When you build a membership, getting caught in a “grow at all cost” mindset is easy. But is that best for you or your community? In this hour-long session, Jay Clouse will walk you through how to design your membership growth goals intentionally.
Jay Clouse is serial community builder who helps people become professional creators. He is the founder of Creator Science and the host of the Creator Science podcast. He recently created his Build A Beloved Membership course, and he previously led Pat Flynn and Smart Passive Income’s Community Experience team, designing their paid membership community and cohort-based course programs.
In this session, the audience was treated to an enlightening discourse by Jay, the founder of Creator Science, a business dedicated to helping individuals become successful professional creators. The focus of his talk was on his unique, data-driven approach to growing his membership, The Lab, which has been limited to 200 members.
Jay’s discussion revolves around many key areas, including the importance of setting clear and honest goals for your membership, understanding your target audience, and making strategic decisions about pricing and membership structure. He emphasizes that “Designing a membership to fit your goals by being clear about desired outcomes and constraints” is crucial.
One of the major takeaways from the session was the role of pricing in shaping the membership. Jay advised using pricing as a filter to attract the right type of customers, aligning it with the value provided. He also suggested choosing the frequency of charges based on the desired level of commitment and reducing churn.
Learners who engage with the session will gain insights into how to design and grow a successful membership. They will learn about goal-setting, understanding their target audience, pricing strategies, and community engagement.
Jay also underscores the significance of timely responses and engagement within a community. He stated, “If they don’t get a helpful response, but a timely response, your community is no longer going to be the place that comes to mind for them for that type of problem.” This highlights the need for being constantly plugged in and providing timely responses to members’ questions.
Additionally, he stresses the value of exclusive content for members, such as live calls and insightful retrospectives. He suggested that specificity in programming and the value of recorded assets for future reference were essential elements to attract and retain members.
When it came to attracting new members, Jay proposes the use of a referral program and the power of word-of-mouth marketing. He also recommends creating a sense of community through social media engagement.
This session offers valuable insights into designing and growing a successful membership. The practical advice and real-life examples provided by Jay make it a must-watch for those seeking personal and professional growth in the membership space.
Jay Clouse: Alright guys. Well, as Emma said, my name is Jay. I’ve been using Circle for a long time. So it’s fun to come do these sessions. I get a lot out of it. I hope you get a lot out of it.
I’ve taken a very different approach to my current membership, which I’m excited to share with you. I think it’s a very sustainable, fundamentally sound, different approach and I get excited about talking about it.
So, my name is Jay. We already talked about that. My mission is to help people become better, more successful professional creators. I see a lot of people doing the content creation thing and spending a lot of time making content and not necessarily reaping the financial benefits of that and I want to change that. I want people who are putting all that work and time in to have financial success as well.
So my business is called Creator Science. Started with a weekly newsletter. That’s free. Creatorcience.com. Expanded into YouTube with a YouTube channel. We have a podcast that was called Creative Elements. We rebranded this week to Creator Science. So everything is Creator Science now and that is also where I have my membership, which I call The Lab. You can see the science motif flowing through here. Because I take a very data-driven analytical approach to my growth as a creator and I think that a lot of creators would benefit from doing the same.
Before this I was leading community for Pat Flynn and the Smart Passive Income team. I built a community from 2017 to 2020 and in 2021 that community was acquired and absorbed into the Smart Passive Income community and I led the team for a year there but starting in January of 2022. I went back out on my own to be growing my creator business and things have been going well ever since.
So some quick notes on my membership, The Lab. It’s 13 months old. We launched it in March of 2022 early March of 2022. It’s an annual only membership. There are no monthly options when people join they join for a full year up front. The pricing on that is $1,999 per year at the basIC level and $2,999 per year at the higher tier.
As a result, in that 13 months the community has generated almost $270,000 in total revenue, which is $254,000 annual recurring or roughly $21,000 monthly recurring revenue. And that is with 200 members and that’s a number that I have capped. I do not want more than 200 members in the community. And I’m going to talk a lot about that. It’s been that way since almost the beginning. I didn’t put this kind of manifesto out in the first couple of months, but I think around month three, I made the public declaration that hey this is actually going to be designed to be small and stay small at 200 members.
A big part of that were my own constraints and what I wanted the community experience to be like and what I wanted my involvement in the community to be like. I’ll talk a lot more about that. But you know the community being a big part of my business, I didn’t want it to be the entire business. I still want to create podcasts in writing and the YouTube channel. I needed ample time to do the things I want to do as a creator.
So pretty early on I put out this declaration that we’ll have 200 members in at any given time. At which point we’ll go to a waitlist and that is currently in effect. As a result, this is a look at the analytics inside the lab at our daily active members through the first year. You can see here. There aren’t any crazy crazy spikes here. It’s just been nice sustained upward growth that’s been really comfortable and really nice. This is the first month,March of 2023, that we would have renewals since we launched in 2022 and so far 93% of members who joined in March have retained their membership. So retention has been very very high.
