Recurring Revenue with Stu McLaren

#021 - Julie chats with one of her mentors, Stu McLaren, to talk about recurring revenue from subscription and membership business.

Stu McLaren helps experts transform their knowledge and influence into recurring revenue by launching, growing and scaling six, seven and eight-figure membership sites. In 2008 he co-founded the world's most popular membership platform for WordPress called WishList Member. When he sold his interest in October, 2014 they were powering over 58,000 online communities and membership sites. And now you may know Stu through TRIBE, which is pretty much the go-to program for starting a membership.

Links:

Sparkle Hustle Grow
Stu McLaren's TRIBE Program

Transcript

Julie: 0:01

So you want to launch a subscription box and don't know where to start? Girl, you are in the right place. I'm Julie Ball, a subscription box coach and your host here at Subscription Box Basics, a podcast for new and aspiring subscription box entrepreneurs that want to avoid overwhelm. So grab a coffee, some pen and paper and let's have some fun! Hey guys and welcome back to Subscription Box Basics with Julie Ball. I'm your host and your subscription box business coach. I'm just going to jump right in today because I am happy dancing and cannot wait to introduce you to my guest today. I'm chatting with one of my mentors, the one and only Stu McLaren. Stu helps experts transform their knowledge and influence into recurring revenue by launching, growing and scaling six, seven and eight-figure membership sites. In 2008 he co-founded the world's most popular membership platform for WordPress called WishList Member. When he sold his interest in October, 2014 they were powering over 58,000 online communities and membership sites. And now you may know Stu through TRIBE, which is pretty much the go- to program for starting a membership. Stu, welcome to the podcast.

Stu: 1:14

Thank you. Thank you, Julie. It's great to be here.

Julie: 1:16

Okay, before we dive into this, I really first want to tell a story. It's about how we got here and it really testifies to the power of in-person events, which I know you go to quite a few.

Stu: 1:28

Yes!

Julie: 1:28

Real quick. Um, back in 2018, Nashville, Christy Wright's Business Boutique, I gifted a Sparkle Hustle Grow box to each one of the female presenters. So in the speaker's lounge, our now mutual friend Jennifer Allwood, the business coach showed you the box that I gave her.

Stu: 1:47

Yeah!

Julie: 1:47

And so I visualized it a million times in my head like, Oh, you grabbing the box saying, okay, I'll take that. And not long after that I was in a breakout session at the event and my phone starts blowing up, right? And people are saying your box is on stage. Sue's on stage and he's got Sparkle Hustle Grow. And so I'm trying to maintain my calm. I'm literally in Jennifer Allwood's breakout session with the mic in my hand asking a question and my box is on stage. So you know, made my way down to the main stage. You had just finished your presentation, I snapped a picture with you of course. So I could share it on social media.

Stu: 2:23

That's awesome!

Julie: 2:23

And then fast forward another year. I'm not only in your TRIBE program, which I love, but I got to see you twice this year again in Nashville at the Business Boutique and then at Amy Porterfield's Entrepreneur Experience in San Diego. Here you are on my podcast. What a treat that just goes to show you the power of in-person events. Live events can lead to the most amazing opportunities.

Stu: 2:48

Well, and I think it's a relationship thing. It's like, you know, uh, at that first, um, uh, Business Boutique event, like we connected and, and of course like I am a huge fan of people who create quality work in this world. And that's exactly what you're doing with your subscription box. And it was a great example and it was just funny because I was backstage and I saw the the box there and I was asking Jennifer about it and she's like, Oh yeah, like all the, the, the female speakers got on. I'm like, what? What is this like, what's up with the dude? It's like where, where, where we got the shack here. I'm just teasing. I'm just teasing. So anyway, I was looking at the box and I'm like, this is so well done. And so I'm like, I'm going to quickly, so I tweaked some slides, you know, to incorporate it into the presentation that I was delivering, you know, a couple of hours later. And it was just awesome that a, yeah, that you were there. We got to connect and, and here we are.

Julie: 3:36

I love it. And since then we have featured Jennifer as one of our guests experts in the box. So it's just so many opportunities came from that. But okay. So enough of my story telling, let's talk shop.

Stu: 3:46

Okay.

Julie: 3:46

So we've talked, we, I know you believe that recurring revenue and I believe it, it creates stability in business. We have experienced that ourselves in our own businesses and that's why I love the subscription box business model. So I know you live and breathe this stuff. So what would you, why would you say that memberships and subscription box services are the future of business as we know it?

