Some Membership Website Marketers Need Their Ethics Read

By David Eedle |  Email This Post

A free DVD detailing how you can make thousands of dollars from marketing on the internet sounds like the deal of the century. There’s only 5,000 DVDs available, and they’ll send it to you for just the cost of shipping – less than $10 if you are in the USA, a couple of dollars more if you live outside the USA.

That’s the offer in an email that lobbed into my Gmail overnight. One of a bunch I get each day from internet marketers around the world.

The DVD is produced by two guys who have sold more than $15,000,000 worth of products online, and will let you in on the secret of how to use email lists to unlock the wealth you want and deserve. If you don’t already have a mailing list, then don’t worry, they’ll show you how to build your own email marketing list with thousands of hot prospects. List building 101 appears to be a key part of the program, along with implementing an email marketing campaign, either with your own product (a training program maybe!) or pushing affiliate products.

If you click through to their sales page (‘squeeze’ page in internet marketing parlance, presumably because it’s designed to ‘squeeze’ you through the sales funnel as quickly and painlessly as possible) you’re greeted by a video from one of the sales guys, and a long, long ream of text explaining what the DVDs contain and how they’ll transform your internet marketing efforts. There is the obligatory batch of testimonials from people who went from nothing to thousands of dollars in revenue in less than a week.

So far so good – and, let’s face it, no different to hundreds of such high hype offers that blast out every day.

What caught my attention was the catch, well actually the whole point of the marketing strategy – although you’d be hard pressed to identify the point, camouflaged as it is in the sales hyperbole. It’s the second or third time I’ve seen this technique in the last couple of weeks, and made me pause for a moment to think through the implications.

There are nearly 5,000 words on the sales page along with a video and images (mostly of clearly thrilled and happy customers, or of expensive motorcars). Let’s break the page down a little:

• Almost at the top there’s a ‘why are you waiting, just click and buy link’ – because you are already so excited by the entire concept you just know you don’t need to plough through the whole page before making a purchase decision
• After 2,600 words the idea of a ‘club’ is introduced and how members of the club achieve real internet marketing success.
• After 4,100 words (by which time you start to feel fatigued by the long list of testimonials from happy customers) there’s the first mention of $97 a month for membership of the club
• Almost the last main paragraph – which means you’ve slogged all the way through 5,000 words – explains the club requires a recurring payment that you can opt out of in the first 30 days
• Finally, in the footer, there’s a detailed explanation of how you’ll pay the DVD shipping then automatically be charged $97 a month afterwards in small grey text along with the usual disclaimer that despite all the sales pitch in the previous 5,000 words there’s no guarantee you’ll make a cent.

Although, as the pitch says, why would you want to cancel because ‘you can stay in for as long as you want at only $97 per month’. As if they are doing you a favour by allowing you to remain a current member.

If you click through to the sign up page you’re greeted by a block of text and a signup and payment form. The text does tell you that you’ll receive “a full, 30-day membership” to the club and that “Of course, you can cancel at any time during your trial membership and you’ll never be charged a dime.”

What the whole exercise boils down to is a marketing strategy to acquire new customers to a membership website that costs $97 a month. The ‘free’ DVD is simply bait, by signing up you are not receiving a ‘gift’, you are giving the marketers a gift – of your contact details and your credit card.

A few weeks ago I wrote a post ‘7 Ways to Spot an Internet Marketing Scam’, listing the seven signs you should look out for. Let’s test today’s offer:

1. Length – gee these people need an awful lot of words to convince you to buy their secrets to success. Check. 5,000 words.
2. Effortless – you can make thousands a month, working from home, while simultaneously looking after your children, doing the laundry, and cooking dinner. Unlike the truth that real money comes from hard work and commitment. Check. No experience required.
3. Speed – you’ll have thousands of dollars rolling in within weeks Check. Testimonials include people who made tens of thousands in less than a week.
4. Testimonials – paragraphs of hyperbole from ‘satisfied customers’, who invariably are only named with first name and initial (wouldn’t want you tracking them down to authenticate their success). Check. Loads of them.
5. Pressure – sign up now or the world will end. Check. There’s only 5,000 DVDs and more than 50,000 people have said they want one.
6. Guilt – you and your family deserve to be rich, if you don’t buy this product/service/system you’re a bad person who’s consigning your loved ones to penury. Not really. But there’s a picture of a Ferrari.
7. Discount – the system usually costs $2,500 but sign up today and you’ll ‘only’ pay $250. Check. The stuff on the DVD should sell for $2,000 but you get it for just postage and handling cost.

Taking a step back for a moment, think about the economics of the offer.

• DVDs are cheap as chips to duplicate in bulk – and they’ve done 5,000
• The content for the DVDs appears to be a series of videos that was already available anyway
• There’s some minimal production costs to package the videos onto the DVD, but I could do this on my MacBook, anyone with a modicum of skill could handle the disk preparation
• The customer pays the postage and handling. Indeed, if they shift 5,000 DVDs they stand to earn revenue of over $50,000 – depending on how efficient their distribution system there may even be a small margin in there for them.
• At the end of the exercise they have 5,000 people who have handed over their credit card details and agreed to a recurring billing, starting in 30 days, of $97 a month.
• The big variable is what percentage of the people will cancel prior to the first monthly payment. Of course, the marketers will presumably email the list to remind them when the first payment is due to be charged, but if I was uncharitable (and there examples of this), the trick is to either send the email pretty early, so the customer forgets again, or really close to the deadline, so the customer has little or no time to respond.

Let’s say 60% of the people opt out prior to the first payment. Thus they have 2,000 people left who pay the first $97. Now let’s assume a 20% attrition rate each month, that is, each month 20% of the remaining subscribers opt out.

Lo and behold. How to make $900,000 in 12 months from almost no up front investment, here’s the table showing the overall numbers. At the end of a year they’ll only have less than 200 subscribers left, but will have earnt $903,342.

Now that’s how to make money online with membership websites. Although, truth be told, it’s really a training program that teaches you how to do almost exactly what they do – build a list, sell a product to the list. They sell a program about their program. The ‘club’ concept is used because people love to idea of belonging, of being a part of something. Pitching a club membership feeds straight into that basic human desire.

Hey, I hear you yell, what’s wrong with $900,000!? Well, nothing I guess. Except ask yourself:

• Do I really need to pay $97 a month to work this stuff out, or do I have the brains and nous to put something together myself?
• Is my idea of an internet business executing the same marketing strategy as these guys? Can I sleep at night pushing a program that seeks to bait people into the holy grail of internet marketers, a recurring monthly fee?

If you are comfortable with these things, then sign up, get your free DVD and send $97 a month off to the promoter. But as we outline in our book Niche Content Millionaire, this is not the path to sustainable, long term business success online. There’s a very very fine, and blurry line, and some internet marketers skirt dangerously along it. Those internet marketers who stray over the ethical internet marketing line, or those who veer perilously close, may need those ethics examined by customers considering handing over a regular monthly membership payment.

Niche Content Millionaire is a downloadable eBook that tells you the true story how we made millions from subscription content and membership websites. Buy Niche Content Millionaire Now

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