2143 - Transforming Your Business Through Membership Models with Membership.io's Stu McLaren

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1:05With us right now, it's Stu McLaren. Stu, you are the creator of the Membership Experience. You are the co-founder of Membership.io. And Stu, you got a brand new book, and we're definitely going to talk about that. Stu, it's great to have you. Yeah, thanks so much. Appreciate it. Great to be here. Yeah. Listen, before we get going, oh, by the way, I have to mention the book. I won't just tease it at that. It's brand new. It's just hit Amazon. It's already got a ton of five-star ratings. It's called Predictable Profits, Transform Your Business from One-Off Sales to Recurring Revenue with Memberships and Subscriptions, which we're going to talk about.

1:45Particularly, Stu, we'll be talking about application to those of us who do higher value work. And we generally work with higher value folks that aren't necessarily looking to join maybe an amateur Facebook group. It's more exclusive. That sort of thing. We're going to get into that. First thing I want to know, Stu, is what are you listening to? What are you, what are you watching? Any great movies, TV shows? I'm a huge fan of live music. And so I love listening to live albums. So for me, there's an incredible Mumford and Sons live album that they recorded in Colorado at Red Rock. That is epic.

2:26Being a Canadian, there's also a band called the tragically hip uh and they have uh epic live albums so uh that's what i've been listening to and then um you know i can't help but watch some old youtube videos from when they did their live concert at slain castle that's like one of my favorite uh to listen in the background as far as like shows though i've really gotten into um going back to like you know world war ii uh type shows. And a thing that turned me on to it was a book that I read called The Happiest Man on Earth. And it's this true story of this gentleman who survived World War II and Ostwitz.

3:10And it was crazy. And the adventure that he went through and then coming out the other side and starting his life over and rebuilding his life. And ultimately, he became a tremendously successful businessman. And it was just a really great story. So it just really turned me on to like, um, the per back in that time. And it just gives me, you know, gratitude for, you know, the life that we get to live right now. Yeah. So, uh, there's been a great show called, um, SAS rogue heroes. It's on Amazon prime. Oh, it's, uh, it's a really great series. They've done two seasons now and uh it's loosely based uh on real events um obviously they they yeah they you know fictionalized a little bit but it's really really good well i tell you what i am filling up my queue uh-huh this looks fantastic i would absolutely love it by the way the book that you'd mentioned it's called the happiest man on earth the beautiful life of an auschwitz survivor by eddie jacku uh and i might be pronouncing that sound right is that right that's right that's what yeah yeah Yeah.

4:22You want to see a book with, I mean, just stellar. I mean, probably one of the highest reviewed books on Amazon, I dare say. It is this book. I am adding it to my queue. Thank you so much, Stu. Stu, tell me about the work that you do. And obviously, tell us about membership.io as well. Yeah. So, you know, many people watching and listening could probably relate, you know, in 2008, I had a really great business. It was a consultancy business. And I had great clients. And we were booming, things were really rocking. My wife and I had just got married in 2007. And so we were talking about starting a family.

5:03And every time that we did, I had like this pit in my stomach, because it's not that I didn't want to have kids like I love kids, I really wanted to have kids. But the thing that was, I don't know, causing tension for me was that I was working a lot. I was working, you know, early mornings, late nights. My schedule was not my own. My schedule is very much determined by the work that I was doing for our clients. And so what I realized was in that moment, when we're having this conversation about starting a family, and I'm just like, why am I like uneasy about this? And I just realized that I had a great business, but not a great business model, because the only way to grow that business was to give more of my time.

5:46And I didn't have any more time to give. And if I wanted to be a present husband and father, something had to change. And that's ultimately what led me to memberships. And we can unpack like that journey and story, but that's kind of where it all began for me. Yeah. Well, and we're going to talk about the, well, let me, let's just, let's talk about the book because that thing is part and parcel. Okay. So you're doing consulting and a lot of folks that are kind of in this audience are in that same space. They're very good at what they do. These are not, you know, kind of like information marketers.

