How to build a community from scratch

0:00You know, I thought we would start, Neil, on how to build a community from scratch. because we've talked about how communities will get stronger and stronger and we have our community and we can share some numbers publicly and then we've been planning some things as well. And I got some interesting metrics around communities too. So maybe we should start with the business metrics behind a strong online community first and how much you can make. And then we'll talk about how we've been building our community from scratch. So as everyone here might know, Neil and I, we have a little for fun group called the Agency Owners Association.

0:33and it's a school group. So that's S-K-O-O-L. And the way it works is you pay a monthly fee and with the monthly fee, people will pay to get access. Could be group coaching, could be courses, whatever it is exactly. Now, Neil, if I were to ask you, what do you think the churn rate is for communities on average monthly? I would say the churn rate is 20 to 30%. 20 %? Yeah. 20 % to 30 % is a bad community, right? Yes. Now, what do you think would be like higher tier communities? Like good and then best of the best? I would say good is under 10%. And best of the best, you're probably looking at under 5%.

1:12Okay. So what do you think our community group churn is? Our community group churn? Yeah. So monthly, how many people are we losing? Percentage wise. I don't know how many people are in the group. So let's go with percentage. I would say percentage 15%. 15%, okay, 6%. All right, not too bad. It's actually not bad. So what happened this week was, so we have a GM that runs the group. His name's Greg, and he does a great job. He's got a lot of ideas, so I meet with him once a week. And this week, the conversation was, how do we improve the churn rates, which we'll get to in a moment. But those are the business metrics, and there are some school groups that are doing 100, 200, 300 grand, are you sending me something?

1:55No. A month. And I thought Neil was going to text me something. But these groups do well. And some charge maybe$1 ,000 a month. Some charge$100 a month. Some charge$20 a month, whatever it is exactly. Our group happens to be$399 a month or so. But the thought behind it is, if you create a good product with the community, then people will stay. And what happens is it's recurring too, so it's great. And the line is, so people might buy your product, but if you have a community, they stay for the community because people are lacking the ability to hang out with like-minded people. And so what I did was I asked the community last week.

2:35I said, hey, what needs to happen for you guys to stay in the AOA, the Agency Owners Association, forever? I posed the question forever. You might as well go big with the question. And what do you think people said? we need to grow our agency and make way more money. No, no, no. Like what, what, what does a group need to do to help to get them to stay in the group forever? Help them make more money. Yes. But what they mainly said was they like to hear from both of us. They like to hear. So I was like, okay, Greg, I was like, Greg, you know, obviously we're, our main thing is our agencies. We need to focus on that.

3:10But I was like, okay, if Neil and I are going to meet once a week, um, to have lunch or whatever, and we're going to record, maybe if you can give us some soundbites too. I'll just bring my little vlog out and we'll just record it. Cause I've, I've two mics on the thing. I will just record as we're eating or something like that. And we'll send it to the community. Right. In addition to us doing like, you know, we're recording tomorrow morning at nine 30 with a group. Right. Um, so the, the point of saying all this is, okay, how do you build a community from scratch? You have to be involved in the beginning.

3:33In the very beginning, I was pretty involved and I was on the calls weekly, right? Now you and I are on, are on the calls monthly, but we're going to have these little sound bites and those will eventually just become like a giant course and then that'll be for onboarding, right? That's our way around it to continue to stay involved and to post more. You're smiling. Why are you smiling? Because I bet you in the next week I'll start seeing lunch invites from you on my calendar. Yeah, you will. Yeah. Well, you were the one that brought up the lunch idea. Yeah, I went to lunch. Yeah. But Eric just turned it into work.

4:01Well, no, because we're giving advice to people. But I'll tell you what, we don't even have to do it at lunch. We can walk from your place to lunch and walk back and then we'll give advice as we do it. Okay, fair enough. Anyway, but the point is, there's a lot of different ways to grow the community, right? One, you have to make sure that usually people join a community, if it's an online community, usually it's for the founders, right? And you have to be very engaged in the very beginning. The second piece is with a community, you have to make sure that you're constantly asking for feedback in the beginning.

4:32Because we didn't ask for feedback for a while. If we're not asking for feedback on how to make the product better, you can't make the product better, right? So those are two things to start with. And I'll turn it over to you, and then we can go back and forth. Yeah. With the community, the biggest thing that I found is it's going to churn no matter how good of a community you have. You can have like a really loyal face, loyal base like Joe Rogan or Elon Musk or whatever it may be. But the moment you're charging people for something, you're going to get churn. It's just natural. And the churn is going to be pretty bad for something like communities because it's not something that they necessarily actually it doesn't matter.

