Mike Morrison of Membership Guys (Passive Income + Paid Advertising to Grow Membership Sites)
Mike Morrison is not only a great friend of mine, he has been in the online business space for nearly 20 years. He has done this as both an online agency owner and has been at the forefront of the rise of online membership site businesses.
Each week Mike drops a new show where he gives membership advice, tips, and insights on planning, running, and growing a successful membership website.
This interview was awesome! We covered everything from the power of memberships as a passive income stream, using paid advertising to grow your membership, and even a little discussion about professional wrestling, something we are both huge fans of! And yes, we tie it to memberships. You’ve got to hear it to believe it!
What You'll Learn:
- The scary part of the online world. (1:30)
- The slowdown 4-1-1. (5:30)
- How to attract the right members. (8:45)
- How tojust keep stacking. (11:30)
- Subscriptions, subscriptions, subscriptions (21:00)
- The importance of niching down + being a connecter. (26:50)
- Are you essential or expendable? (29:25)
- How liive events can help your membership (37:45)
- Working with your significant other. (45:00)
- You don’t have to have a perfectly measurable ROI. (52:45)
- Average months stayed (AMS) 101 (1:04:30)
- Scarcity v. urgency (1:08:00)
- The only truly consistent thing in memberships. (1:15:02)
- Let people know you’re in this forever, too! (1:28:00)
Show Notes
The scary part of the online world.
When Jocelyn and I got into the online world, we realized the scariest part of online business is making sales. You can figure out tech and even marketing, to an extent. But, it’s closing the deal, making the sale and knowing that you have to do that work again next month.
We actually stumbled into memberships, because our first product was lesson plans for teachers. Jocelyn sold lesson plans for the first two months of school the year we quit our jobs, and then we were begging for sals month after month.
When we met our buddy James Schramko he said, “that’s a membership.” And he was right, we were just doing it the hard way!
We immediately realized the cool thing about it was that created predictable, stable income.
Like Mike said, memberships aren’t as flashy as some of the other ways to make money online.
But, what makes them a game-changer is the stability. Mike was used to time for money, project-based work. It was invoice to inbox. Invoices don’t come as regularly as paychecks.
When Mike and his partner were in the early stages of running their own membership, they were seeing other people getting recurring revenue and were jealous.
Eventually, they got to the point where they realized that they no longer were trading time for dollars, but their memberships were working for them! They were no longer starting from zero with each project.
The slowdown.
There’s three pillars we always talk about in memberships:
- Content
- Community
- Consistent leadership
If you can do those three things, you’ll probably get paid month after month and year after year.
The community part is interesting because it’s not a community where anyone has really direct access to each other. It’s either in a Facebook group or someone posts something, maybe they reply to something you posted a few days ago.
People post something and there’s that expectation like, ‘there will be other members or Shane and Jocelyn will jump in here over the next day or two.’
What that does for us is slows everything down.
That’s up to you, you have to set the pace. Contrast that to client-based work like what mike was doing before his membership, where they tell you when they want something. That is an adjustment Mike doesn’t feel everybody makes, as some memberships do have chaos and expectation. This causes some members to actually pause their membership if they expect a reply in an hour or so.
That is why you have to lead the community. If you want a fast-paced membership, that’s okay, if that’s how you work!
If you want a membership where you can have the private coaching sessions, it’s okay to set the tone of giving 24-48 hours to get back to everyone. You get to set those rules. As long as you’re not miss-selling, as long as you’re not seeing expectations that don’t line up with that, you can do whatever you want. You design it to fit you and your schedule.
Because, if it helps you then you’re going to be in a better position to serve and help other people.
Attracting the right members.
You have to set the culture of your membership to draw the right members.
If you get your culture right, people stay. You want to draw in like-minded people so that they can support each other inside your community.
My wife Jocelyn and I had a VIP dinner at our live event last year. It was hilarious, nobody talked to me! Everybody just talked to each other, because they knew each other. It was awesome because some of them were meeting in person for the first time, but the culture was so string they felt like they were already friends.
Our customer service requirements include that we will response to questions within 48 hours. It’s the same in our forums, one of the members of our team will respond within 48-72 hours. We keep that consistency there because we want the culture of the entire brand to be on my pacing, and what I want to do with my team.
In our webinars we’ve been doing webinars to make sure that we draw members in that can attend the webinars. About 75% of our member calls are at noon, EDT. I do this because I want to draw people in that can attend member calls. That probably makes me lose sales. I could be doing more at 9 p.m. But, here’s the deal. My life right now with my kids at their ages and their activities, doesn’t permit me to do that.