We have 49 members on the waitlist. So we don’t have any more spots, but we have 49 people who have said, “Hey, I want to join if and when there is an opportunity.” So that’s some I think important context as to where I’m coming from and what has kind of colored the lens that I want to share this with you for.
I personally believe that the only way to design your membership to fit your goals is to get really clear and honest about what your desired outcomes are from your membership, you know, we talk a lot of times about growth. And my question is, like: For what? You know, to what end? For what purpose? When is growth enough? What is it doing for you for your business for your members? And do we really need to have this belief that perpetual growth is the goal? Because you know as part of The Lab one of the explicit promises that I make to members is that there’s gonna be a lot of access to me a lot of my time.
If the community was double the size that is it is now I wouldn’t be able to fulfill that promise, you know, not to the degree that I do now right now everyone who joins I do a 30 minute welcome call with which has been really great in terms of an investment in the culture of the community and that’s something I wanted to do, but I can’t do that at 400 people and at 400 people the amount of activity in the community changes as well. If it was, you know, kind of a one-to-one comparison to the activity for 200 people, if we doubled that it would be a different member experience.
So I think it’s really important to think about: What does this membership look like when it’s going as well as I want it to? And am I setting up my constraints so that that outcome is likely? These are your design constraints. I don’t know if you’ve spent a lot of time in design thinking or design research. But whenever you’re building a system to achieve some sort of goal. The things that you won’t bend on kind of your non-negotiables. Those are your design constraints.
I think you want to focus on things like how many members do you want in your membership? How quickly do you need members to join the membership if you’re still pre-launch how quickly do you need them to join? And how many? How much money do you want to earn from your membership? And in what time frame? Not all communities are paid communities, but this is predominantly coming from the lens of a paid membership community.
You know, if you’re going to launch this, what type of financial return do you want to see from it? And on what time frame? That’s an important honest question to ask yourself. How quickly do you want to create recurring revenue? You know one benefit of having an annual only membership is I do is that I get a large chunk of membership fees up front but then per member there is no actual monthly recurring amount. So the first year any new revenue that came in month to month was a new member joining. There was no recurring. Do you want to create recurring revenue month to month or can you wait quarter or semi-annually or a year? How much time do you want to spend on your membership each week? And what does engagement look like in a good sense? You know, what? What does it look like for someone to be engaged for you to be engaged? How much time are you putting into it?
So for me when I was thinking about designing my membership, here’s some things that are important to me. I wanted this to be the core offering of my business. Nathan Berry, who’s the founder of ConvertKit, has this really great question, which is are you building a strip mall or a skyscraper? Either is fine, but they’re different business models. Strip mall is kind of like saying I have lots of small buildings that each have little bits of revenue. It’s like having a bunch of different digital products. Or a skyscraper is more like saying this is the one thing that I am building and I’m gonna build it as tall as I can.
I wanted to move my business away from a bunch of one off digital products to a single offer type of situation and I wanted The Lab to be that. I wanted the lab to be an evergreen always open enrollment cycle. I didn’t want to rely on launches. Launches personally exhaust me. I get really burned out trying to do opening closed cart launches, and I didn’t want this to be that way.
I’ve been doing community for six plus years as I shared with you and it’s important to me that I continue to innovate on what online community looks like and how that experience is. And I knew that having my own membership would give me a place to do that.
I wanted to strengthen relationships with my existing audience. Something that you start to experience as a creator as you grow, your overall audience is hard to know. Exactly who your biggest fans are without giving them some way of raising their hand and saying I want to learn more from you or I want to support you. And so having a paid membership is a really great way to filter for who are the members of my audience that really care the most because I as a creator want to pour even more love on them, appreciate them. Give them more of my time, but I needed some sort of system to select for that.
This is kind of what I’m just saying. I wanted to find out how I could invest the most of the people who invest the most in me. It also creates a really rich research lab, you know in a way you really learn a lot about your audience when you give them a really safe place to talk about their problems and their experiences. And this is really important. This is something that I don’t think people think about enough, which is I wanted this to financially incentivize me to invest a lot of time into it from the beginning.
But I see a lot of people doing and I talk about pricing here in a little bit. I see a lot of people saying I’m gonna launch this, it’s gonna be twenty dollars a month. They put a bunch of time into it. They get their first 10 members. It’s $200 per month and the quick really quickly realize I don’t know if $200 per month is worth it for me. For some people it is for others a stop you need to figure out what is it what is worth it to you? And on what time frame? Because if you don’t have that alignment you’re gonna grow to create kind of an adversarial relationship with things you’ve made and I wanted to really love this place into perpetuity. And as I said I didn’t want it to consume all of my time. That was really important to me, that even though this was the largest revenue driver of the business, I didn’t want it to take all of my time. So that’s what the business or what the membership was for me.
But you also need to be really clear, probably even more clear on what this thing does for your members, for your customers. What is it that they can expect to gain from joining your membership?