5:11They don't need it. It's not like food, toilet paper necessities, right? I look at a community as you don't necessarily need it in life to survive. So you're going to get churn. But you look at business. If you have a sales team, you need a sales CRM. It's a necessity. Even in business, a community to pay for a community to be part of one isn't a necessity. I'll give you a great example of this. We were part of Dan Martel's SaaS community. I ended up joining - SaaS Academy. SaaS Academy. There you go. Um, we joined it for one of our team members. His name is Carlos back in the day. We lasted, I believe it was a one-year membership and you can keep renewing each year.

5:52That's all we renewed for. Did our team get value from it? Yes. Did they love it? Yes. But as a business, it wasn't a necessity in which we had to pay for it on a daily basis to run our business. I look at like Amazon Web Services, a necessity. If you have a business and you need hosting, tech business at least, you can't just cut your Amazon bill. God damn it, Neil. The title says, How to Build a Community from Scratch. Not talk bad about a community. No, I still think people should end up doing it. But I would say if you want to do well and build a community and have it last, you got to figure out how to make it more of a necessity than a nice to have.

6:35And you can't really make it a pure necessity, but you can get closer and closer there. Like when you're talking about the agency owners association, if you teach people how to reduce their churn, grow their revenue, they're more likely to stick around because it's helping their numbers and there's a direct ROI. Most communities don't have that. When you give people a direct ROI for whatever they're looking for, like if you could have a community for how to become popular on social media. If you're actually helping people grow their social media following and they're seeing results each and every single month, they're much more likely to stick around than if you just had a community, but there's no tangible thing that they're going to get after being in there for a few months or a year.

7:20Yeah. So, well, and this one, I mean, I'll give you a couple more things you can do to grow your community. YouTube works really well. Wherever you have an audience, if you just plug the link for your school, like it will convert, especially because school has a trial and then it shows you how many people will convert to their trial and how many people will convert from there. What's our trial conversion rate? I told you already. On the landing page, it's about 6 % or 7 % to free trial and then about 30 % to 40 % of people convert to paid. Are we asking for a credit card to start the free trial?

7:56I don't know what school does. I'm assuming they are. I'm assuming yes. 40 % is too high. Yeah. So that's what it is. But what I will say too, is Neil's absolutely right. The churn on these monthly communities, online ones especially, is higher. So usually in SaaS, 5 % a month is actually high. We're at about 5%, 6%, right? It's not bad. But just understand that if you have 5 % churn, you have to replace 50 % of your customers every year. That's a lot. Now, Neil brought up a good point. So I met with my GM, not Neil. I met with my GM earlier this week for the AOA. And he said, so what are we trying to do out of this?

8:32And I'm like, look, man, honestly, at the end of the day, the number one problem all these people have, and we've quizzed people before, the number one problem by far is getting more customers. That's the problem. So for the$3.99 tier, we should just help people at all levels do that. But at the end of the day, and I was very transparent, I'll be transparent with everyone here. We are looking to partner up with or potentially acquire agencies. And for those people, we want to meet these people in person, right? Because you build an in-person relationship. Have them come over to Beverly Hills. We'll do like a, we'll do like an in-person thing maybe once or twice a year.

9:04And that's it. Cause Beverly Hills is home turf for, for Neil and myself or LA is, I should say. But that's where we're trying to go with it. So I think you have to understand what you're trying to build. Cause if you don't know what you're building for, it's like, oh, you're just trying to do it to make money. That's not going to help. You have to understand the problem that you're solving. And so for a higher tier, maybe you're looking to grow to seven, eight, nine figures and get yourself out of the business. Okay. That's a different conversation. Maybe if you're just looking to acquire more customers and build a lifestyle business, which there's nothing wrong with, we have that for you as well, which is the$3.99 tier.

9:33Yep. Yep. So, and by the way, this actually, this moves in well with, let me tell you some podcast analytics insights. So, okay, look, guys, we're going to give you some fascinating marketing insights from our podcast analytics, and maybe, maybe you'll get something out of this. So do you use Snipt? Do you know what that is? No, you don't. I don't use it, but I know what it is. Oh, you know what it is. Okay. So Snipt is, it's a podcast app because Neil doesn't really listen to podcasts that much unless I send him something usually, right? So Snipped is cool because it shows you how many times a podcast has been snipped, meaning that how many times a podcast has had like bookmarks in the podcast, right?