I’ve got to draw in the right culture. I have to set those expectations throughout the entire funnel.
Like Mike said let’s say I lose half my potential sales. However, the sales that I do get will stay twice as long!
Just keep stacking.
If you lose one member a day but gain two, that’s okay because you’re still growing! Just focus on giving yourself a raise every day.
I really like the concept that Mike talked about here. Mike talked about having his membership rise up to his client-based work he had before.
We call this raising the floor. If I lose ten members and gain eleven, I’ve grown this month. That lifts the floor of our business, which is actually where most of our revenue focus is. I know the potential, if I want to sprint and go to the moon. But, if I can raise my floor on monthly recurring revenue above everyone else’s ceiling, I don’t get stressed, I win. All I have to do is keep the floor raising higher. It’s kind of like those houses on the beach on stilts, just keep lifting your floor and giving yourself a raise every month.
Just say to yourself, ‘hey, churn is what it is. We’re going to make that better, but did I get one more member than I lost?” If you did, be okay with that! When you shift that mindset, you’ll grow forever.
We all have moments of up and down, but I no longer have as many because of my successful membership.
Mike says he and his partner spent 4 or 5 weeks sick. Mike says he usually doesn’t get very sick, maybe the occasional 24-hour bug whenever they travel, but nothing outside of that. Because of that, they really weren’t able to contribute to their work that entire month. If they had any other business besides a membership site, it could have been detrimental.
There is a difference between a transactional business and a relationship business, memberships are relationship businesses. All he had to do was tell his community about his illness and because of their relationship, they were completely understanding.
And, because they kept kept stacking, they were still growing!
Subscriptions, subscriptions, subscriptions.
Memberships are everywhere, even businesses that don’t seem like they would fit a subscription!
It’s not just Netflix or Disney+.
Let’s look at the example that Mike gave. There is a major car manufacturer using the subscription model for cars now. You can literally get a new car every X amount of days, it’s kind of like a glorified version of a lease, but’s a subscription!
Some of these subscriptions are programs or lease deals, prepackaged as a membership. Before that, the software industry was already making a shift towards subscriptions. For Adobe and Microsoft, subscriptions used to be a secondary option. They did this because their software in one large lump-sum was quite heavy price tag. However, they could convince more people to do a a monthly subscription. Now, subscriptions are typically the first option you see!
I was on a podcast a couple years ago and they were trying to stump me. They tried to come up with something that couldn’t be turned into a membership. The one that got me was a plumber. But then I thought, “well wait a minute though. A plumber has 100 people in the counties that touch his county that do go pay him, he just charges them $50 a month for unlimited calls, unlimited help, whatever they need between X hours. An emergency call would be an extra $100.” I was thinking, “how many people’s pipes bust on a daily basis, maybe one?” That plumber is making good money and he doesn’t have to worry about getting calls or advertising. He just uses word of mouth and that still works for every plumber.
Subscriptions are only going to continue getting more common and focused!
Niche down + be a connecter.
With more subscriptions coming onto the market, you really have to set yourself apart.
There are two things that you absolutely have to do:
- You have to niche down. You have got to know what you do and how do it. Your niche is you and it is not just what you teach.
Ex. For my wife Jocelyn and I we really focus our marketing on the south and midwest because we have a strong accent. For Mike, he focuses his marketing in the UK and parts of America where people really connect with him and the way he talks.
You have to be really personality driven to be able to lead your membership.
- You have to be a connecter. You have to make sure your members have friends in our community.
People will not leave their friends. I’ve made a mistake that I have to correct. I made a Facebook group for our live events, I just kind of put people in there. And, they loved it. But, one day I realized it was cannibalizing the community forums a little bit.
Because, as we did live events for our community members more, more people started talking in these Facebook groups for the live events.
It was awesome because they were hyper-engaged in both of these places. But, I made the mistake of turning that off, taking their friends from them in the process. We actually had some people get mad at us, in that moment. Not because we weren’t doing anything anymore in the group, because it gave them more than one way to connect with their friends.
If you want to be one of ones that rise to the top in a couple years you’e got serve, you’ve got to lead, you’ve got to niche down. You’re got to be a true leader and be there in the thick of it with your members and let your membership go to the top.
Are you essential or expendable?