6:20These are folks that are that are actually quite exceptional. They're very talented. They've earned their stripes. They have some respect. They have some authority in what they do. And quite frankly, they didn't get into what they're doing because they're trying to get rich and live on a beach and take pictures in front of fancy cars. What they're trying to do, what they know is they have a gift, right? And so, and I'm kind of projecting a little bit here. So, but it's, you know, we want to have a tremendous impact in the world. And so I think one of the easiest things to get into, Stu, is actually like, if you're really good at what you do, consult.

6:56It's actually a very easy business to step into because now you can just do the work you're really good at with an individual client. But the problem with that, So obviously is when that engagement ends, well, so does your income. And so if you have a small roster of clients, then, you know, you've got kind of a higher risk. You're probably experiencing cash flow issues. And I work as a chief revenue officer. So I know this very, very well. And I know what our clients go through. So my job is just to facilitate endless introductions so that that's usually not a problem. But help us understand your take on this and how perhaps with that audience, we could maybe restore some sanity and bring some joy into their business so they no longer have to worry about the ups and downs.

7:44Oh, my gosh, I have a really great month. And then they have a really bad month. And then that stresses them out. And then they start thinking that they're no good or they're not good at something. It's no. It's just some tweaks here that we can make with your model. All right, Stu, I teed you up. I'm going to be quiet and I'm just going to listen. Well, you're absolutely right. And that like every business has vulnerabilities, every business, you know, we've seen this even recently, like, you know, um, when COVID hit, you know, look at like what happened instantaneously. Like there were businesses overnight that now couldn't even welcome customers into their shops, their stores, their restaurants.

8:22And so immediately they were faced with tremendous uncertainty, not because of anything that they had control over. You know, even recently, like with the potential TikTok ban, you know, that sent a spiral effect into so many businesses, millions of businesses, creator businesses who are dependent on TikTok as a platform. And they had now the threat of all of a sudden that platform like disappearing overnight. You know, even like when we think of the new American administration coming into office, again, this is not a political, you know, view one way or the other, but the tariffs that are being imposed on certain countries, that has real world implications for a whole lot of businesses.

9:11Yeah. Right. And so I'm sharing all of this because every business has vulnerabilities and every business has these vulnerabilities in many cases that we have zero control over. So what I'm on a mission to do is I'm on a mission.

9:29Stress of uncertainty and the best way to do it is by adding recurring revenue into your business. In fact, the best, best way to do it is to add multiple street model. Like I was in that model. That was my business model. But it is very vulnerable because if you have a roster of clients, let's say, for me, I was at the beck and call of these clients. So as I mentioned, my schedule was not my own. So that's why I needed to change. But let's just say you're happy with the flow. the schedule's good, all that kind of stuff. The vulnerability that you have is like, if you got a small roster of clients, even though they could be paying tremendously well overnight, boom, one client can decide to go in another direction.

10:15And now 25%, 30 % of your income can disappear like overnight. Like that is a tremendous vulnerability that creates a lot of stress for a lot of business owners. Now, when you have recurring revenue, you don't experience that stress because at the beginning of the month, you actually get paid by all the customers that were paying you last month. You're building on the momentum from the month before. And so it's a tremendously stable and predictable business model. And this is why you and I were chatting off camera about how businesses that have recurring revenue are valued at such a much higher multiple because of that stability and that predictability.

10:59And so any consultant can add recurring revenue into their business. They've just got to start thinking a little bit differently about their expertise and being able to share it with more people. See, with a consulting business model, we're limited in the clients that we're interacting with. And so there's a limit on the number of people that we can impact. With a membership model, it's totally different. We can impact so many more people. We have so much more leverage and certainly a lot more stability in the business. Okay. So Stu, do you mind just using me as a lab right now? And maybe we could talk about, and I can kind of share what we do.

