Membership Sites – The Key To Leveraging Residual Income
Membership Sites – The Key To Leveraging Residual Income
by Mike Paetzold – Copyright 2009 – All rights reserved
Ever wonder how people can make $50,000 or more a month with their business? In almost all cases it is because they leverage the power of residual income. They sell a product or service that continues to re-bill every so often. Each time it re-bills they get paid for the initial sale again and again and again.
Definitely beats having to get new sales each month to generate your income.
Now you still need to continue to sell people but if you add new people into a residual program each month your income increases from that same effort.
For example – You sell 5 memberships a month that cost $40 a month and pay a commission of $20 each. This nets you $100 a month of ongoing income. The next month you sell 5 more but you get $200 because the first 5 re-billed and you get the commissions on the new sales on top of that. Each month it continues to grow and pretty soon you could have a $1000 a month income from those same 5 sales a month.
Now it will not double each month in a straight line Not everyone will continue to keep their subscription but you can get a sizable number to do just that.
To be realistic, a 50% retention rate for any re-billing would be very doable. At that retention rate instead of a growth rate that doubles each month $100 – $200 – $300 a growth pattern of $100 – $150 – $175 will be what you will get. Keep more people than that and it will grow faster. Either way it still continues to grow each month if you continue to feed the system with new sales.
Sure beats having to increase your sales from 5 a month to 50 to do that with a one time sale of the same price to reach a $1000 a month income.
Developing residual income in this way is one of the keys to generating a stable income. Knowing that you have a base income each month and spending your effort growing that is how the big players expand their income so quickly.
Having a membership site is one of the easiest ways to do just that. The other is to promote membership sites of others. The downside of promoting others sites is that you do not control the site and if the person running it decides to shut down you can lose a big chunk of your income at one time.
(Been there, done that, have the t-shirt and coffee mug.)
The big advantage of having your own membership site is the ability to add an affiliate program. This allows you to leverage others to increase the growth of your site. Unlike being the affiliate you will make a percentage of each sale of each affiliate.
Using the earlier example and having 5 affiliates that each make the same 5 sales as you will now allow you to add 30 sales a month. On 5 of those sales you keep the whole $40 and on 25 sales you get $20 and the affiliate gets $20.
Your total would be $700 the first month and if all continued would continue to expand by that amount each month. Now in the real world that does not happen but if only 50% continue each month the numbers would still continue to grow exponentially.
Instead of growth like $700 – $1400 – $2100 you would still be able to get growth like $700 – $1050 – $1225. Fifty percent retention is a realistic projection and extremely doable.
You can see the power of residual income and a membership site is one of the easiest ways to harness that power.
Discover how to set up a membership site In under 6 minutes – using COMPLETELY FREE software. Check out Membership Tactics.
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Disclaimer: Some of the links mentioned within this post or posts it may lead to are my affiliate links and in such case I will get compensated for recommending those products. However, I will never recommend something that I don't personally believe in and I welcome your questions and feedback.
July 12th, 2009 at 12:08 pm
Great post, Mike – residual income, though it may be harder to create at first, is what gives you the freedom of time down the road to work on bigger projects, since your income is already assured for that time period.
July 12th, 2009 at 12:19 pm
Definitely would be something that would be good to have. I could see that as being a good model to want to follow. it shows there is a lot of potential in membership sites. Thanks for sharing.
Andre Arnett´s last blog ..Top Traffic Tips Seminar Price Increase Delayed
July 12th, 2009 at 2:00 pm
Very good information Mike… something that we all as online marketers should be using. Building up a residual income is a fantastic way to earn money, without the need to constantly find a ton of new one-time sale customers each month.
Joel Osborne´s last blog ..Top Traffic Tips Simulcast
July 12th, 2009 at 8:40 pm
Yes I like the idea of residual income. I grabbed the software and now am considering how to actually put it into action. Still working my way throught the videos. This is clearly doable.
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July 12th, 2009 at 11:36 pm
I have always thought of getting into membership sites. But have not gone that route yet. To have some residual income would be nice but all the membership programs I have looked at before were way beyond my reach. I think I will take a closer look at Membership Tactics. Just not sure I have to time to add something else to my plate right now. Sounds Very interesting.
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July 13th, 2009 at 9:07 am
Residual income is the dream of any internet marketer. Certainly it is mine. You brought up some very good comments to consider: your own or promoting someone else’s.
I have been caught several times promoting others, so I should start looking in doing my own…
Fred
July 13th, 2009 at 1:17 pm
Great post, something really worth considering when deciding what affiliate programs to promote. Creating my own membership site is something that I will research further and hopefully add to my marketing plan soon
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July 13th, 2009 at 10:03 pm
Residual income is definitely the way to go, but you are spot on in that you have to keep feeding new members into it.
While retention rates do vary greatly depending on the site after a little bit of time you will get a better feel for what the retention rate is, whether it is your own product or an affiliates product, and will be better able to promote and better understand how many you need to add to increase your income whatever percentage you want.
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July 14th, 2009 at 9:26 am
Nicely put Mike!
I think that without residual income provided by membership site it is very hard although not impossible to succeed. However small – you have to have some form of stable and predictable income.
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