When should you add paid memberships to your website?

Deciding when to add a paid membership component to your website can place you at a crossroads. One road is familiar. It involves maintaining a popular blog, something you already do well.

Then there's the other road – the less-traveled one that's built with memberships. Attract enough members, keep them engaged, and this road could lead you to the greatest success. But what time is the right time to exit the well-worn path and forge confidently into the unknown?

Here, we'll analyze several factors publishers should consider before creating a membership website. You'll discover which signals indicate a high probability of success and whether it's time to expand your blog into uncharted territory.

Test audience engagement

The more your audience cares about your content (and your brand), the more likely it is to strengthen that connection through membership. The trick, of course, is measuring the extent to which your audience is engaged. Do people truly appreciate the value you deliver? How can you tell?

Unfortunately, steady traffic alone does not indicate a loyal audience or a base of potential members. It may mean you practice effective SEO, but testing engagement demands attention to other indicators:

• Subscribe/unsubscribe rates: If people already subscribe to your blog, read your newsletter, or otherwise opt-in to receiving your content, many of them may take the next step and become members. Just be sure to monitor your unsubscribe rates, too. If lots of subscribers unsubscribe at a later date, it could mean you didn't provide the value they were seeking. Giving your audience a reason to stay connected is critical for running a successful membership site, and a loyal list of subscribers is a positive harbinger.

• Email open rates: Do subscribers open your emails and read your content? If you use a modern email marketing platform like Campaign Monitor or Mailchimp, email open rates are something you can monitor easily. Publishers working with old lists might be sending to inactive email addresses, and the email open rate can help you understand whether recipients actively engage with the content you send them.

• Social media sharing: Here's where impressive traffic numbers and audience loyalty often deviate. Publishers whose content is frequently shared on relevant social media channels can count those shares as signs of an active, engaged audience. High traffic with little sharing, on the other hand, could mean your audience is finding your content but choosing not to engage with it any further.

These are just a few engagement indicators, but you may experience others. For example, publishers actively selling products from their websites might have good reason to expect success with memberships as well. Even blog comments can signal audience loyalty. If your audience spends time interacting with you (and one another) through commenting, many commenters may seek additional value through membership.

Anticipate the likely ROI

You do not need thousands of members to run a successful membership website. You just need to generate positive ROI over the long term, which is something many publishers can achieve whether they start off with 120 members or just 12.

Depending on the unique value you provide and the costs associated with membership, even a handful of subscribers could make a membership website worth your while (and theirs). Just be sure to anticipate whether member-generated revenue will cover or exceed your long-term investments of time and capital.

In performing this assessment, it's important not to focus on your likely near-term member base. Successful membership website entrepreneurs aim for a viral effect of attracting many additional members by providing unparalleled value to the first few.

For example, let's say seven people become members in the first month. At this point, your member count is small, but the value members receive is high. Only one member leaves after the first month and of the remaining six, three members (or 43% of your initial member base) "recruit" an additional member. These recruitments, of course, come in addition to the signups you receive through marketing activities on social media, your blog, web properties owned by others, and word-of-mouth.

The longer this trend continues, the more memberships you will sell over the long term. To arrive at a likely assessment of your website's future ROI, you should pay close attention the growth potential of your initial member base.

Brainstorm revenue streams

If you're contemplating a membership website, you may already have one revenue stream in mind: memberships. But the membership itself is just one way to generate income. What additional revenue streams could memberships help you create?

To be sure, different kinds of publishers will be able to sell different products and services. A virtual personal trainer, for instance, might do well selling courses – one price for members and another price for non-members (to encourage signups). A financial planner might do better with e-book sales. Money management consultations via live chat are an additional option, and offering discounted rates to members provides the incentive to schedule a call.

As these examples illustrate, a membership subscription fee is just one way to sell products or services. Remember: you're working with the most engaged, attentive faction of your audience. Members trust you to deliver value, and you should always be brainstorming new ways to provide it. When you can identify multiple revenue streams beyond the membership subscription fee, a successful membership website may be in your future.

Just be sure to act quickly. If audience engagement, likely ROI, and potential revenue streams are steering you down the membership path, waiting to begin could prove costly. The sooner you create your membership website, the sooner you will reap the benefits.

And the sooner you can help your audience learn new skills, achieve their goals, and improve their lives.

Photo credit: Thomas Schlosser