What You Need To Know To Start an Online Membership Based Business

Starting any type of online business is challenging. Forbes reports that 9 out of 10 online businesses fail. So many things have to fall in place for an internet-based business to succeed. One analysis looked at entrepreneurs’ self-evaluation of why their startups shuttered. The results revealed some of the prime reasons:

• Insufficient market for what was being sold.
• Bad timing.
• Wrong team of people to execute.
• Running out of money/lack of investment.
• Pricing/cost issues.
• Marketing/promotion problems.
• Good follow through and customer service.

In addition to the above considerations, an online business based upon membership dues or subscriptions has its own unique challenges. It would be easy to give you a pep talk, but sending you some tough love in this case might help you be educated enough to be one of the success stories.

1. Test your idea.
   Just like any other online startup, you’ve got to know if there is really a market for what you’re selling. If you are solving a problem for a specific group of people, are there enough people with that problem to support a business? Here are some of the ways to test the idea of a membership startup to gauge demand. In this case, the membership business model is a content subscription website.
   1. Start an email list where you offer valuable content at no cost — can you grow the list to a decent size? If you can’t get subscribers when the content is free, you should question if you can get members to pay for that content later.
   2. Write a blog and promote it via social media channels, groups and email listserves. You should allow people to subscribe for updates to determine the level of interest.
   3. Create your own groups, listserves, etc. on LinkedIn, Facebook or other platforms. You can create a place for people to share their problems and questions related to the point of pain they are experiencing. If you can get a following, this group can be a place where you can one day gently offer your pitch for membership to an audience you know is already interested.
   4. Create social media profiles on Twitter, Facebook, Instagram, LinkedIn, and/or YouTube — whatever channels where you think your potential members might spend time — to start sharing your wisdom for free. Your followers here can serve as your initial marketing test ground. If they are consistently sharing your content, that is one clue that what you deliver has value.
2. The need to deliver value never ends (until the member stops paying)
   With a traditional product-based business, you may be looking at a one-time sale per customer and hoping for word-of-mouth or social sharing to pull in additional business after that sale. Subscription and membership-based businesses are on a never-ending hamster wheel of delivering information, services or products to subscribers. The up side of the wheel is ongoing revenue. Ask yourself if you can envision continuing to create, support and deliver value to your customers for the next year or five years.

   If you are a thought leader or coach hoping to sell expertise, this exercise might look like writing an editorial calendar for the next five years. If you can’t fill up the calendar or feel like you won’t be able to create new content indefinitely, you might consider creating memberships that are a fixed length of time so that you can step off the hamster wheel. The down side of this means that the recurring revenue from your members stops after the membership term ends.

3. The need to execute and communicate never ends either.
   Many entrepreneurs are big dreamers and idea people. As a startup founder, it may be that your ability to envision may exceed your skills in execution, technology and communication. In cases like this, it is best to find co-founders, partners, consultants or team members who can raise your game in the areas you are weakest. In a membership-based business, your weaknesses will more quickly become glaring as the cycle of delivering value to your members on a recurring basis repeats itself.

   For example, if you are selling a monthly subscription box product and don’t have good fulfillment arrangements made, your customer service nightmare will repeat itself on a grand scale on a monthly basis — tying you up with putting out fires instead of finding or dreaming up the next cool thing to include. Read about one startup founder’s journey on the subscription box path.

4. Choose the right platform.
   There may not be the need to reinvent the wheel or hire programmers when it comes to membership software. There could be vendors who already offer the right kind of platform for your type of membership website. You might need a learning management system, a subscription management platform or perhaps a WordPress membership plugin. Do you think your membership-based business is the exception? You might not be that special — there’s already a provider of ecommerce software for subscription boxes.

   It’s not always easy to find the right provider. There are many factors to consider such as:

   • Must-have features.
   • Nice-to-have features.
   • Ongoing and setup costs.
   • How they will accommodate your business processes. If you have not taken time to think through those yet; it’s time to now. This is one common area of friction that will pop up when you haven’t found a good match.
   • Scalability.
   • Support.

Create a matrix in the form of a spreadsheet where you can take notes as you do your research. Google sheets works great for this task as you can share what you have gathered in real time.

Amy Hufford is a Technologist at MembershipWorks. Amy has worked in the membership technology space for more than 20 years.