you have a solid chance of success. If it doesn't, then you can remove it from the list and move on to the next one.

  1. Is there existing competition? Many people who haven't started a business before may discourage you because there's competition in the space. In reality, competition is a good thing. It means the market is already spending money on products and services. If you don't find competition, it may be due to a number of factors, such as strict government regulation, lack of demand or challenging distribution models. When you come up with a new angle, you won't be competing directly with existing players, so we're using competition as a proxy for viability.

  2. What kinds of existing products are there? A membership site thrives when people sign up to learn from you and interact with each other. It's important to look at the niches you're interested in to confirm what kinds of products are already available. How are the products being distributed? Are they all physical products? Is there space for what you're trying to accomplish?

  3. Is information being sold? People may say any number of things about an idea or whether they'll pay for something, but actions speak louder than words. Make sure people are already buying information. It's the backbone of your membership site, and you'll develop a large body of content over time. Be sure it's what people want before you start.

  4. Does the market care? To establish and grow a successful membership site, it's essential to have a core group of true fans. These are the people who will buy your membership, your coaching, your masterminds and everything in between. This is how you build an extremely profitable business. To find out if there's a passionate user base for you, visit forums dedicated to your niche. Do people have strong stances about specific topics? (For example, vegans and paleo dieters are adamant about their way of life.)

Step 2: Creating your monetization strategy

This is an area that most membership site owners don't really think about until the site is up and running. If you're building the site as just a fun project, that's great, but for those who want to actually turn this into a profitable business, let's iron out how we are going to make money before building it.  

Start by analyzing your competitors:  

  • What does their membership include?
  • Are they selling additional products or services?
  • How do they present those offerings?
  • What is their price point? If there are multiple price points, how are they structured?
  • How large is the community for each competitor?

I'm a firm believer in not reinventing the wheel, just making a better wheel. The same holds true for the monetization strategy you pick.  

The majority of membership sites charge a monthly or annual fee to be part of the community. However, your price point is by far the biggest driver of how much perceived value you will need to present to your members. There's a big difference betwen paying $7 a month and $500 a month, so the expectations will be completely different. Also, the higher the price point, the more susceptible you are to churn (cancellations).

It's also important to understand the value of an audience or membership that has reached maturity versus one that is just starting out. Someone is more apt to invest in a membership that has a long-standing active and thriving community with years' worth of content than in one that is just getting its feet wet.

I'm not suggesting that you make your membership pricing the lowest in the market – sometimes that backfires – but it's important to understand the concept of price sensitivity. Even giving your membership away for a short period and then surveying them to ask how much they would pay per month is a good starting point.

You'll also want to think about how you can introduce expansion revenue into your membership site. Essentially, how can you increase the amount each member pays you over time? Your members each have financial limitations, depending on their income and needs. While it may be a small percentage of your members, some will have the means to pay you more for additional value (e.g., one-on-one consulting, private group coaching, in-person masterminds), so as your membership starts to mature, find ways to increase the lifetime value of your customers with upsells.

Step 3: Finding product-market fit

If you have conducted your initial research properly, there should be some certainty of product-market fit. What is product-market fit? It's when there is proven a need for your product or service in your particular marketplace or niche.

The goal here is to create an MVP (minimum viable product) so you can go into a marketplace and ask people to pay you for your product or service. For example, if you're planning a membership site that teaches people how to play the guitar, test the viability of this by selling bundles of private video lessons. If you want to build a paid coaching community, do a trial run with a series of group coaching calls, supplemented by a private Facebook group.

I also recommend creating some "flagship" training that solves the main challenge all of your target audience faces (and is the primary reason they joined your site). This, along with some group or private coaching, is a great start to your MVP.

From there it can expand to additional training, workshops, interviews, case studies – all providing value and supporting your flagship training.

Step 4: Creating the content engine

In terms of what tools to use to house your content, we like to keep it simple. Membership platforms like FreshMember, Kajabi, and WishList Member make it easy to create membership levels, add content, drip content, and more. We also recommend starting a private Facebook group, which you can use for your regular interactions with members.

Now, on to creating your actual content. Some resources I like to use for research on how I should organize and structure my membership sites are Lynda.com and Dummies.com (known for its "For Dummies" books). Both sites allow free previews of their tables of contents on different topics. These are virtual goldmines, because these companies invest a lot of time and money to figure out the best way to teach their topics. You can use their tables of contents as your guide for structuring your own course content.

You can also find resources on these sites for these important steps:

  • Structuring the member area navigation
  • Generating content training
  • Finding guests or industry experts to contribute
  • Determining the pain points and challenges of your audience

Now, let's talk about what type of content you can create and how.

You should never create content just to create it. You must have a specific purpose for it. Whether you are creating premium courses, live trainings, downloads, discussion forums or any other types, figure out the best medium or format for your content and keep a specific goal or purpose in mind. Aim each piece of content at one topic.

