Guaranteed Success: Membership Can Skyrocket Your Profits

Hi and thank you for joining us for another episode of Chats with Jason. I am of course, your host, Jason S. Bradshaw, and this is the show that helps you transform the experience to transform your business. Now, today's guest, I'm absolutely excited to bring to you the conversation that we're about to have. Some of the highlights from his career is that he had his first sale in 2004. In 2008, he co founded the world's most popular membership platform on WordPress. In 2013, he partnered with Michael Hyatt, helping him scale his business. And in 2019, he co founded what's now known as Membership IO. This amazing entrepreneur that joins us is not only a successful business person, regardless of the measure, whether you use revenue, profit, customer or employee experience, but he is absolutely committed to giving back to the communities in which he works live and play. And above all else, he prioritizes his family and that comes through in everything that he does. Our guest today I am obviously a huge super fan of, but I'm sure you will be too by the end of this episode. Mr. Stu McLaren. Welcome to the show, Jason.

Thanks for having me, buddy. Good to be here.

Now I'm sure we're in for a few stew isms during this episode and Rick can't wait to dive into things now. Congratulations on the release of your very first book, Predictable Profit. Transform your business from one off sales to recurring revenue. Now, we will absolutely get into that, but can you share with the audience a little bit of your backstory, please?

Yeah. As you said, I made my first online sale in 2004, which I was thrilled about because I grew up in a little community out in the middle of nowhere. Cows on one side, corn on the other type thing. So the idea that I could sell something that I created to somebody halfway across the world, all thanks to an Internet connection, was like revelational to me. So I was really pumped about that. Fast forward 2008. I had built a very successful mid six figure a year business. It was a consulting business. And things were cruising. I was doing everything that I had set out to do. And then my wife and I, we got married in 2007. And then we started having serious conversations about growing our family in 2008. Now, for the record, I wanted kids. I wanted to be a dad. Wanted to be a father. But every time we had these conversations, there was like this knot in my stomach and I just couldn't, I couldn't figure out what it was. Then I had the realization that the thing that was causing that Anxiety every time we talked about kids was I realized that I had a good business, but not a great business model because although the business was booming, it required my time, me personally trading my time or my clients. And so what I realized was that like, if I wanted to be a present husband and a present father, something had to give, because the only way to grow that business was to give more of my time. And I didn't have any more time to give as it was, let alone the fact that we're talking about having kids. And so something had to change. And that was the catalyst that really transformed my perspective. A friend of mentor of mine suggested that I take what I was doing for my clients and instead I just teach it inside of a membership. And I was like, what does that mean? He said, well, Stu, think of it this way. He said, you would teach one time, but you'd be able to help hundreds, if not thousands of people simultaneously. And he said, and they would pay you every single month to be able to access that content. And I thought, that's amazing, that's incredible. And so I started down that path in 2008 and the technology then was not what it is today. And I'm getting caught up on things like ht access files and server settings, and it was way above my head and I'm moaning and groaning to a friend of mine and he said, why don't you just create your own solution? And I was like, what are you talking about, dude? I'm like, I'm the guy that's having trouble with the tech. Like, I'm not going to turn around and like program something. He said, well, why don't we team up together and create something that I've got a developer that I've been working with for years. And so we did, and that became our software company that went on to become the world's number one membership platform for WordPress. And as soon as that happened, it was just like things just took off. And I realized there's something here. And so I actually started to let go of clients. I poured more of my time energy into growing that company. And before I sold my shares in that company, we were powering over 70,000 online communities and memberships. And that's really where I learned being behind the scenes, like what works and what doesn't when it comes to growing a membership. And since that time, I've essentially been teaching people how to do it in their own business and then providing the software for it, which is our new company called Membership IO. So that's essentially the backstory. But it all started from a pain point of great business but not a great business model. And really shifting the mindset around, finding a business model that allowed me to develop recurring revenue.

So finding those pain points and solving for them, not one, but two software companies out, there's got to be some lessons learned in doing it twice.