It comes down to whether you’re essential or expendable. whether you are a pain-killer or a vitamin.
Memberships that are expertly lead are not necessarily something that people instinctively do. A lot of it is ego or habit. A lot of people do not disconnect from the idea that people “come for the content, stay for the community.” However, within a community they still want leadership. when they post a question, they want the experts’ answers. They do want your answers when they first start out.
But, if you’re always jumping in there and won’t let go of your need to always be the person answering, o one else is going to get a word in. Which in turn turns your membership into a very public, private messaging tool. And, you also squash out any leaders coming to fruition inside your community.
You have to realize that you may have 10% of the people in your community that have the answers that you don’t even have a course for. (Mind you, we’re not talking about Q&As, because that’s totally different). If you’re leaders don’t rise up or have the ability to, your membership can’t grow.
Leadership is not being a boss. In 90% of cases, leadership is actually learning when to get out of the way.
Live events.
I don’t think we’ve had one person from our live events leave the community. When you calculate in the power of retention at a live event, you really don’t lose money. And, we had about 75% of the people that came to the first one, come to the second one.
That’s an avalanche going into the future. It’s like, I may not have made money today. But, by having this live event I lost $50,000 on the cost, but you know what? If I do the math, I probably gained $100,000 in retention over the next two years.
Even loses become investments in your retention program. It’s all about the long-term. It is so important to look at your ideas as what will pay-off at the end of the day. And, continue to do so year after year.
Mike saw this himself when he heard one of his members directly say and one who hinted at saying, they were planning on cancelling their subscriptions. They hadn’t logged in for a bit and had gotten a pretty good rhythm in their membership. After they went to Mike’s live event, they decided to stay and it actually made them see the lifetime value of their membership.
Getting those lifetime members are so important, because when they stick for life they help bring in more members that will commit too!
You have to take a step back and look at the bigger picture.
Working with your significant other.
Just like any other partner there are advantages and disadvantages to working with your significant other.
For Mike, he and his partner Callie Willows have agreed on occasion that they would have moved faster on certain decisions. But sometimes they have realized that they have to come to a consensus on the decisions they make.
Ex. Mike is a reformed web developer and so he works on the tech side of their businesses. even with that, where Callie doesn’t do that, some decisions Mike still has to discuss with her. Because, otherwise their webpages would be getting redesigned every week.
So for them the decision-making process can be slowed a little. Mike says it’s not necessarily because he is working with his partner, but because it causes you to have more consideration for the other person’s ideas an input.
When you share a home with your business partner you can’t just say ‘whatever’ to their opinions. So, in that sense, it is a different type of business relationship. It can also be a hard hat to take off.
However, the benefits more than make up for the cons of working with your significant other!
Having two people doesn’t just mean twice the resources, it is an infinite added ability and leverage to what you can actually get done. For Mike and Callie, their partnership allowed them to get very far into their business without needing additional help.
That is very similar to Jocelyn and I. We say we can do everything but we shouldn’t.
Also, when somebody leaves your team, you can pick up the slack faster and it’s not as devastating. For instance, we had two people quit like two weeks before a live event we had, and they were major parts of organizing the event. It sucked, but if I had been alone in that situation, but there is no way I could have picked up the slack without Jocelyn, and being able to divide and conquer.
We help each other out and look out for each other and our business, more than anyone else would!
You don’t have to have a perfectly measurable ROI.
Not every facet of your business has to have a perfectly measurable ROI. But, some should be.
One of the most responsible things we can do as business owners is grow our communities. We have to have new blood. One of the best ways to do that is paid advertising. We create a lot of content, we have a lot of organic strategy. We want to have 75% organic traffic and I want to be going and guesting on podcasts, I want to be speaking, I want to write good blog posts and goos show notes. The podcast itself needs to be really good. We do have to pepper that with advertising. Learn how to monetize a podcast!
Let’s say my membership is $100/month. Your instinct is I want to spend $100 to get $100 profit. That’s not really true though. It’s more like my LTV is $600, so am I comfortable with spending $200, $200, $400 for a member, knowing that I’m going to get $200 4 months from now?
The LTV is something Mike says that so many people don’t even think about. Too often people look to recoup their ad spending in the first month. Or, they have to have a self-liquidating offer, otherwise they won’t do an advertising. This is because they are looking at the short-term value and neglecting the lifetime valor earnings per lead. Then, they don’t know the real value of every person that signs up for their email list. They don’t know what they can justify spending or their actual return on investment.