10:13So that shows you the engagement rate for that. And that's very high signal. So what I do for Snipped is I pull up marketing school and I just look at what gets snipped the most. And then I look at our YouTube analytics and I look at what podcasts or what episodes tend to do the best. For YouTube, it's always the SEO stuff. It's not even close. For snipped, what type of content, not even just category of channel, but what type of content gets snipped the most from you and me? Probably when we share tools. Yes. When we share tools or when we're sharing stuff like this, when we're sharing stuff that we actually do, people get way more utility from it and our retention rates are actually higher, right?

10:49But when we record something like, you know, you talk about a discount or whatever, or maybe you went to the car wash and something happened to you. Sometimes that will get a lot of views. And so it's a mix. Yeah. And I think Eric mentions, uh, going and using snip to see what other people like, which podcasts are getting quite a bit of engagement. I forgot when this was is maybe a year ago, six months ago, maybe it was on a podcast episode. And, uh, you're, you're telling us on marketing school, how it's a great way to actually see which podcasts are truly getting engagement because the ones that have a ton of bookmarks and things like that, it usually means that they truly have audiences engaged.

11:30Exactly. And when I snip, by the way, I'm actually writing in and I'm bookmarking things. So it's actually a huge, it's a lot of effort. It's a huge signal. Yeah. So anyway, I just wanted to start with that. And then you can pick. Well, speaking of communities, you want to talk about how Mr. Beast is trying to buy TikTok? Well, I mean, so Neil put this in here. He says, will Mr. Beat become the next TikTok US owner. So you bring it. I just saw him tweet something about it. So I don't know much about it. He joined a group that's trying to buy out TikTok. And there's actually a lot of people like the Kevin O 'Leary's and people like that saying, hey, we want to end up buying it.

12:05There's a lot of different articles that are saying what the price of TikTok US is going to go for. Some say it could be 50 billion, some say more, some say less. I actually don't think any of these kind of people are actually going to be able to get the deal. Yeah. Because it's such a big amount. If you were TikTok, you would just choose the person who has guaranteed money. And yes, you may have to deal with monopolistic laws or rules, antitrust type of stuff. But in reality, if the government would let Facebook buy it, hypothetically, it would be very easy for Facebook to come up with the cash and they can do a quick deal.

12:44And it's seamless. But on the flip side. If you have to go through Mr. Beast and his group or a few others, they're pulling money from a lot of different places. And yeah, it's a lot of work and they probably have to get the banks involved. But on the flip side, Google is like a$2 trillion company. It's easy for them to just buy it. So would it be for Microsoft or so would it be for Apple? Even like Walmart, they're a massive cash cow. Maybe their market cap's not as high because the business isn't as sexy as Amazon, but it is a massive cash cow. And I believe the most realistic option is just extremely large corporation just buying them over anything else.

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15:34What? So Stanley Druckenmiller is known as the goat of advertising, right? He's a great trader. And he's like, look, I've been investing for 49 years and I've never seen us go from such an anti-business environment to the most pro-business environment that I've ever seen. Wait, wait, let's back up. You said he's a goat of advertising? No, investing. Oh, did I say advertising? I think so. Oh, I meant investing. I was just like, wait, I thought he's a finance. Okay, start over. Yeah, yeah, yeah. So, okay, the goat of investing said, look, in his 49 years of investing and he's got great returns, he's just like this is the most pro business investment he's ever seen meaning that because the last administration you had Lena Khan and she was blocking all these deals it means it's more likely that a bigger deal like this is going to go through and plus guys, by the way when Elon was buying Twitter it was like for$44 billion I'm sure all over the place hey you want to invest in Twitter I know a lot of friends you can get in Twitter over here you want to put in 500 you want to do this I'm like, for what return?

16:34It's like, the return is not going to be that great at the end of the day. You're better off putting it somewhere else, aka your business, first and foremost, or some other areas, right? Because we talked about this a couple of years ago when Elon was buying Twitter. It's like, you could have invested, but the returns just aren't as sexy. No, I'll break out a calculation for you. Someone sent me an article. I don't have the link anymore. And this person bought$50 ,000 worth of Bitcoin back in the day for, I believe, somewhere around$140. Oh my God. Okay. So that's 357 Bitcoin. Oh my God. And you look at today's price, let's call it 104 ,000.