11:37We have an amazing roster of clients and we're very blessed and honored and I'm grateful. And we just get to work. Like revenue is great. Like we're doing well. Like we're growing, like we've had a great track record. My challenge has been, and I'll share with you my concerns, because I think that they probably would be similar to other people, is initially I was thinking, well, I don't want to cannibalize. I know this was early on. I don't want to cannibalize some of my bigger ticket work, because that's where I do my best work. When I'm just teaching people, you just see a lot of, unfortunately, half-hearted effort on both the learning and application.

12:26And we were very, I think one of our main concerns is the way that we do things is very intentional. And so I think we resisted the urge to, I mean, honestly, what I saw was just kind of a cash in, a cash grab to offer a membership. And this is just my own psychology that's at play right here. And I'm sure you'll have some insight here. But look, the reality is I could probably flip a switch, offer a membership site tomorrow, but I don't necessarily know what the implications of that are going to be. I mean, it's funny because everything's pretty much already built for it because that's what we use for our own high ticket clients.

13:07All right. I'm sure you've encountered Stu people like me. What advice would you give me? Well, let's talk about it. You said you see it as a cash grab. Talk to me about that. Why? Initially. Yeah. So, so part of this, again, I think has to do with my own value system and, and this is kind of going back a ways where I felt like I had a little bit of a distaste in my mouth for some of the more bro-y elements of marketing that was about, you know, just creating membership sites, using automated funnels and your one click away, dot, dot, dot, one funnel away, dot, dot, dot, dot with, you know, and so for that, That was so unappealing to me.

13:43And I felt that it was so different from my own energy and values that it really caused me to say, I don't want to have anything to do with that model because it just feels yucky. Now, I can see the flaws in my logic as I'm talking. Well, I'm just going to ask you, is that to say then everybody in consulting is pure and And there's no bad consultants in the world? No, of course. Okay, so time out right there and then. I know, I know. Let's talk about that. Go for it. Because therefore, if what you're saying is you're throwing out the whole business model because you don't like one thing, but the opposite can also be true then, is that you could also bring your energy, your approach, your philosophy to a membership and make it what you want.

14:35It's just like you have brought.

14:41Would it be fair to say that that whole cash grab, you know, thought process is kind of invalid? You know, it's absolutely. And honestly, now that I'm talking it out, it really is old psychology. It's, you know, it's, I think it's, you know, I think about my, my fears were based out of my own, probably just ego, really, you know, I just got done reading Ego is the Enemy by Ryan Holiday. So it's, boy, I tell you what, if you want to, if you want a book series that will open your mind to, you know, kind of your thinking, your motivations and so forth, that three book series, Obstacles the Way, Ego is the Enemy, and now I'm going to, you know, reading through stillness is the key um man those three books anyway um okay okay so so that's that so let's talk about like that you said you've already got all the stuff oh my god you want to know the crazy things too this is okay this is look and i don't know that you know this about my background i already had a six figure a month company and in selling 19.99 a month memberships yeah like so i've already done this i already know i like it so i listen i i'm so glad we're having this conversation right now because listen to our friend that's listening if you've been listening to episodes of mine for any length of time you may possibly be witnessing a transformative moment here because the the big light bulbs are flashing all over the place stew's being blinded right now with all these light bulbs that are popping on all over stew i'm sorry i interrupted you no it's all good this is good it's a good conversation because you know once we just pause for a moment and we take time to just think it through, we start to see like, oh my gosh, this is like a real way to have impact on my business and impact on those that I serve.

16:28Because the other thing that you mentioned was that your concern was people coming in, not doing anything with the information. Yes. Yes. And you said that you have a process that really works. And so let me, let me back up out of that. You know, at the end of the day, you're right. There are always going to be people who will listen and learn our information and not do anything with it. But so much of the success of people within our communities is dependent on our ability to create an experience that moves them from where they are to where they wanna be. It's just like when you're working one-on-one with clients.