I think about a jobs to be done framework. Why is somebody hiring your membership? What is the job they are hiring it to do in their life, whether it’s functional or even emotional? So for me, I wanted to help creators go from under the radar to on the radar and a certain way. I wanted to give them a place to learn and grow with other creators at their level. I wanted to help them level up the professional quality of their creator brand. I wanted to give them community powered learning experiences. And I also wanted to give them inspiration for building their own beloved membership community. I would say probably a third of the members in The Lab have or aspire to have their own membership community. So for them, it’s a double dip. They get all the benefits of being a creator but they also get all the benefits of seeing how I’m innovating and what I’m doing differently in there.
So I would invite you to do the same and I’ll pause on this next slide momentarily so you can take notes. If you want. We won’t spend a lot of time here, but I really encourage you to ask yourself these questions: How many members do you really want or need? How many of those should be there at lunch if you are pre-launch? Do you want to have an application for members? How much money do you want to earn from this? How much money do you want to earn at launch? You know, it’s both the long term—how much money do you want this to bring in in a typical year or a typical, you know X number of months? But also at launch how much do you need for this to return to you to make this worthwhile? Do you want or need monthly recurring revenue? How much time do you want to spend on this each day or each week? How will you spend the time that you do dedicate to your community or membership? And what type of interaction do you want to see between your members?
One distinction I give a lot of creators who have a large audience is you can create a membership that the value is not explicitly just from the peer to peer interaction. If you want to have the membership the value of your membership be derived predominantly from the peer-to-peer interaction in your membership. It’s difficult to scale that. It’s really hard to foster closeness and good peer-to-peer interaction in a very large membership. So if you are a creator with a larger audience and you want to get a lot of people in here because it’s a lower price point or just because you can then I would probably design the experience and the expected participation to be less about peer-to-peer and more about education and access to you.
So pause just for one more moment while I take a drink of water, if you guys want to write this down or screenshot it. All right. Remember you want to be honest with yourself in these questions. There’s no reason for you to delude yourself or lie to yourself. You don’t have to tell these answers to anybody else, but you need to have alignment on what you want. So you can design this to be what you want, even if you feel like oh my answers are selfish or capitalistic. Honesty with yourself is important or you’re going to create a system that you come to regret.
Let’s talk about pricing a little bit because I think pricing goes hand in hand with this question of growth and how many members do you want? One of the biggest issues I see with failing memberships is really unintentional pricing. I see a lot of people who don’t think about designing their own pricing and instead they just look at what they see other similar communities or memberships doing they’re like, I’ll just copy that. And as a result, you see a lot of like $49 per month or $499 per year. Other people will price too low and they’ll say hey, I’m gonna price that less than ten dollars per month.
There’s no wrong price quote on quote. Unless it doesn’t fit your design constraints. You need to make sure whatever price you choose is in alignment with those constraints. I’m talking about what you’re trying to earn from this. How many members do you want to have? These are really levers for you to play with in the sooner in the process of putting this together the better off you are so some of the variables in your in your equation to consider the number of members that you really want to have in this membership how much you can charge How often you want to charge, you know people assume that you should have annual and monthly options.
I threw monthly out of the window immediately. I said, I don’t want to have a monthly option. You may choose to do it bi-annually or quarterly, you know, there’s all kinds of different frequencies on which you can charge that you can consider. You could even have multiple pricing tiers. I’ll talk about that here in a minute. But these are all levers that you can pull that can change the total revenue possibility of your membership. It can change how quickly you get to a certain number that makes you feel happy. It can change cash flow in your business. So these are levers that I really encourage people to play with quite a bit.
We talk about each of these kind of one by one total desired members. I touched on this earlier, how many members you actually want or expect, and I think it’s important especially pre-launch to think about it in kind of two traunches, two chunks, the total members you want at the end of year one so you can kind of plan on an annual basis. And also being kind of honest with yourself for projections of how many members do you expect at the end of month three, you know, I’d call this kind of your launch your honeymoon phase how many people do you think you can bring in when this thing is new and exciting and the first three months if you if you can make an educated maybe conservative guess at that and then compare that with the pricing model you’ve put together. How do you feel about it? Now if people just run that math and say how do I feel about this? Is this worth it to me?
How much to charge the question I get a lot. How much should I charge for a membership again? There’s no right or wrong price. I’ve seen memberships that are less than $10 per month. I’ve seen memberships that are more than $20,000 per year and they all run on the same underlying technology. The difference really is customer selection. Customer selection is what I would refer to as this question of what type of customers do you want to attract and what type of customers do you want to filter out? There’s this really great documentary on Netflix called the Andy Warhol Diaries. Andy Warhol, legendary artist, painter, incredible documentary. They took his diaries after he died and actually trained an AI model on his voice and much of the narration in the film is an AI version of his voice reading his Diaries. It’s really fascinating, really really cool. But he has a line in there. He says artists asked me how to get rich and I told them: Sell your artwork to someone rich. Have them put on their walls and tell their rich friends. And like it’s this really flippant observation, but there’s this kernel of truth in there about customer selection, which is the type of customers you attract beget more customers like that most of the time. So the earlier you’re thoughtful and intentional about who is this for, who am I making it for, the more you start the flywheel turning of this system is generating more customers like that.