17:08All right. I'm just rounding to 104. And you look at that ends up being$37 million,$142 ,000 and change. So call it just 37 million to round, right? If you look at 37 million, they put in 50 ,000. They've held it for a very long time. That's a 740 times return. So people are like, dude, you would have been so rich if you ended up putting all your money in Bitcoin back in the day. Well, first off, no one who has money, I wouldn't say no one, almost everyone who has a majority of the people by far would not put a hundred percent of their money into something that is an unknown investment, especially when something's in its early days, they would put a small fraction of their money.

17:55So let's say if I would have put$50 ,000, And that return is built over a very long period of time. The return is amazing. And you and I mainly put our money into our business. We've dabbled in crypto. We won't get too much into that. But when you look at the numbers, we've produced not as high of a multiple return on our business, but we've produced very large returns on our business. And from a dollar perspective, I would say the returns have been, at least for us, I would say the dollar perspective, not the multiple, but the dollar perspective returns have been better. Yeah. Well, also percentage-wise, if you think about it.

18:36Yeah, because I started with very little to nothing on my first business. So you can call it almost infinite. Yes. Yeah. Yeah. So that's what it is. And I think the younger versions of ourselves, and this is not an investing podcast, but I would just say the younger versions of us would get distracted by these shiny objects. It's the same thing with businesses. It's the same thing with marketing. Don't get distracted by all the channels. Don't get distracted by every single business. Just once you find something good, you should go all in on it. Yes. And I didn't see the Trump coin come out, but one of my very close friends did.

19:09They made a killing. They sold it in 24 hours. Again, this is not financial advice though. And I saw literally the minute the Melania coin got tweeted out, literally the minute, like I was like, it just came out. I could have quickly bought it. I did not. I didn't care. This is not being political or not. It's not about left or right. It's more so, I believe if I invest in marketing business and myself, the return in the long run is much better than investing in other random thing. I think also it's just, It's another thing that takes up your headspace. And that mental real estate is super, super valuable.

19:45So do you want to pick the next one? This is a fun one. I was watching a Seth Godin video. I've seen it. I'm pretty sure you've seen it, but someone sent it to me again recently. And it's about if you have a brand or a logo. And Seth Godin asked the question, if you walk into a hotel and it's a Hyatt, but you don't see the logo, can you actually tell it's a Hyatt? and if they change it with the Marriott, what's the difference? Exactly. But if, and Seth goes into, if Nike created a hotel, could you imagine what the experience would be like? Yeah. Yeah. You look at an iPhone, if there was no logo on it, you would still know it's an Apple product.

20:24And that's a real difference between a brand and a logo. Marriott, Hyatt, they're just logos, Apple, Nike, they're just brands. And I think it's really hard to build a brand. And I would say, and I'm not trying to be pointing the fingers or picking on you or me, I don't think either of our agencies are a brand. I would say we both have logos. We don't really have a brand yet. Both of us are trying to differentiate from all the other agencies out there. But it's really hard. Like if you just go to our site and there was no logo or anything like that, take away the color scheme as well. It would be hard for people to know it's our company and what makes it special.

21:02People say too. So a brand to me ultimately is just, It's a feeling, right? But brand is also what people say about you when you're not in the room. Jeff Bezos said that before, right? And so to me, you know what? A good example. Do you know the Muji stores, the Japanese stores? Muji? Muji, they sell like stationery. They sell like a lot of things. They're like all over Japan. There's some stores here too. Okay. So in Japan, when I was there in October, they have a Muji hotel. It looks exactly like the stores. It's a feeling. When you walk into a Muji, it's like contemporary. They sell pens and things like that.

21:37They sell a lot of different things. They do well. They do well. Yeah, they do well. And then also you could eat there too. Everything was done in a very Muji way. It was like you expect that experience. So it's the same thing. Just like when you walk into the Apple store, it's like, oh, yeah, you know what that feels like. Although Microsoft store is very similar and Google store aesthetics. Yeah, but nobody's inside the Microsoft stores. Yeah, and I don't know if Google sells a store, but I was in one of their pop-ups in West Hollywood like years and years ago. Yeah. So that's what it is. All right.

22:05So that is it for today, guys. Go to marketingschool.io slash agency to learn more about the Agency Owners Association. And that's the group where you're going to see our churn numbers get even better. Goodbye.