17:07You're moving your clients from where they are to where they wanna be, and you have a process for that. And a membership's the same way. And so the old school way of doing a membership is thinking that you just create a one size fits all experience for everybody. You just dump everybody into the same membership. There's a library of content and it's kind of like you wash your hands of responsibility. It's kind of like, okay, go find what you need and there's tons of value in there. And that's not the way to design a membership that lasts the test of time. See, if you want a membership that's going to last not just months, but years, decades even, what you've got to become is obsessed with your people and the progress that they're experiencing.

17:48It sounds like that's exactly the case that you have right now with your consulting clients. If you take that same passion, that same focus, apply it to a membership, what will happen is that people will get results because you are there creating a personalized experience for them. Now, this may sound like, oh, my gosh, that sounds like a lot of work. How am I going to create a personalized experience for hundreds, if not thousands of members? Well, today, the technology that's available to us is far leap years ahead of what it was just a few years ago. Oh, are you kidding? If you saw the first iteration of Savings Angel, my other company, I mean, what we built it on.

18:26You talk about MVP. Yeah. No, I'm up there with like duct tape and bungee cords every day trying to keep that system running compared to what we have today. And that's the way memberships have evolved today. So like, for example, when you log into your Netflix account, you're going to see totally different shows than if I were to log into mine or the person watching their account is going to log into theirs. And now what's happening behind the scenes? Well, Netflix is creating a personalized experience for every single one of its members based on what we watch, what we don't watch, what we like, what we don't like, what we stop, what we start, all of those things.

19:08And so now in today's world, we can do the same for our members in our membership, where you could have somebody come in and they are more in the beginning stages of learning what it is that you're sharing. or you could have somebody come in that is more advanced, but both members are going to therefore see content that is relevant to them, that meets them where they are at. So the advanced person coming in, they're not going to see beginner content and get turned off and leave. And the beginner person is not going to see advanced content and get overwhelmed and leave. Instead, they're going to see content that meets them right where they're at.

19:43Now, what that does that drives engagement. It drives consumption of that content and therefore drives results. And so today's world is different than it was just a few years ago in the way that we can serve people and help them get a results. And I'll leave you with this final thought and then we'll move on. But that is at the end of the day, I've been doing this for nearly two decades, helping people specifically create memberships. And what I know to be true is that I have never seen anybody cancel from a membership because they've experienced too much progress. Like I've never heard somebody say, you know what?

20:22I'm just having so much success that I'm out of here. And so the opposite is also true, which is like, as long as we are helping people experience progress, they will stay. And as long as that's the obsession, you'll have a membership that works for everybody. You know, this is really incredible. Stu, I'm going to be very transparent. And, and cause I suspect that, can I ask you a question? Do you have a hard stop right now? I have about another 15 minutes. Are you sure? Is that okay? Yeah, yeah. Thank you. And let me just be very transparent too, because I'm thinking of like, well, why did I resist this five years ago?

20:58Now, part of it I think was quite noble. I wanted to make sure that, hey, before I go a little bit more one to many, kind of a little bit more visible, I need to make sure that I know what I'm talking about. because I don't want to be one of those in bro-y info marketers that's just repackaging, regurgitating stuff. And they don't have what there to back it up. Now, since then, our clients do six and seven figures a year. Like my confidence level, you can't tell me that it doesn't work because we've done this over 250 times with our high ticket clients. So now I think if I'm thinking of like, you know, my concerns early on, I think some of it was out of fear.

21:36like I didn't want to be judged. But also, too, I think there was a sense of nobleness in wanting to say, you know what, before I influence too many people, I better know what I'm talking about here. So I think this is good news for consultants that have been doing what they're doing for a length of time. What you have to offer is exceptionally valuable. Stu, can you address maybe the kind of that fear aspect of this as well in this sense of wanting to be prepared a little bit? Yeah, I think the advantage that you have in, you know, being a consultant, especially if you've been a consultant for any number of years, and you've got experience working with clients is you have spent time thinking through the process and the systems to be able to get the results that you are promising your clients.