This is a graphic I put together in my course and in one of those lessons I talk about, you know, having a purpose for your membership is a filter where you say we help you do A. Having that filter up front tells people who this is for, the B C and D. People will say oh that’s not for me. Similarly pricing is a filter when you have a price that fits customer A it may be too out of reach for customer B. It may be too low for customers. See pricing itself can be a filter for the right type of people you’re trying to attract.
Earlier in this presentation. I shared that my membership is basically two thousand dollars per year. You probably had some reaction to that. You might have thought wow, that’s high. You might have thought that’s reasonable. You might have thought, oh that’s lower than I would expect. That says something about you and where you are in life in your business and I use the price in such a way where if it felt like oh that’s high, I couldn’t afford that, then that’s probably too early for you in your creator journey for this membership experience to be for you. That’s a lever that I pulled. Millionaires won’t join a $10 per month membership. Probably beginners wouldn’t join a $20,000 per year membership. These are large swinging pendulum moves on different ends of the spectrum, but you know those generalizations help you understand the point.
So who does your price attract? And is that aligned with who you’re trying to attract? You may be frustrated and asking but how much do I actually charge? And I can’t tell you that answer, you know your customer better than I do. I can’t tell you that answer. But questions you can consider when putting this together again right now. How is it priced? Who am I attracting? Is that aligned? Is there precedent for your customer to pay a similar price point that you want for similar experiences? Does your customer value savings up front by paying annually? I know a community that is for financial advisors and they have the highest proportion of annual versus monthly members that I’ve ever seen even though they offer both because that customer just understands the time value of money and the savings by paying annually. So that’s not all customers, not all customers have those means, not all the customers have those understandings or that understanding or that appreciation. Maybe your customer does.
Do you want to create multiple decision points throughout the year? I’ll talk about that more here in a second. How many members do you expect that you can reach? You know, how many people do you think your footprint, your audience, will be able to reach right now? How much does it need to generate to be worthwhile to you?
And don’t underestimate asking people who would be a good target member for you. You know if there’s somebody that you have in your mind, say this membership is for people that are just like Jay. You should talk to Jay. And say hey, this is what I’m thinking, this is the price point. What do you think? Don’t underestimate the value of just asking and having a conversation. Do it live so you can hear not only their response, but you can see their body language. You can see their emotional response. It’s really important.
All right, how often to charge? Most creators assume that they need to offer monthly and annual pricing and I think that is absolutely not true. I’ve proven that it’s not true. You can charge on all these different cadences. The more often you ask people to decide whether to renew the more often. Some of them will choose not to every time you give someone that the decision should you do it or should you not some number of people some percentage of time they will choose not.
In The Lab, I chose annual only because that filters for where they are in their journey, you know by doing annual only it makes the buy-in price higher so that kind of filters for where they are in their Journey. It filters for commitment to the space. They’re committing to doing this thing for a year. I believe it really reduces churn and for me, I’m not like the most established creator. It’s great for cash flow for me that allowed me to invest in the business further to make the experience better to grow the audience.
That was all a strategic decision and I just ask people: Would you rather convince someone to make one purchase decision or 12 consecutive purchase decisions? Because all the people that have stayed in The Lab for a year to have the same result that I just had I would have to convince them to say yes 12 consecutive times, all of them. and I just think it’s easier to have someone make one decision even though it’s a bigger decision, look back on it 12 months later and say yeah, I think that was worth it then to get that. We’ve all been in the situation where life happens circumstances change in some months, we freak out, we decide to cut whatever subscription we can, and if somebody hasn’t been involved in your community, in your membership for a month through no fault of your own but that happens they may decide not to renew even though if they had the next two months, they could have got a lot of value out of it and continue to renew, so timing plays a big role. I just think that for membership where a lot of the value is peer-to-peer communication, lower churn is better because it reduces the amount of volatility and chaos in your membership base.
Multiple pricing tiers. This is something that I’ve also implemented and really glad that I have. Any time you have more than one price, let’s say you say I think I’m going to price it at $500 per year by creating a second pricing tier. That’s $750 per year. Some people will buy that they will see value in the added benefits that you give to that assuming you’ve created legitimate additional benefits. So on average if you have multiple pricing tiers, you will increase your average order volume just by having it because some people will buy that.
So how many tiers of pricing are available within your membership? And what is the difference between those tiers? Because if the difference is not clear, you will create confusion. Confusion leads to inaction. People won’t make a decision if they’re confused and so confusion might lead people not to make a purchase at all. So there’s some risk here. But as long as you are clear on the differences between these two tiers, then it should be pretty easy to make a decision.
This was the original pricing chart for The Lab. You can see it here. I had two levels of membership and you can also see the price was lower before we hit our cap. This is something else that’s valuable and I’ll talk about that here in a minute, but we had two pricing tiers. That’s all A or B. And I used colors and visual cues to show the differences. I really like pricing charts like this where all the bullet points are side by side. You gray out the things that are different. From one and the other but this was really affected for me. You know, you can see the differences.