Advertising needs to amplify and accelerate the things that you are already acceding at, organically.
Don’t think that everything can be measured or that it should.
Your membership should look like this:
- Attract people into your membership through content search, paid ads.
- Deliver experience and results to your members, that way it makes them happy.
- This is when you get advocacy.
- The output of that is not linear, but cyclical. The people who get the results, once they’ve been engaged they give more fuel to your marketing machine.
- Then, you’ve got your testimonials.
- Your testimonials bring in traffic.
The cycle just continues from there. Don’t take your eyes off the membership prize!
You don’t have to go so fast, because everyone else is freaking out because they ran out of money from their last launch. You’re not, you don’t have to put all your eggs in the advertising basket.
Average months stayed (AMS) 101.
One number that we look at other than LTV is average months stayed, or AMS. I even care more about that number sometimes than LTV.
Because, if I know a dollar trial creates 11.6 months of membership and I know a free trial creates 6.5 you can know what offers are making people stay and for how long. This is a better number to look at for the stability of your business even more than income.
You can really say, ‘hey, I can hire this person because I know that 60% of my members came in through this funnel, they stay 11.6 months.’
This is a number that a lot of membership owners miss because they’re always looking at cash. Or, they use it purely to calculate their LTV.
Look at your AMS in isolation because it is going to make what you promote with those ads better.
It all goes back to attracting the right people and they are not always the people that generate the most revenue.
Scarcity v. urgency.
Figure out what is urgent for your members.
As Mike said, Memberships, courses, coaching, they are all in business of problem-solving. If someone comes with a problem, they see you have a solution, they think the solution looks amazing but is not available for six months. If they are willing to wait 6 months, if they are willing to defer solving their problem for 6 months:
- How serious are they?
- How urgent is this problem?
- How likely are they to actually committing to take action?
You have to ask yourself, are those the members you want?
If I have a compelling problem and I want to make progress in my life, I am not waiting until it is convenient for you.
Your determination has got to be about more than sales and numbers, it has to be about the long-term. You long-term is determined by the quality of the people you’re bringing in!
It’s scarcity v. urgency. I can create scarcity, I’ll put a block on the page. The important thing you can do in your membership is not create urgency, it’s to figure out what is urgent for your member.
If you know what is urgently on their minds, their willingness to buy is already there. We just have to get it front of them. But, if you’re so focused on scarcity you’re going to run out of tricks.
You can create urgency just by having an awesome product!
For everyone that asks. what reason do people have to join today?
Think, 'what reason do I have to buy an iPhone? What reason do i have to buy a laptop? What reason do I have to buy these tickets?' Because I want to!
The only truly consistent thing in memberships.
The only thing consistent between all memberships is this: what works for one won’t work for another!
For instance, I only use Google ads to lead into Facebook ads. I only run cold traffic with search. Jocelyn and I continue to do this because we’ve had massive success with it. When someone searches for what you offer, you can send them to your Facebook and build a relationship with them. Because of that, I have the largest US History teacher facebook page on the internet!
Mike said that he wanted to try this out one day, but he hasn’t. And yet, he is has a million dollar membership. He has found different ways to drive traffic, because he tried different things!
You have to be willing to try different things and see what works!
Let people know you’re in this forever, too!
One mistake I see membership owners make is having people in your base offer, 20-30% of your people are going to move up fast.
Before I say this, remember that this comes after you get 200-300 members. Anyways, after that, start think about what the next subscription looks like in your stack. If you figure that out, you’re going to do some special things with your membership.
At the same time you have to tell yourself that you are not going to serve those people past a certain point, according to Mike. Sometimes your role is take those people part of the way and guide them where to go next. But, if you don’t want to do a mastermind coaching because that’s not your thing, you’re not doing something wrong. You just have to come to peace with the fact that your membership is for beginners.
Be aware of what expectations you are setting and recognize what that means for the dynamic of your membership site community, the potential of your community.
If you’re good with that, if you know what that means, and that fits your goals, that’s what your membership needs to look like!
If you would like to connect with Mike Morrison you can find him at:
Remember to subscribe and leave us a review to the Membership Masters Podcast here on Apple Podcasts: https://podcasts.apple.com/us/podcast/membership-masters-podcast/id1519253634?i=1000481765838
You can also listen this week's full episode here on Spotify: https://open.spotify.com/episode/08sy38ExbmLtaZh6LtndKN?si=llnLjQphRom20v8R70OBWw
