According to statistics, most small businesses today are service providers. They may be financial advisors, lawyers, personal trainers, accountants, dentists, pool cleaners, consultants, engineers or in similar occupations. Essentially businesses like these sell time, not a product.
Time is a finite resource. We each only have so many hours in a day.
That means it is harder to scale a service business where you sell your time. Typically you have to hire more employees or outsource certain activities. And labor, especially for knowledge workers, is expensive.
So the question remains: How do you grow when you’ve started and run a service business?
That’s where the power of your knowledge and today’s trend of content marketing work to your advantage.
Evolving to a Subscription Based Business Model
According to Greg Head, Chief Marketing Officer of Infusionsoft, a marketing automation software provider, one of the ways to scale a service-based business is to turn your knowledge into a subscription-based model. “With a subscription-based model, you can automate educational services online — and even the services you provide through in-person interactions,” he noted. By incorporating self-service access to their expertise, small businesses can expand and transform their operating models beyond in-person engagements, he added.
Infusionsoft and research firm Audience Audit teamed up on a study earlier this year of more than 1,100 small businesses that showed a growing interest in subscription-based delivery models. Those small business owners focused on growth spent more of their time and budget on marketing and sales, and they also used technology to gain a competitive advantage. All the businesses in the study had annual revenues of more than $250,000. Head told us:
In the new education economy, knowledge is becoming a prized and valuable tool to get attention and attract new customers.
Small businesses that embrace online content marketing typically attract and convert new leads through educational materials such as blogs, ebooks, videos and tutorials. Once they start using knowledge for their marketing, they convert their followers’ interest into recurring revenue streams through a membership site. Head added:
An increasing number recognize that they have a revenue-generating opportunity once the demand for their content is established. They start giving away less free content and move their premium educational services to subscription-based membership sites.
Membership sites are websites that provide gated, permission-based access to educational content, including ebooks, videos, tutorials, articles and more. They allow subscribers to access services on demand or participate in online communities with other members. The membership site’s owner controls access to the content, which might entail a one-time, monthly or annual membership fee and free content.
Monetize Your Knowledge Using a Membership Site
With that in mind, we asked Head for his advice when it comes to membership site best practices. He recommends these six essential elements of a successful membership site:
1. Monthly Recurring Income
Small businesses with special expertise can generate recurring revenue by charging a monthly or annual subscription fee for access to valuable educational content. Simply load the information chosen to be shared with members, set the membership level pricing structure, and update the site according to the content model.
Billing occurs at the frequency that’s been defined, which helps in predicting future cash flow. As long as the content is valuable to customers, they’ll continue to pay for their subscription.
2. Lead Capture
Provide free access to some content behind the registration wall captures contact information that can be used in subsequent marketing.
3. Prospect Nurture
Once the prospect’s contact information is captured, nurturing can continue on the membership site by sending the individual more content and previews of premium content that encourages an upgrade in membership.
4. Customer Service
Updates and training can be provided as new products and services are released. This allows customers to gain access to common customer service questions without having to contact the company directly.
5. Product Introductions and Upsells
Increasing average revenue per customer is critical to business growth, and current customers are the best targets for additional sales. A membership site simplifies the introduction of new products and services and provides a low effort, low friction opportunity to recommend complementary offerings.
6. Modernizing Your Small Businesses
Jermaine Griggs, founder of Hear & Play Music, an online music learning center, uses membership sites to deliver training and tutorials to his growing community of music students. Using a membership site has allowed him to not only build a loyal fan base, but it has resulted in repeat sales increasing by 90 percent. His lifetime customer value also went from $90 to $375 and he reduced his work week by 60 percent.
“He’s a prime example of someone that’s succeeding in this new education economy by using membership sites,” Infusionsoft’s Head told us.
A Matter of Successful Growth
Small business success has always been a matter of making the most out of limited time and resources. With an online membership site and other Web based tools, small businesses with educational based products and services can elevate their unique value propositions and transform their operations.
Intelligence Photo via Shutterstock
More in: Content Marketing
We live in a knowledge economy and if you can deliver your knowledge at scale you can be financially rewarded far beyond even high-price hourly occupations like lawyers.
Hi Robert — You hit the nail on the head with that one word: scale.
A subscription site positions you to scale in a way that you can’t do if you are limited to selling your hourly time.
Hmm. Interesting. Has given me food for thought. Is making me think about what knowledge I have and whether there’s a need for that knowledge and to what extent. Thanks for this post.