You may be asking okay, there’s two but I hear a lot of people saying that I should have three tiers because that anchors the middle tier and that’s where I want most people to go. Should I have three tiers? And I think it really depends, you know, you look at software for example a lot of software companies will have multiple tiers like this. You can see it here on Riverside’s page. They have three, you can see four tiers here, but three that are immediately apparent from a pricing perspective, but actually they offer monthly and yearly pricing. So what you actually have are six tiers. In my opinion you have six choices for people to make and to me that’s a lot that becomes more difficult because not only am I comparing across plans, but then I have to decide do I want monthly or annual? I think that’s starting to create more friction than you necessarily want. Now six is true when there are three tiers. If you have two tiers you have monthly and annual, now you have four choices. That’s significantly less than six, but it’s something to consider, you know in this paradigm. I just had two choices. Recently when we hit our cap, I introduced a lower tier of membership that’s access to all the educational materials but not the forum, not direct messaging. Now I have three tiers, three decisions, still less than four if you had two tiers and two pricing points, but you know a little bit more complex. So, you know, I think there’s merit and there’s ability to do as many tiers as you want. You just need to understand the trade-offs that it creates more choice which slows people down. Generally complexity is not your friend.
So when you’re doing this, make a simple calculator for you to play with the different pricing models: the price that you want, the number of members that you want, the number of tiers that you want. I have one of these in my membership course, it’s kind of a complex Google sheet. I put together that even incorporates having two tiers, but make a calculator for yourself and play around with it just to understand the reality of what you’re building here.
Now I want to talk about having a cap on your membership, you know, the premise of this presentation was how to grow your membership and seemingly that would be in direct conflict or at odds with having a cap on the membership and It’s actually not true. So let me talk about the super unconventional benefits of it.One of them being that I can focus on connecting to the members over growth by not having endless growth. I knew that hey, I’m gonna have 200 members in here. It’s worth it to me to have a 30 minute one-on-one welcome call with every new member, even though that is a hundred hours. I have just committed at the drop of a hat over this next year to do it. I’m gonna do that. Welcome calls at times can dominate my week. I have four of them this afternoon. They can dominate a day. They can dominate a week, they can be a lot, but this is a good investment in the community culture. And each of these individuals my ability to connect with them personally and also connect them to others and if they renew I don’t have to do this next year. There won’t be this many welcome calls. This is a near-term short-term pain point for a long-term benefit and I say pain, but I enjoy all of those calls. It just takes up time in your week, so I can focus on connection over growth by connecting people together.
There’s a familiarity that happens. With each of these members being in there for a year, you know, they commit, they’re gonna be there for a year whether they’re really active or not that active you’re gonna be seeing their name and face a lot. You’re probably gonna see him on some live calls. So there’s just a lot of connecting of people I can do here when I’m not worried about forever growth and that stands out, that makes a membership remarkable, that creates a lot more word of mouth and referrals.
It also creates a controlled consistent member experience. This is the biggest reason why I put it in place in the first place. I wanted to continue to invest as much time in each individual as I could and keep the discussion deep, nuanced and a conversation as opposed to a bunch of people talking at each other. The larger the community is, the less closeness that people feel generally unless you do an incredible job of building the culture but generally: larger community, less closeness, it stops being a conversation and more of like a support forum or just talking at each other in my opinion and what we built in The Lab was a very close knit personal experience and I didn’t think I could sustain that above 200 people even at 200 it started to get a little more difficult.
So having a cap, whatever that is, helps you control the experience. I had this mental finish line to strive towards that drove me. When you have an endlessly moving goal post, it feels like nothing ever is done or accomplished. For me, I had a goal, and that goal was designed in such a way that if everything else in my business fell away, if I kept the membership happy, it would afford my life and the operations of the business. It creates predictable recurring revenue, even though I don’t have monthly recurring revenue. Since this is annual recurring, I can look at how many subscriptions are up for renewal this month and know exactly how much revenue my membership will generate. If anyone churns, I can calculate the impact on my revenue and make those spots available to new members. It also creates a built-in scarcity feeling and urgency for joining the membership without having to do launches.
In February, we hit our 200 member cap, which was the 12th month of the first year of this thing existing. I was just sharing with Twitter and email that we had a limited number of spots left, and things went pretty crazy. February was the best month my business has ever had. We generated $74,000 in membership fees because the number of available spots got smaller and smaller. I didn’t have to do any launches. Just updating a counter on Twitter was very effective in getting people to make a decision to join when they had a legitimate source of urgency.
Having a cap contains my time commitment. Now that we’re at this cap, I understand how much time I’m putting into the membership each week. Anything I put in above that just makes the membership better. Supply and demand play in your favor. This is where growth comes in. In my course, Build a Beloved Membership, I talk about a two-stage launch approach. The first stage is the private opening, and the second stage is the public launch. Many people ask how to get their first members for their community. I recommend dropping little breadcrumbs in your content to let people know you’re creating a community, even if you don’t have a sales page or anything to show yet. When I launched the community a year ago, my regular retail price was $9.99 per year.