Yeah. Okay. So one of the big lessons and the reason I sold my shares in the first software company was on paper, everything was awesome. Like I had a great business partner, great team, great product. But the thing that I did not like about it was that it was built on the back of WordPress. And that meant that any change or decision that was made by WordPress would instantaneously have a trickle down effect on me and our business. And I just did not like that. And because WordPress would make a change and then it would cause something to break and then it would have this domino effect. Now we got tens of thousands of customers whose thing doesn't work. And it was just too much stress. And it was stress that was like all provoked because we were not independent of WordPress. And so that's why you'll see my second software company, it's a SaaS. It is not dependent on any other platform. And it's for that reason that was probably one of the biggest lessons learned in that whole journey.

Yeah, owning your destiny. Fantastic grit. To go back at it a second time and apply those lessons. You're often referred to as the membership expert. And a question that I have on that is memberships or are memberships just for hobbyists and coaches or does it have a broader business application?

Yeah, there are all kinds of different types of memberships. And I certainly talk about this in the book. There are four different types that I generally will put most into a bucket. If we just take a step back and just think about all the subscription services and memberships that we belong to today, we start to see that there are many different ways that this can take shape. From like Netflix and Spotify to Amazon prime to Costco. Do you know that 70 plus percent of Costco's bottom line profits come not from what they sell in the warehouse, but but come from their membership fees. That's a crazy number when you think of this. We're talking billions of dollars. And bottom line is that there are really four different types of memberships. One is a product based membership. So Dollar Shave Club made this famous. They realized that hey, our customers are buying razors on a regular basis instead of forcing them to come into the store and remember to buy them. Why don't we just make it easy and convenient and for a monthly fee, we'll just automatically send them new razors. That company went from zero to $1 billion valuation in four years. And that's a physical product. Now you see physical product memberships like raises the month, coffee of the month, ties of the month, socks of the month, you name it of the month. It's a physical product that they've now turned into a subscription. Subscription boxes would fall into this bucket as well. Huge booming industry that's taken off. That's a product based membership. Second would be a service based membership. So similarly, this is where you're taking a service and instead of hoping that somebody comes back and buys a service again, you create a membership where you know that with certainty that those customers are going to pay you at the beginning of next month. So a couple examples, a barber shop here in Toronto. Instead of paying one time for a cut, you pay a monthly fee. You get a certain number of cuts. They give a slight discount to the customers that belong to the membership. So there's an incentive and an advantage for the customer. But as the business owner, they now have the certainty and predictability of knowing that at the beginning of the month they're going to get paid by all of those members transforms the business. Whether it's a barbershop, whether it is a med can spa, whether it is a massage therapist. Mary Claire Fredette, in our community, she's a massage therapist. That's what she did. She had so much unpredictability of knowing if and when clients would come back and get massages. So she created a membership and instantaneously created predictability, leveled out her revenue each and every month. And interestingly enough, I caught up with her a little while ago and I was asking her, I said, have you launched your membership again? And she said no. And my initial thought was like, oh no, what happened? And she said, no, Stu, I haven't needed to. She's like, the 80% of the people that signed up with me three years later are still with me today. So just imagine that for a minute. Like the lifetime customer value of those people who sign up for a membership. It's crazy. And so whether it's car washes, barbershops, spas, massage therapists, there's all kinds of ways to turn a service into a monthly membership. The third kind is my favorite. This is the most common area that I play around in and that is information or knowledge based memberships. It's where People are taking the things that they know, love and do and turning it into a membership by helping people either solve a problem, learn a skill, or they create convenience for them in some capacity. So examples would be like weight loss. That's a problem where somebody's not going to go from being overweight to their ideal weight. Like that. It takes time to solve that problem. Perfect for a membership. Under the learning new skills, you're not going to go from not knowing how to paint to becoming the Picasso. Like that. It takes time to learn those skills. Or you're not going to go from not knowing how to grow a business to having a thriving business like that. It takes time to learn those skills. Or you're not going to go from not knowing how to sell to becoming a great salesperson. Like that. It takes time to learn those skills. And then as I said, the other one is like where you're creating convenience. So we see all kinds of examples of this. Andrew Kraut over in Australia has got a Great membership. It's 350 bucks a month. He helps real estate agents with Facebook ad templates. So they don't need to be a Facebook ad specialist. They can just modify his templates and very quickly and effectively sell homes on Facebook. And if all they do is sell one more additional home as a result of the ads that they're using from this membership, it's paid for itself many times over. That's an example of creating convenience. Nicole Melton does the same in hers. She helps businesses that are in the beauty profession and she provides them social media templates. Or there's many examples like Anna Digilio or Caitlin and Jessica who have multimillion dollar a year memberships providing lesson plans for teachers. And so what they're doing is they're taking something that was difficult or time consuming for teachers, which is lesson plans. And they've made it easy. They said, listen, just pay our low monthly fee. You don't have to worry about lesson planning anymore. We'll do it for you. Just focus on serving the kids in the class. And so they've got thousands of members, part of their membership as a result. So those are three product based, service based and knowledge base. And then the last one is community based. This is where people are paying just to belong to a community. So a lot of associations would fall under this. I used to belong to caps, which is the Canadian association for Professional Speakers. In the US it's the nsa, the National Speakers Association. There's an annual fee to be part of that association. And there's associations for all kinds of industries. That's a community based membership. So there's all kinds of different ways to apply that to virtually every kind of business, whether it's a product based biz membership, service based membership, knowledge based membership or community based membership.