Great article, an opportunity to capitalize on one’s knowledge. A scalable business for many.
Well said, Jim:
It truly is an opportunity, and many of us could stand to open our eyes to the opportunities in front of us.
Thanks Anita. I think a lot of the people who are running these types of businesses successfully are missing out on much larger revenue opportunities that you hinted at in #5:
“A membership site simplifies the introduction of new products and services and provides a low effort, low friction opportunity to recommend complementary offerings.”
In addition to up selling their own products the opportunity to earn affiliate revenue by recommending the products and services that they use and believe in to their students is another great opportunity. Best of all with that they are leveraging the work they have already done earning people’s trust to generate revenue that they do not have to do any additional work to produce the product for.
I agree – there’s no better way to monetize your knowledge than starting a membership site.
I have a dream to start a membership site for that very reason: You have people who are eager to take your suggestions.
You can pitch affiliate products which you personally use and recommend – this will have a great conversion rate.
Don’t spam your members with offer, though.
Hi David, Thanks for your comments. First, I must give credit for the tips to Greg Head of Infusionsoft. He was a fount of knowledge and good insights for this article.
I totally agree with you on the affiliate income. There’s a lot to be said for supplementing the sale of the product of your own intellect, with carefully chosen — and complementary — information products of others.
This is the perfect time to share your knowledge. The Internet is like an international marketplace that even a three year old can penetrate. All you need to have is a skill or something that people would be willing to follow. Use this and you can easily make some money online.
I personally find that youtube is also a good teaser for leading potential subscribers to your site. Just make a video with a snippet of information about your topics and then lead them to your website. From there, create a subscribe option and hopefully people will subscribe to your youtube channel as well.
If it’s a paid subscription, you can send out video links or even set up webinars with webex where people can ask you questions in real time.
Hi Mike, That’s good advice on using video to market your subscription site, or any kind of site, actually. We need to do more video for Small Business Trends, and you just gave me an idea!
Great ideas you shared here, Anita.
My focus in the coming months is on having information products that offer useful information…that’s well worth the investment.
One of my projects involves updating…and adding new content to, my best-selling franchise ownership eBook.
One more thing: I love the new design!
The Franchise King®
I think that’s a smart approach for you. You have tons of knowledge in the five inches between your two ears, and there’s no reason you shouldn’t capitalize on it with materials you’ve written.
That said, have you ever considered a membership site, such as Greg Head’s tips outlined here? It could be a way to get paid for people “picking your brain.”
PS, thanks for the feedback on the site design — the team has worked very hard on it, for several months. I’m just glad we have a modern-looking design to do justice to all the content in Small Business Trends, from people like you. 🙂
Great article, Anita! I have been teaching small business owners for some time that hourly billing for time is a dead end street. Once you block out all of the typical days off like vacations, holidays and sick days, plus the time devoted to their own business administrative tasks, entrepreneurs have a much reduced number of days and hours they can bill and bring in revenue. Whether a company has one, ten or a hundred employees bringing revenue, they are still limited to a great extent by their clocks and calendars. Membership sites can open new revenue streams using the same knowledge and content.
Keep on fighting the good fight on that! And you’ve outlined a powerful exercise for business owners to do — to actually pull out a calendar as you suggest and add up how many hours are available. I’ll bet most people will be shocked as how little time (comparatively speaking) they have to “sell.”
Most new business owners seriously underestimate the time it takes for administrative stuff. I know in my case, I have steal time just in order to write, because the administrative and management side of running my publishing business takes the bulk of my time. And as a business grows, even as you hire people to help with the administrative side, there’s no shortage of management tasks you still need to do.
Excellent article, Anita. We truly live in a knowledge economy and you can see that in the unemployment statistics – the unemployment rate for non-educated is much higher than those with college degree. There are number of opportunities out there to showcase your knowledge and expertise and monetarily benefit from that. Subscription base model is the right way to go about it.
Good point. And if you are someone who has spent the time and money to develop your knowledge, I think you should be fairly compensated for it!
The explosion in blogs and content marketing today has been very positive for small businesses, on balance, I think. However, there has been a downside: some are giving away so much of their knowledge, that they are not properly looking out for their business, their employees, or their families. They are not getting fairly compensated and not earning enough. Yes, giving away some amount of knowledge is good on many levels — just not too much.
Let’s stay off the unemployment rolls! 🙂