So these people that I just put a line in my email and said if you want to join you’ll get 50% off for life. They paid $500 and they have a membership in the community for $500 per year for as long as they would like to retain their membership.
As time went on I raised the price at one point from $1,000 per year to $1,500 per year. That created a moment of urgency again for people who are on the fence. I gave them a week and I said I’m gonna raise the prices in a week if you want to join, this would be a good time to join and a lot of people did.
Now that we’ve hit our cap, I raised the price once again. Now it’s at $2,000 per year and I have fit 49 people on the waitlist. Is that 4x higher than the people that joined initially, my biggest fans who are paying the closest attention and believed in me? Yes. Do I think some number of people on the waitlist will pay that? Yes, so as much as I hate to lose members and I hope everybody renews into perpetuity because I’m happy with that. The number makes me happy.
If I do lose a member, I’m going to replace their membership fee with a higher membership fee. So I will continue to generate more revenue in the community, even though I don’t ever have more members in it because I can just kind of play the supply and demand game. This also gives me the ability to buy out inactive members. I’ve never heard anybody talk about this but this month I have bought out the memberships of two inactive members in my community so that I can make it available to two new members who want to join and I’m gonna keep doing it.
I’m gonna do it slowly a few at a time, but I don’t want dozens of inactive members. I think right now Circle tells me I have 25 inactive members, meaning 25 members of The Lab have not been active in the last 30 days. They’re not adding value to the community. They’re not getting value out of the community. So I just buy them out. Why not let them be inactive and still pay you? Some of them, I do. I mean that’s been the way so far but they’re not getting value out. They’re not putting value in.
They’re 49 people who want in who could add value to the membership and you know if I can buy out the remainder of their membership, it’s gonna be less than their membership rate because they’ve been there for a while. The membership rate they joined is less than membership right to join now. So everyone I buy out I can replace at a higher rate. I’m going to generate more revenue so I think that’s really really interesting. I think it’s really interesting from an alignment of incentives perspective, and I’m really excited to keep doing it.
This also leads to incredible attention. I showed you this month had 93% retention because the people who joined in March of last year have a rate that’s far lower than it’d be to join now. And the deal is that remains for as long as you renew, but if you choose not to renew, if you can get back in—which should be a big if because there are more people on the waitlist than there are available spots—and if you did want to come back in you’ll be paying a higher price than you had initially, so that creates incredible retention which continues to fuel the culture of the community. It’s very very cozy and nice.
So these have all been good consequences of having a cap. Membership continues to grow. I showed you a moment ago that we added this third tier to access the courses, the recorded materials. I do a 30 minute retro every month to show how I’m earning money as a creator, how I’m spending it, what I’m deciding because of it. So people can join that membership for $700 per year and they get first access to the first available spots. So they get value they get education the total value of which is more than the price of that membership. And they get first dibs at those available spots and that membership doesn’t have a cap because they aren’t really seen or experienced by folks in the community. They don’t have access to the forum, their DMs are turned off. The moment they join it’s just an educational starter membership, but they get first dibs at the few available spots, you know, so we’ve had close to a dozen people join the starter membership this week. It’s the first week of it existing. They’ll get first dibs on the spots available next week in the community and I’m really excited about that because again, that’s a way that the overall revenue of the membership will grow. There’s no welcome calls for that membership. There’s a lot less maintenance, you know, it’s basically bundling together education materials.
So I would say this presentation, the bulk of it was two lessons from a course. I have called Build a Beloved Membership that talks about the concept pre-launch and post-launch of your membership. There are I think 30 total lessons. So if this is valuable, I really believe that this course will be valuable for you as well. No pressure, no expectation. If you’re interested in it, you can go to beloved membership.com to learn more again, no pressure. But if this is useful, I do believe this will help people make better membership communities.
All right, in conclusion, this is supposed to be a conclusion. In conclusion, you don’t need to grow endlessly in terms of the number of members in your community for this to grow in revenue and be worth your time. I really encourage you to choose your own design constraints when building your membership. You should play with the levers of the number of members, the amount of pricing. Determine your own level of involvement, how you want your participation to look, and that experience for you and the members. And I really do think that you should consider a membership cap. I think more people should consider it. I think having a small intimate membership is by design is a rare, very valuable thing and in a world where people are joining more and more communities being the remarkable, different, more intimate membership I think is competitively interesting. That’s it. I have 18 minutes for questions if you guys have them. That’s where the newsletter is. That’s where the course is. If you want to join the starter membership, that’s where you can do that the course is included in the starter membership. But what questions do you guys have? And anything that I was explaining that you wish I would have gone deep into?
Emma Catranis: Jay, everything you said, I’m just blown away. There’s so much value in this presentation. So thank you first and foremost. This was really wonderful.Why don’t we open it up if anyone wants to come off mute and ask their question. I would love to leave time for everyone else to ask their questions.