Don't be afraid to leverage content you have created in the past. You can utilize previous blog posts, whitepapers, webinars, articles, videos, etc. Sometimes it can be as easy as changing the format of a piece to freshen it up (blog post to video or vice versa).

Once you have generated your first 25-50 members, allow them to fuel the content you'll create next. Ask them often through surveys, "What challenges are you facing that we haven't covered in the program?"

Step 5: Handling payments, subscriptions and churn

Here's where the headaches begin. Keeping up with even a few member subscriptions can be mind-boggling. Juggling 100 or 1,000 is all but impossible without help. Who signed up and when? Which rate did they get? Was a discount or coupon involved? When will the next bill be sent? What happens when someone wants to upgrade or downgrade? How do you handle bounced credit card charges? What if the subscriber complains and wants a refund? Subscription billing and subscriber management could take up all your time, leaving little room for working on your offer and continuing to provide real value to your customers.

That's one of the reasons we created PayKickstart. Shopping cart software that can integrate with your favorite payment gateway, like Stripe or PayPal, makes it easy to accept payment, manage subscriptions and automate the technical side of your business.

As a membership site owner, you don't want to be worrying about things like creating coupon codes, updating expired payment methods, processing upgrades and downgrades, and adding members to your site. All of this should be done for you automatically so you can focus on your members and growing your business.

Your shopping cart software should be able to automatically perform these functions:

  • Accept all types of payments, like credit cards, PayPal and ACH
  • Add a member to the correct membership plan or level (removing them if they refund or cancel)
  • Add a member to your email marketing tool for future follow-up and communication
  • Create coupons for time-sensitive offers
  • Reach out to your customers to update their billing information when payments fail (this is called a dunning sequence)
  • Track affiliate partners and pay commissions for referred members
  • Monitor the health of your membership with key metrics like new signups, MRR/ARR and churn
  • Handle legal and tax compliance
  • Send surveys to customers for feedback and suggestions

 

Editor's note: Looking for e-commerce website design or shopping cart software for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

 

 

It's so important to have a solution that can handle all of these things, saving you the burden of paying for costly custom design and development.

Step 6: Building your followers and brand ambassadors

The majority of membership sites are simply drip-fed content, with little or no input from the owner or members. Don't be like those membership sites.

The difference between the membership sites that thrive and the duds is member engagement. Depending on your membership, that could mean any of these:

  • Live seminars or webinars where members can ask questions through chat or over the phone
  • Forums where you post regularly, providing help and support for your members
  • A Skype or Slack channel where you hold "office hours" or similar
  • A private Facebook group where you interact with members
  • A Q&A section or forum that allows users to ask questions and gain feedback from subject matter experts
  • An annual or quarterly live event

All in all, it's about communication, stimulating engagement and delivering results. Ask questions. Feature big wins from people in your community. Invite members to speak at your live events and webinars. Make them feel part of something special!

Pro tip: The best membership sites are the ones where the community stimulates the discussion for you.  

Step 7: Knowing when to expand

Do not worry about scaling and growth until you have accomplished a few things:

  1. Established product-market fit
  2. Know your member avatar like the back of your hand
  3. Have low churn rates (typically less than 3% is great)
  4. Maximized lifetime member value
  5. Know your KPIs

Too many times, I've seen membership site owners put the cart before the horse. Here is what I mean:

  1. If you haven't established product-market fit yet, you could be creating something that there simply isn't a demand for. 
  2. If you don't truly understand who your target audience is – what challenges they face, what keeps them up at night, what prohibits them from reaching their goals – it's going to be hard to push your target audience's hot buttons enough for them to join.
  3. If you have high churn rates, that means customers are canceling for some reason. It's your job to figure out why. Was the price too high? Was your marketing misleading or the product not what they anticipated? Was there not enough value in your content? Did they have a poor customer service experience
  4. If you are not maximizing the customer value, you are missing out on additional revenue and growth opportunities. With less ROI, that means you'll have less to spend on traffic, customer acquisition and content creation for your membership.
  5. If you don't know your KPIs (key performance indicators), how will you know how much you can spend to acquire a new customer, or what a new customer is worth?  

Until you have mastered these five important aspects, don't worry about new traffic sources or customer acquisition channels. Focus on serving your members, providing them high value and edifying content, first and foremost. In short, make your site one that makes people want to be members. 

Mark Thompson
Mark Thompson
See Mark Thompson's Profile
Mark Thompson is the co-founder of PayKickstart.com - a SaaS that is reinventing the modern-day shopping cart and affiliate management, helping thousands of businesses and Entrepreneurs sell more, maximize customer lifetime value and automate subscription commerce. Mark has spent over a decade in the world of marketing and software, selling over $20+ million of his flagship training programs and software.
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