Yeah. And it reinforces to me that really doesn't matter what industry you in. There is a membership path potentially where ultimately you deliver more predictability in your cash flow, in your revenue stream, but also I think at the heart of it, you get to serve your customers in a more genuine way and in a way that fills their needs. Now, your book, which I am the wonderful owner of, two copies in physical form and we're going to give one away to an audience member that the first audience member that dms me after the episode goes live will get a free copy of your book shipped out via Amazon because it'll just be the fastest way. But I've also got it in Kindle and in audio. Not because I've read it four times, because I love it and it's a lot easier to loan someone a physical copy. But when I was reading the book, one thing that shocked me was that you didn't hold back. Like you could go from page one to the last page and implement everything that you've talked about in the book and have a membership up and running.

Yeah.

What's stopping people from actually taking that step though?

A lot of it is they over complicate and overthink things. Like, one of my blessings and my curses, so to speak, is that my brain just cannot work in a complex world. So I have to simplify things and make it as simple and as easy as possible. That's really what I tried to do in the book, is just boil it down to the 20% that's going to help you get 80% of the result. But even then, there's still the tendency to think, it can't be this easy, it can't be this simple. There's gotta be more to this. For example, like in one of the chapters, I don't recall it offhand, I'm just going to find it. It is chapter 16. It's called the fastest and easiest way to launch your membership. And in that chapter, I detail how to launch a membership with a single message. And this message could be posted on LinkedIn, it could be posted on Facebook, could be sent by email, could be done via podcast or YouTube video, but it's one message to your audience that would immediately allow you to launch your membership and get the ball moving even before you've created anything. Now that in and of itself immediately starts to raise a lot of the mind gremlins that creep up, that say, no way, it's gotta be more complicated than that. No way I can't launch without this. No way. I can't sell something that I haven't created yet. And all those gremlins are going to come up and appear. And that's why, like, when you ask, like, what's the thing that stops people the most? It is not that they don't know what to do or how to do it after they've read the book. It's just facing the inner critic, facing those mind gremlins and realizing that you can keep it simple, you, you can keep it easy. If you just follow what I talk about in the book, you'll be able to launch your membership. And then that creates momentum and that creates confidence. And in that is where you begin to build. And so oftentimes a membership starts with a handful of members. Like I think of Jennifer Chamberlain, she started with 20 founding members. After the first year, she had grown that to a hundred. After the second year, she had grown that to just over 200. But it was her third year that she hit the inflection point. She went from 200 to more than 2,000 members. It became a multimillion dollar year membership and it only started with like less than 20 members. So we often overcomplicate, overthink, and as a result, it prevents us from doing the most important thing, which is taking action and getting it moving. The other big mistake that people make is they tend to overwhelm their members. They tend to think and make the mistake that the more value that I'm going to create in this membership comes from the amount of content that I give. So the more content I give, the more value I create. And that's just not true in a membership. Like, the number one reason that people cancel is overwhelm. So that's a good thing for us because that means we do not need to create anywhere near as much as we think. And when we do that, we prevent the overwhelm, which means more people implement, they get better results, and that leads to higher retention. Those are a couple of things that often prevent people from moving forward is one, they overcomplicate it. And number two is that they provide too much and overwhelm their members inside the membership.

