What is the best way to sell information products? In this video, Neil Patel and Eric Siu are on the main stage of Marketing School Live entrepreneur events with powerful business tactics around how to get sales for a membership site. In this episode Neil Patel explains why having a membership site will cost more money upfront and why having a one time offer can help you get cash to scale quickly.
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Full Transcript of The Video
Neil Patel: No, I prefer one time offer over a membership. For informational products.
Speaker 1: Yeah, for info product I'm talking about, yeah.
Eric Siu: I don't like membership sites 'cause you have to keep updating it. Neil, he has a course one and done, you just focus on scaling it. With a membership site all the time you've got to keep engaging them, there's a lot of work that goes behind it. If you look at ... [Pat Flynn 00:00:26]'s a really good example. He got a smart passive income, he used to have a community, there's a lot of upkeep that goes into that versus, okay, let's just nail the course, go scale it and then let's move onto the next thing, scale it up.
Neil Patel: When you do a membership site, you can potentially get more money to lower barrier to entry, so people can just pay a monthly fee and you could potentially cut more money in the long run. But, it takes a while to get the money.
Eric Siu: Yeah.
Neil Patel: With upfront, you can scale much faster and you can use the cash to grow. Unless you've optimized to keep people there for a long period of time, which most people won't, because you don't really know why people are canceling until they start canceling, right? If you said you already know why people are going to cancel, it'd be a full of shit answer. You have to talk to people to find out why they're going to cancel. So go with the upfront fee, get the cash, use the cash to grow.
Then, once you have enough money, you can use some of that to test a membership site, and you can keep tweaking it to find out how often are people logging in, how much are they using it, how much are they learning, and you keep tweaking it until you get it right, and then eventually you can switch the whole model to membership. But in general, you have to go and fine tune all that stuff for membership to work out, and most people don't make membership work out because they can't front load the cost for ads and lose the money and be in the negative. Plus, they haven't analyzed how to keep people there long enough and it just takes time and talking to customers.
Eric Siu: Keep in mind too, you're going to want to model this out. A lot of membership sites out there, we're talking 15 to even 30% turn, that's really, really high.
Neil Patel: How many of you guys have recurring charges, raise your hand? Okay. Make sure you use a VISA and MasterCard Updater. How many of you guys have your domain with GoDaddy? Well, have you noticed that when your credit card expires they keep ringing you? And charging you? Is because your credit card is still there, the number may have changed. They use something called VISA and MasterCard Updater, in which for 10 cents VISA and MasterCard gives them your new credit card number, without them asking you.
So they can keep charging you pretty much for life, until you want to click cancel. So if you are doing recurring charges, you'll lose a lot just based on credit cards declining and stuff, so use VISA and MasterCard Updater. So if Eric is paying for one of my memberships and his credit card gets stolen and next month he has a new number, VISA will give me his new number and everything for 10 cents. So that way I don't have to bug him, and it's a great way to keep making more money from your subscription based charges. It's all legal, you can have it in your terms of service and all that kind of stuff. That's what all the large corporations do.
Speaker 4: You guys seem to be doing a lot of things at rapid speed, and you talked about general managers are your right hand. Can you talk to me a little bit about who this person is, what they do and how you hire them?
Neil Patel: Each company varies, but the one thing I look for is someone who's really process-oriented. Who's really frugal, not frugal as in compensating people. I believe money should be spent on people. Without the people you don't have the company. Money shouldn't be spent on offices, fancy desks. Money should be spent on making the person's life better. Free food, better wages, help them pay for vacations or whatever. Give the money to the people, not to office companies. So I look for people who are process-oriented, good with cash, and other than that, people who are on it. Paying attention to detail and are anal, because if they are, they tend to make sure everything's all right.
And I also look for industry experience. I don't have the time to train, I want to hire people right away who are good to go, and you don't have to have a lot of money to hire these people. They can grow with you, and if you can't afford to pay them what they're wanting, after they do well for six months or a year, you can end up telling them, beforehand when you hire 'em, "Look, if you meet these milestones I can give you X, Y and Z bonus, or I can make you a partner or I can give you profit sharing." So they've got to work their way up to it. In other words, you're making them prove themselves. So as long as they fit all those criterias, I look forward to hiring them. And more so, they have to be a cultural fit. If they're that high level of a position, they will affect the company culturally, all together. So if they're not a good cultural fit it won't work out, even if everything else pencils out.
Eric Siu: There's a ... and this will be the final answer before we jump into networking since we went a little over. So there is this book called Rocket Fuel, I think some of you have probably read it. It's from this guy named Gino Wickman, who wrote the book Scaling Up as well. I think it's Gino Wickman, or Gene Wickman.
Traction, and ... you should definitely read that one too, [inaudible 00:05:01] read that book. But here's the concept, you have the leader who is the visionary, the guy that comes up with ideas all the time. And that definitely is Neil, and for me, I'm very much an ideas person. I like to move very quickly. I'm not detailed-oriented, so I make a list of all my faults. But anyway, going back to the book, you need to have an integrator that can help you actually implement those ideas, and my integrator is back over there, Daniel. You can wave at everyone. Yeah, so he's really organized, he's detailed-oriented, he's good at things that I'm not good at. He catches things that I don't, so you gotta make a list of all your stuff.
And people are like, "What about the [inaudible 00:05:39] test?" That actually does help give me some insight, but I definitely recommend reading that book first and then making a list of what you're weak at and what you can use help with. I actually had another integrator who's in the audience, who runs a gun blog, Eric [inaudible 00:05:53] and he compensates for all my weaknesses. So you can have people that you're looking to have join your team as an operations person. They can actually go there and take a test, I remember [inaudible 00:06:04] I had them all take it when we were on a retreat.
... Group that I'm in, and everybody in that group scored really high in visionary, they suck at being integrators except for one guy who's half half, but hopefully that helps.
Speaker 5: And so I kind of wanted to get your insight on ... I'm focused on two things right now, and is it more efficient for me to chose one, and then just go full force, or could I make it happen with both?
Neil Patel: You ... ?
Speaker 5: And this is ... [crosstalk 00:06:32] I have ...
Neil Patel: You love one more than the other?
Speaker 5: Yeah.
Neil Patel: Then go with that one, and tell the other one to F off.
Eric Siu: Yeah.
Neil Patel: That's it.
Eric Siu: Same answer. Hopefully that helps, but thank you everyone, I think we'll open up for networking now, but appreciate it.
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