22:24And that in and of itself is super valuable. Now, I think the mistake is thinking that, you know, you're going to cannibalize your business. You brought that up earlier that if I offer a membership to work with me at the high ticket level, they're just going to join the lower price membership. Yeah. I don't, I don't believe that today. I don't believe that it's actually the opposite. Like what will happen is it will actually drive more demand, you know, for your high ticket consultancy. And so what's interesting is you get the ability with a membership to serve more people. And at the same time, you're creating this incredible, you know, pathway for people who do want to go deeper with you and do want that more hands-on experience.

23:11And that'll end up driving a lot more, you know, clients for your high ticket sales. So it's a really fantastic way to be able to take that knowledge that you've gained over the years, that you've built a process and a system for, be able to share it with more people, help more people, and at the same time, drive the high ticket clients within your business. You know, and there's also too that, listen, high ticket clients are generally not going to do low ticket client activity. They're just not, they're way too busy for it. Like I, you know, if I'm looking, if there's something that I really want and need, like I'm not going to, I don't want to spend months learning this.

23:50I don't have time to do that. Like, oh my gosh. Yeah, absolutely. My time is way more valuable than, you know, and, you know, investments in a consultant or whatever. So, you know, we, and I've paid, you know, consultants 20 grand to, you know, get stuff done or whatever. And, and the reason why is because I can ROI that so easily. And so, you know, for the fear to someone else that's out there, um, worried that your high ticket clients are just going to cheap out. They're not, they're not interested. I'm not interested in cheap offers, like it's, I've got way too many things going on and I can make really great use out of highest value options because of, you know, the, we got some stuff going on.

24:31We got lots of people doing lots of things and lots of complicated systems and we can make best use of that. So, Stu, very specifically, I want to talk about, man, I want to, I wish we had more time. Can you share just a little bit about pricing and, and like, because I'm at membership diet IO and your pricing, uh, you know, it, you have monthly and yearly. Um, but it, you know, on these products, on these subscriptions, um, you know, it, it maxes out at$200 a month. It goes all the way from$8 a month or$7 a month, if annual, uh, to a max of two 19 a month, uh, month to month. That's, that is, those are really kind of low ticket numbers.

25:14Well, it depends. Right, right. And forgive me, it's all relative, but from my perspective, or maybe a really high, you know, high value consultant, they might look at that and like, it's not even been in my vocabulary to consider offering a$29 a month membership. Like they've just even been on the radar to do that. Well, true in that consultants are typically working with a much smaller number of clients. So it's the same math. It's just different variables. So rather than having like high ticket, which is like, let's say tens of thousands of dollars per client, but a very low number of clients, you're just doing the opposite.

25:53You're going lower ticket and way more clients. Now, what that does is it actually eliminates a lot of instability in the business. like we talked about. Because with a high ticket price point and low number of clients, if a single client leaves, it can have a detrimental effect on the business. The opposite is true when you've got a lot more clients. You don't feel the impact of a client leaving anywhere near as much because it's much more stable. And so it's just a different business model. It's kind of like what I was explaining before. It's just, there's no right or wrong. It's just a different business model.

26:36One works on, you know, a lot of money from a small number of people. The other works from a smaller amount of money from a whole lot of people. And so it's just a different business model that creates more stability. But here's what I will say that is, should be music to every consultant's ears. And that is the effort you put in today begins to compound tomorrow, next month, a month after that, and a month after that. So just like investing, it's hard to say, well, I don't know how my$1 ,000 a month investment is gonna turn into millions because right now you're just looking at$1 ,000 a month, $12 ,000 a year, let's just say.

27:20But over time with compounding interest, that then turns into millions. The same is true with a membership. Right now you might be saying, I don't see how a low dollar price point is going to turn into a multi-million dollar year business. But that's because you're looking at a small number of clients today. I'll give you so many examples. This will just kind of frame it up perfectly for your audience. There's a woman over in the UK. Her name's Bonnie Snowden. Now, she has a passion for teaching people how to draw. Now, I know some people might be thinking, okay, but Stu, this is not really like a business-related example, like how can this turn into like, you know, a million dollar plus business?