Linn: Thank you very much, Jay, was super insightful. So we currently have a community already. We are a community business. So we have a lot of members. We have partners. We have students, a lot of target audiences, but we want to open up our community to externals and start charging for it. So how would you go about that? We don’t have any memberships at the moment, but we want to start introducing them.
Jay Clouse: So you’re saying you have a community, but it’s a free community? And you want to bring paid memberships into it? I think it’s a challenging thing and let me tell you why, let me give the preface and kind of the spiel that I give to explain why it’s challenging. I had a free community for a long time. It was great. I enjoyed it as it became more successful, meaning more people joined, more people participated. It had a higher cost to maintain it to me without any more reward to it. So it created like this low-key resentment in me where I was subconsciously doing things to not foster the community and it gets really misaligned in terms of incentives. That’s the reason why doing a free community is hard in theory. I see why having a free space in a community that is a paid membership makes sense because you have kind of a try before you buy you get people warmed up and then you can kind of passively market to them the paid version of it. I think that’s possible. I haven’t seen people do it because you have to make the free thing good enough that people use it and find value and think man if this is the free thing, I wonder what the paid version of this is like. But it can’t be so good that it’s accomplishing all of their needs that they see no reason to upgrade and all of that will incite this internal tension of making the free space great and not being rewarded for it. So it’s really really challenging. What would happen if the entire membership was paid and the people that are in there right now. have priority access, they have a better deal, they have better pricing. But the whole thing was paid. That’s one thought experiment. If you do want to keep that free and have a paid group for external partners, then I think you still need to make the free people feel like hey, you’re getting paid level access, but you’re getting it at no charge and here’s why, here’s what our expectations are for you to continue. I used to work with a lot of freelancers and similar piece of advice I give a lot of them. They would say I have this partner and I really want to do this project. They can’t afford it. They can only afford this price. How do I do it? And I always recommended when you invoice them, if you are going to give them a discount, if you’re gonna give them preferred pricing, you should still put the full price on the invoice and then mark an explicit discount so they understand the value that they’re getting and I think the same would be true in your circumstance here.
Linn: That really helps. Thank you.
Jay Clouse: I saw Susan put in the chat: Do you do welcome calls for those who renew and Susan the answer that is no we do weekly office hours calls. I do several one-on-one hot seat calls per month. So there’s so much ability to get one-on-one access to me, but I don’t have like a dedicated 30 minute call per member every time they renew. contact.
Zack: So thank you for this by the way. There so much content here just to use so I really appreciate the time. Fo a group that you’ve built that you know feels exclusive, that is at a higher cost than than most, do you still find the same challenges that a lot of us have when it comes to drive engagement once they are members or is a lot of that solved just because they’ve already paid a higher amount so that kind of brings in the engagement automatically from them or that they knew that they were able to get in because the spots were limited? I’m just wondering if you have the same engagement issues.
Jay Clouse: No, the quick answer is no. The reason why could be a number of things though, you know, like yes pay more to have access to this. You’re probably going to have some voice in your head. Like I want to make sure I take advantage of this. Actually the thing that causes the most disengagement in The Lab is that there is so much engagement that people turn off their notifications and then it becomes kind of an out of sight out of mind thing. That’s the trial. That’s the struggle that I’m dealing with right now. Now of course people also have like seasons of life getting busy and stepping back and then stepping back in but I know exactly you’re referring to and I do not experience that in The Lab, but I think the main reason why is because I really focus on excellent experiences meaning that what I see happening in most communities is really optimized for getting people to pay and join and then you kind of go dark and it’s kind of on the member to figure out how to get the most out of this.
I’ve built a really robust. very unique onboarding experience that really gets them to the point of having a positive experience with the community. Now let’s fast forward through that onboarding experience a little bit and get to the point where they make the first post because I think this is also critical and I think a lot of communities who struggle with engagement still get the first post. And what I see happen is you’ll get the first post, It’s an introduction people spend 10 minutes pouring their heart out taking valuable time and being vulnerable and they click post and they sit back and they wait and they’re thinking themselves maybe subconsciously how will I be received into this space and they either get no response or they get a very light response or they get a very slow response. All of which creates a very painful first interaction with your membership, and I don’t know why they would come back. And I just see that happening where people lose every single individual immediately after getting them in there.
So, you know people ask me a lot. How many hours are you putting in The Lab? Because people talk so highly of it. It’s not about the number of hours. I mean the answer to that is like probably 10 on average, 10 hours per week. But it’s not about the number of hours. The thing that makes a lot of difference is the timeliness of responses because if people are hiring your community in a jobs to be done framework saying I want to join this community because I think it’s gonna help me act, they really value timeliness. So again anytime they make their first or they make any posts and investment of time and energy saying, can you help me with this or I’m struggling with this, if they don’t get a not only a helpful response but a timely response, your community is no longer going to be the place that comes to mind for them for that type of problem. They don’t think that they’ve made a good job hiring the right person, the right community for the job. So I don’t spend a ton of hours, but I’m constantly plugged in. I have notifications for every space. I have notifications for every message. I am context switching all the time. That’s a choice I’ve made for the experience. I’m trying to create so that I give people timely responses to their questions.
