4. The Problem With Paid Membership Communities

Can you sell information/expertise like Software-as-a-Service (SaaS)? This is something I’ve been thinking about ever since I met tech billionaire SaaSWiz. Building my own SaaS is a little out of my wheelhouse at the moment. But it got me thinking about how I can build a business that behaves like a SaaS. That is…

  • Recurring revenue
  • Tiered pricing
  • Product-led growth
  • Flywheels
  • …And so on

None of these are exclusive to SaaS, mind you. And to some extent, I’ve already done this with my agency. But agency growth is human-led and requires a significant investment in deploying expertise profitably. This is why so many freelance consultants fail when they try to scale their expertise via the agency model.

But there’s another way to sell expertise; via information products, i.e. courses, ebooks, and the like.* It’s a proven model but it has several trade-offs. Because there’s no recurring revenue, in order to sustain an info-product business you have to keep creating new products. Have you heard the saying, “the best way to market your first book is to publish your second book”? Not only that, supporting an info-product business requires a lot of marketing. Launches, content, ads, and so on. Have you heard this saying, “write two books and give one away”?

That’s how I ended up at Memberships. Not a new business model. And more and more people are launching their own. Sol Club, AJAC Tribe, Hustler’s University, Marketers Utopia, AdSkills etc. So now we have all the features of a SaaS business model, with the most important component: Product-Led Growth. If you do even cursory research into how good SaaSes grow, they’re all product led. And by this I mean, the product does all the heavy lifting to bring new users in.

Some examples: Airtable and Webflow with their templates, Ahrefs with its SEO/content marketing education, Mailchimp and ConvertKit with their free plan. It’s endless.

Here’s how that’s replicated in a membership. By serving the community, marketing is a byproduct. E.g. you create a detailed resource to help your members solve a specific problem. Now you can give that resource away for free or turn it into a standalone “front-end” product to promote the membership. You can do this because unlike courses, information is not the product. Support and community are. This is why you see SaaSes produce detailed courses, comparable in quality or better than paid courses, and give them away. A perfect example is Lemlist launching its own membership community and giving away it’s Cold Outreach Masterclass and Personal Branding Masterclass for free as lead magnets. As of writing this manifesto, the Lemlist community is at 8,353 members.

One of the best case studies I’ve seen recently of product-led growth for a membership is Laurel Portié. She teaches online advertising and has two subscription products: Ads Coaching for 7 and Lean on Laurel. And if you observe how she markets these memberships, she doesn’t have to create any original content or advertising. She just publishes the training and resources she creates for her community as content, and then boosts that content with advertising. Every time she makes her product better, she creates her next marketing/sales asset. It’s ingenious.

* Note: I didn’t include coaching programs because the vast majority of coaching programs are glorified courses at 10 times the price. More on this in the next section.

Two problems with paid membership communities

As stated earlier, I’m not the only one who’s seen the value in memberships even though, as far as I’m aware, I’m the only one articulating their value this way. An entrepreneur sees another start and grow a successful membership, and they wanna cash in. And like the saying goes, marketers ruin everything.

Problem one: Not understanding what a membership is

Here’s the biggest reason why memberships don’t grow: the community founder wants to do as little as possible while charging as much as possible. The most powerful driver of growth in a membership, the product, is hamstrung. Understand, you’re trying to create network effects from scratch. And network effects grow geometrically. Slow to start and then they snowball. So as the founder, you need to be over-delivering 100 times over. Or all you’re doing is charging a subscription for course content, plus the odd training every now and again. Again, information is not the product.

From a business owner’s perspective, I get it. If you think in terms of effective hourly rate, it doesn’t seem profitable to deliver 20 hours of support to a member paying $20/month. Conscientious business owners will solve this problem by creating the next problem.

Problem two: Membership prices are too damn high

I looked into the prices of some of the best coaching programs for copywriters. Before I list them I’ll say, to be fair, these are mentorship programs with extensive support and coaching, and their target prospects are “Westerners.”

  • Copy Accelerator – $35,500/year and Copy Accelerator Lite – $13,500
  • Lurn Copywriting Academy – $30,000
  • Fast Forward Mastermind – $20,000-$29,000/year
  • Copywriting Mastery Mentorship Program – $2,000/month
  • Resheske’s Copywriting Mentorship Program – $7,000-$10,000 (12-week program)
  • The Copywriter Accelerator – $3,000 (16-week program) & Copywriter Think Tank – $11,000/year
  • Copy Posse Launch Pad – $3,000 (8-week program) & Copy Posse Reignmaker – $12,000/year

This isn’t an exhaustive list but I think you get the picture. I’m from Sri Lanka, a developing country. The average salary is $251/month. The most affordable program from the above list is four times the average salary of a Sri Lankan. Now do Pakistan, India, Nigeria, Kenya, Ukraine, Romania, Malaysia, Philipines, and so on. All countries where Western businesses hire their service providers from, because of geo-arbitrage. Some copywriters from these countries save up for months to buy courses. The mentorship programs I listed are completely out of their reach.

how to sell information products like a SaaS business

Above: I asked her where she’s from and she said Kenya. She probably saved for at least two months before she sent me that message. I ended up giving her a discount because she put in the work instead of asking for a handout.

So now, service providers from the “Global South” (that’s the new “politically correct” word for Third World lmao) are stuck. Clients justify paying them pennies on the dollar because of where they’re from and because they’re not as good as a Westerner who’s lucky enough to be able to put $10k on a credit card. And they can’t afford to get the skills necessary, even though they have the ambition and the work ethic to dominate, because the coaching they need is priced for Westerners lucky enough to be able to put $10k on a credit card.

This is why I love Justin Brooke. He’s an internet marketing legend who recently transitioned his coaching program from high-ticket ($5,000+) to membership ($19.99 and $49.99.) Even before the change in business model, AdSkills was the industry standard for training media buyers. Now, Justin has climbed out of the internet marketing kiddie pool. According to him, he’s competing with Udemy ($239 million ARR.)

All that to say this

I‘m working on something to fix the problems I described. There are still some kinks to iron out. This “thing” is experimental and could fail. But if it succeeds, we’ll have changed the copywriting game forever. With the added bonus of delivering a massive f*** you to “coaches” who think it’s a good idea that people go into debt to afford their programs.

Next: Why Courses & Coaching Cost the Downpayment on a House

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