I definitely think that it's easy for us to overcomplicate things which slow us down. No matter what we're doing in business, if we can simplify it, we can move forward faster. One of the other aspects of the book that I absolutely love is even if you're not looking to launch a membership, there's some real golden nuggets in terms of just how to grow a more successful business. And one of those areas is where you're talking about the importance of onboarding a customer. Why is onboarding a customer so important? Don't you just send them the receipt and the login and go from there?

Not in the membership world. Because for us, the membership world is not about that first sale. It's, it's about the repeat sale and the repeat sale and the repeat sale. And so what we got to pay attention to is like, what influences those repeat sales. And in onboarding, studies show if you can create a positive experience in the first 30 days, you can on average triple the lifetime value of that customer. That is staggering for businesses. And so then the question becomes, okay, what do you, you need to do in that first 30 days to create that positive experience? And what I've learned working with tens of thousands of different types of memberships in all kinds of markets, there are really three key things that you and I can do to influence that positive experience. Number one is that we help our members get clarity around where they are in this journey and how the membership is going to benefit them. And specifically, what should they focus on right now? So what we don't want is we don't want them coming into the membership and being overloaded with so many different things they can do or can watch and then freezing because they're overwhelmed and then not doing anything. That's the worst case scenario. What we want is we want them coming in and having clear direction to say, hey, Jason, after you've answered these few questions in the onboarding, looks like you're at this stage in your journey. So based on that, here's where you should put your focus and here's some lessons that are specifically tailored for you. So we personalize that experience and give people clarity and focus. By the way, this, if we pay attention, is what a lot of big companies like the Amazons and the Spotify are doing automatically as well. Like they're personalizing the experience for each individual member. So when you log into Netflix, you're going to have a different experience than when I would, or when my daughter does, or when my wife does, because they're personalizing the experience based on what we consume, what they've learned about us, what we like, what they we don't like all that kind of stuff. And even when you're onboarding for the first time, they're asking you questions to help identify those things so then they can tailor the experience accordingly. So first thing when it comes to onboarding is cool clarity. Helping people know where they are in this journey and where they should put their focus. Second thing is helping people form one meaningful relationship. And the best way to demonstrate this is my family and I, we moved to a new area a few years ago, and that meant that our kids were going to a brand new school. They didn't know anybody. And as parents, all you want is for them just to feel settled. And I remember we walked the kids to school and we found their teacher and we were just. My wife and I were just kind of like, please just let this be a good day for them. We come back at the end of the day and the kids are all coming out of school. And I'm looking and watching and trying to see whether it's my daughter first or our son first. And our daughter comes running out and she's got this huge smile on her face. And I said to her, I'm like, how was it? She's dad, the best school ever. I'm like, really? I'm like, tell me why. Said, you know how I used to go to a Montessori school? I said, yeah. She said, I met a girl in my class that used to go to Montessori school, too. I'm like, that's amazing. She said, yeah, but dad, it gets better. I said, tell me how. She said, you know how I love riding horses? I said, yeah. She said, she loves riding horses, too. I'm like, oh, my gosh. She said, but, dad, you won't believe this. You know the new stable that I'm riding at? I said, yeah. She said, her mom and dad own the stable. I'm like, what? Like, that's crazy. She's, yeah, dad, this is the best school ever. Time out. Her whole framing that this was the best school ever was because she made one meaningful relationship. Same is true inside of our communities and our memberships. If we can help our members form one meaningful relationship, it can frame up their entire experience. And. And so how do you do that? You facilitate connections. You help your members find those common points that they have with each other and you introduce them. And so we do it in our membership. We ask a few onboarding questions. Are you open to being interviewed on a podcast or inside of a membership? Yes or no. And. Or are you open to Interviewing other experts on a podcast or interview, yes or no. And then based on that, we play matchmaker. It's, oh, hey, Jason is looking for guests and Dave would be a great guest, and we introduce them or you introduce people and connect people via where they are located. There's all kinds of ways in which we can facilitate connection, but if we can help our members form one meaningful relationship and can frame up the whole experience. And then the third component of a great onboarding is we help our people get some kind of a win in that first 30 days. And so oftentimes we think it's got to be a gigantic win. It doesn't. It just needs to be a step in the right direction. And then we want to reflect that back to our members and we want to celebrate them, and we want them to realize that is creating momentum towards the outcome that they're after. And if members can experience a small win, it creates confidence and confidence creates momentum, and that's what keeps them happy and paying month after month. So we want to help people, number one, get clear. Number two, we want to help them form a meaningful relationship. And number three, we want to help them get a result.