Let’s look in the chat here. What has been your marketing strategy to attract members beyond your pre-launch? Well, I used a referral program. That was only available to other members and that’s an ongoing referral program. If a member refers somebody and they join they get 25% of that person’s membership. Every time they renew, which I think is really smart because that not only incentivizes them inviting people in but wanting to keep the space great so they stick around as well. So I think I paid out something like $10,000 in referral fees to members of the community, which is great because several members have paid for the membership in referrals. Outside of that, it’s really just been talking about the fact that it exists. You know, I’m not really selling The Lab because I wasn’t in any hurry to hit our 20 or 200 member cap. I wanted it to self-select for the right type of people without being coercive or intense, but I did talk about it a lot. You know, I would talk about it in my email newsletter. I would talk about how much I’m enjoying it on Twitter and what I would talk about the lab on Twitter. Other members would usually chime in and say like, yeah, it’s part of this call or I love The Lab. And now you have this very social, very public FOMO creating thing and a little bit because people see who else is involved. which was just awesome, you know, so it wasn’t really any type of strategy. The cap certainly affected it because as you saw in February, we had our highest month in memberships. Members joined just because the opportunity was going to go away, but I actually don’t like having such a giant spike in membership. I would have preferred to spread that out a little bit more, but that’s kind of the reality of it.
Do you think having members-only content is helpful to attract and retain people? If so, what kinds of content do you think performs well and isn’t super time consuming? I think about this in the realm of programming a lot. I think people value live, exclusive calls. And so one of the things to talk about in the course is what is the role of programming in your membership? What do you want to do? Because it is meant to be knowledge transfer, is it meant to be social? There are like six different categories of what the role of programming can be and then I recommend several different types of events to fit that programming. I do think it’s helpful. One aspect of the membership that gets a lot of positive feedback are these 30 minute retros that I do where I go into QuickBooks, literally show here’s all the money I made this month, where it came from, here are the things that I tried that worked, here the decisions I’m making because of it. Like it’s an open book and I just talk through it and people love that and I do think that has a positive impact on retention because if you leave you’re not gonna get to see those anymore. I think it’s very insightful. So I think it’s useful. It’s fairly time consuming. Like I probably spend an hour preparing it and then it’s 30 minutes to actually record the video but what I think is less valuable on average are open agenda support calls. Like I go through these waves where I’ll do office hours every week and I’ll see attendance kind of dwindle. So I’ll go back to doing it twice per month and then if attendance is really high and I think oh people love this I should just do it every week. There is something to be said about scarcity of programming sometimes because then people feel like they want to prioritize and make time for it because it doesn’t happen all that often. But also if you just title your event something like office hours, if I don’t have a burning question, I don’t know what value I’m going to get out of allocating an hour to showing up. I probably will but it’s really easy for me to deprioritize it in my mind because I don’t know what the value I’ll get out of it is. So any programming you do I would have especially if you’re trying to be efficient with it. Be very specific. You know, there’s another thing in question. Maybe this session is only 30 minutes, you know, maybe it’s 30 minutes where I walk you through how I am doing Instagram reels right now. And that’s it, you know and that’s something that after it is recorded also becomes a really valuable recorded asset.
We have members that are asking about in-person events in the future. Do you have an opinion on this? I think it can be really really powerful. We’re gonna have in-person events in the next two months for The Lab. But what I’m doing is piggybacking off of conferences that a lot of members are already going to so Creator Economy Expo in May in Cleveland, I’m going to be speaking there. We have a lot of members going, I booked us a private dinner. We’re gonna have a private lunch room. It’s just us. The same with Craft and Commerce, ConvertKit’s event in July. We have a bunch of members going so I’ll be doing some private meetups there. It’s really expensive and stressful for you as the organizer to try and plan like a one-off thing. So if people are already buying a plane ticket to go somewhere they’ve already allocated the time. I think it’s really a lot easier to kind of piggyback off of that immediate term.
Michael asked how do you automate referral fees? Yeah, it’s a technical headache. I use FirstPromoter. I think some people have gotten Rewardful to work with Circle if you’re using paywalls.
Stone asked how many founding members did you start with? I think we had about 20 join before I did the public launch and the private opening.
Joselin says are you the only one being first to answer or are there things that you do to encourage others to also comment on new member posts? Yeah, I think actually most of the time other members beat me to it. But that was like six months just modeling the behavior of me being first and being thoughtful and welcoming them. It’s also when people do beat me to it, liking their comment, sending them a direct message saying thank you for helping make this person feel welcome. You know, when you thank people for these efforts that they’re doing that they’re not compensated for they’re not necessarily incentivized to do it, it means a lot.
Susan asked how many people are on your team? It’s mostly just me. I had most of my contract help is on my YouTube production side. In terms of the community, it’s just me.
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