Fantastic stuff. And there was a key takeaway earlier there where you said, it's not about the sale or the transaction, it's about the repeat sale, having them come back. And my call out to anyone watching today or listening is, in your business, are you so focused on that transaction, that initial transaction, that you're harming your business by not focusing on generating the love from your customers that leads to repeat and referral business? Because whether you're in a membership or not, that repeat and referral business is what's going to sustain you and grow you. Now, Stu, 41 chapters in the book. Yet, at least in my case, it felt like such an easy read. We could spend hours going through the book, but we can't for a few reasons. But there's one thing that we haven't talked about, and that's the charity that you and your lovely wife are involved in. And I actually had the pleasure of having Amy on this show just a few years ago when she launched her book. But, Stu, can you share with our audience a little bit about the charity that Amy and you founded?

Yeah, I got to give credit where credit is due. It's all my wife's idea. She just loves traveling, and in that travel, she often is traveling to remote areas of developing countries, and she just saw a real need for kids who wanted education. But there wasn't a school anywhere near them. So she had this idea of building a school for kids that wanted education that couldn't get it. That was just an idea 16 years ago. And I was obviously, like, in full support. I'm like, for sure, honey, let's figure it out. And we built that first school not knowing a thing about, number one, building schools, but number two, doing it in a foreign country. But we focused all of our energy and efforts in Kenya. And I can't explain why, Jason, but Amy and I were both drawn to the continent of Africa. Our son we adopted from South Africa. I don't know what it is. We were just drawn to that side of the world. But we started and built our first school. Our first school led to our second. The second led to the third, and fast forward, here we are. We built 16 schools. Each school is home for anywhere between 300 to 900 kids. So, you know, more than 5,000 plus kids are going to school every day in these schools. And what it has done for me is it actually really helped shape my perspective about business, because what I realized was that actually, I'm wearing the T shirt today. The more money we make, the more impact we can have and the more money we can give to people and causes that we're passionate about. So I believe that business is the best conduit to having tremendous impact in this world because there are so many incredible nonprofits in this world, but more often than not, they're struggling to be able to have the financial means to be able to do the good work that they do. So what an incredible time that we live in to reimagine what it can mean to be a nonprofit. So the way we do it is our business covers 100% of the overhead, so that every dollar raised goes directly to the cause. And then we do all kinds of innovative fundraising strategies to be able to raise a whole lot of money with minimal effort and a small team. And that's what has allowed us to stay small and lean and have a big, deep impact in the area that we serve. And, yeah, I am a big believer. In fact, this picture right here, this is a big moment. This is us opening our most recent school in Kenya. And this is the president of Kenya right here, the actual president. That was a moment celebrate. That was the first school that he's ever opened in while he was in office. But, yeah, I believe the more money we make, the more impact we can have. And I just feel business is the best way to be able to do that.

Yeah, absolutely agree. And we'll put details in the show notes around Village Impact for those that are interested. Now we are coming to the top of the show and before I let you go, Stu, I've got a couple of questions. First of all, if someone wants to go deeper on how to start, grow, evolve their membership, I believe you have a program every year that might just help people with that. Do you want to share some details about it?

Yeah, for sure. Thank you for that. First and foremost, I recommend everybody go get a copy of the book that is the best 30 something dollar investment that you can make in your education as it relates to memberships. As you said earlier, I don't hold back in this book like I'm detailing everything and walking you through that whole process. So definitely go get a copy of the book. You get it on Amazon and get it at your local bookstores. You can get it from our website, which is Stu me forward slash book. And then we also have our annual program, it's called the Membership Experience. And the difference between that and the book is that we're actually supporting you in the implementation of what it is that you've learned. So yes, we go deeper, yes, we have all kinds of visual examples and all that stuff, but it's really about supporting you in the implementation of it so that by the end of that program you have launched your membership and you have recurring revenue coming into your business. So it's really the fast track of taking what I share in the book and implementing it and getting results. And so we do that every year. And you can find more by going to membership workshop.com and that'll give you all the details for our next one.

Yeah, fantastic. And having been a past student of the Membership Experience and even Tribe when it was called that, I can absolutely attest that everything that Stu talks about in the book, about the best way or the ideal way him and his team actually live out from onboarding to six months down the path. It absolutely can see that what you talk about is what you do and it has results and I really appreciate that. Now, student didn't know this ahead of the call, but I'm actually an affiliate for the Membership Experience. So when it is launching this year, we'll be sharing it with our audience during the launch period, of course, but 50% of my affiliate commission will go back to Village Easiest. Thank you so much. That is my pleasure and an easy way for me to give back to a cause that I absolutely love and I really appreciate the work that you and Amy are doing in that space.

Well, thank you, Jason. That was a surprise. Buddy, that, that means a lot, man. Thank you so much.

Yeah, yeah, my pleasure. My absolute pleasure. And I'll keep doing what I can to support. Now, Stu, before I let you go, one last question, one very last question. Someone in the next couple of minutes they're going to be at the end of watching the video or listening to this episode, what do you think they should do to start investing, improving their business as soon as they finish watching this episode?

Number one, I would just encourage people to just open themselves up to the idea of moving from a one time transaction model where you're just hoping that customers come back and buy from you again and open yourself up to the idea that you could very much have a membership model into your business. A membership model that, where your customers are coming back month after month. A membership model that provides predictability and stability in your business like never before. A membership model where with that stability you're not hoping that customers come back with certainty that they are. And that certainty creates confidence that you can invest in your marketing, you can hire with confidence. Like that transforms us as, as business owners and leaders within an organization because we're able to make decisions from a place of certainty and confidence, whereas we can't with a regular business model because we just don't know what can and will happen. And so I just want to encourage people to open themselves up to the idea that a membership model can 100% make a right fit in your business. Whether it's a product based membership, a service based membership, knowledge based membership, or community based membership, there is one for virtually every type of business. And so first step is go grab a copy of the book. Predictable profits, as we said, you can get it where all books are sold. And then second is just start going through and reading the book. As you mentioned, there are 41 chapters, but they're all short chapters and they're designed to be able to move you through that whole experience and, and learning and consuming the book as quickly as possible. And as soon as you do, I think you're going to have many different ideas because there's so many different examples that are shared throughout the book that'll get those creative juices flowing. So I'm excited for everybody watching, listening, because once you got that recurring revenue coming into the business, it's a game changer.

Absolutely agree. And what a great way to end the show on. Just a reminder, the very first person to send me a direct message on any of the social platforms after the episode goes live, I'LL shoot out to you a complimentary copy of Stu's book Predictable Profits. Transform your business from one off sales to recurring revenue with memberships and subscriptions. Stu McLaren, it's been an absolute pleasure having you on the show today.

Thanks Jason. Appreciate you buddy.

Thanks so much. Hey, just quickly I wanted to reach out and say thank you for taking taking the time to listen to this episode of Chats with Jason. I'd really appreciate a five star review on your favorite podcasting app. Or if you're watching along on YouTube, give me a thumbs up and show that you like this video. And be sure to subscribe so that you don't miss out on the awesome content and the great guests that we've got coming up for you.