Stu: 4:11

Because it takes a business from hoping that people are going to come back and buy again and instead of hoping we know for certain they're going to come back and buy again. And we're seeing examples of this literally everywhere. Like it doesn't matter what type of business like heck, even Burger King has rolled out a subscription, right? Like$5 a month can get you unlimited coffee. Now people would say like, why would Burger King do that? Well, number one, it creates stability in their business. They know that for certain they're going to have those thousands and thousands of people paying$5 a month. But more importantly, what that subscription does in particular is it brings people back into the restaurant on a more consistent basis. It gives them a reason to come into the restaurant, which they're therefore likely going to spend a lot more money. But you're seeing companies in all kinds of different markets. Doesn't matter whether it's a product-based business, service-based business, knowledge-based business or community-based business, rolling out memberships and subscriptions. And I'll give you another great example. So there's a car wash that's right across the road from our office. And uh, when they opened, um, the guys in the office came in and they're like, dude, you gotta go check out this car wash? And I'm like, well, what's the big deal about a car wash? And they're like, it's a membership. And I'm like, what? And so of course, being the membership guy, I'm like, okay. So I go over and I check it out. This was about three months after they had opened. And, um, so I started asking questions. I'm like, well, you know, how many members do you have? And at the time they had 3000 members. And I was like, what? And so timeout for a minute. Like, just think about that. Like there's another car wash about a minute and a half up the road and it is never busy. And they are always hoping that people are going to come back to that car wash. Whereas this new one, they have 3000 people that are paying them every single month no matter what. And so it's a great deal because basically you, you pay a monthly fee and you can go through the carwash and unlimited number of times. So I come home and, uh, you know, a couple of days go by and my wife's like, your car is like looking super clean, like, what's going on? I said, Oh, I got got this subscription. And she's like, well, I want to take my car through it. And I'm like, Oh, baby's like, I'm sorry, like my subscription is tied to my car. And she's like, well, let's get a subscription for my car. And I'm like, okay. So we go back, uh, this is about a month and, uh, afterwards, and I get another subscription and I'm talking to the girl again and I said, so like, what are you up to now? And she's like, we're over 4,500 members now. And I was just like, look at the stability and the difference that that creates for that car wash versus the one up the street that's hoping that people come back and spend money with them. And that's the difference. It takes it from hoping people come back to knowing that they're going to come back and spend with you. And that's why businesses all around the world are doing whatever they can to incorporate some type of membership and subscription into their business model because it creates the stability that you just talked about.

Julie: 7:13

I couldn't agree more. One, I need a membership to a car wash. I think my husband needs one too. I wish they'd put one in around here. But yeah, that stability is so important. Especially as an entrepreneur. We're already on a roller coaster. You know the ups and downs, you never know. But when you can project that revenue, it's just, it's like you can breathe a sigh of relief.

Stu: 7:37

Yeah. And, and I don't know about you, but like it creates comfort when it comes to hiring because you know that the money's going to be there and then when you hire, you have, you have more capacity to be able to do more. And so, but with that, uh, without that, you have the uncertainty of like, Oh gosh, like I hope I can afford this person. Like, you know, and, and it creates a different feeling as an entrepreneur and a different level of confidence as an entrepreneur. And so yeah, yes, it creates stability for the business, but it also creates confidence for us as entrepreneurs to be able to make sound decisions and how we move forward and grow the business.

Julie: 8:13

I agree for sure. So what I'm seeing right now in both memberships and subscription box industries, um, that there's a lot of people are joining it. It's hot, it's busy. Um, and one of the things that I tell my students all the time is, you have to niche down. And so I saw this month, um, you tweeted, if you're not known for anything specific, it's really hard for people to spread the message. And I really couldn't agree more. And so why do you think it's important to niche down? And do you have a recommendation for those who want to please the masses?

Stu: 8:44

Yeah. Well, I have real world experience with this. I used to have a brand where I helped all entrepreneurs with all things marketing and it was hard and it was heavy to cut through the noise and to, uh, to be known for anything. And the reality of it is, is if I were to ask a hundred people what I did back then, I would get a hundred different answers. And, um, and you know, I heard that you, you know, it's better to niche down and all this kind of stuff, but sometimes, you know, you just have to hit it and you just have to be hit right between the eyes for it to like finally like lock in. And so that's what happened for me. I had a mentor of mine, um, who, who had that conversation with me. And uh, there's a whole backstory behind it. But long story short, he basically sat me down and said, Stu, you have decades of experience helping tens of thousands of membership site owners. He said, that is what you should be focusing on. And I said, really? And my ego kicked in. My ego was like, but that's not all I am. I mean I can help people in so many other ways like ego, ego, ego and he's like, look, I'm just suggesting to you that you focus on that and see where it leads. Well, in all his wisdom, he was absolutely right because the moment that I focused on serving people with what I had been doing anyway, just not like, you know, focusing on it on the front end in my messaging, everything took off because from that point forward people could say,"Oh, you're thinking about starting a membership site. You need to go talk to Stu","Oh, you are struggling with your retention in your membership. You need to go talk to Stu". Anything as it related to the membership. People knew I was the guy and they started coming in droves. It's just like for you was subscription boxes. That's why people come to. And so because of that, um, it makes it so much easier for the word of mouth to spread. And before, you know, you have this momentum in your business because you become known for something specific. Now the fear is that, yeah, but if I niche down, I'm eliminating all this huge market that have people that I could be serving. But what I'm here to tell you is that you will gain way more momentum and you'll end up helping way more people by becoming known for something specific. And the reality of it is you're not serving a local market. You're serving a worldwide audience and becoming known for something specific with a worldwide audience. It's still a huge market.

Julie: 11:17

Right.

Stu: 11:17

But take this as a perfect example, hopefully people can relate to this. My wife right now, um, she, uh, we're, we're in the midst of training for like this big mountain climb, uh, thing that we're going to do in October. So we're super excited about it. Um, but in that like, um, my wife has started to experience a little bit of knee pain. And so with that, do you think my wife would rather go see a general doctor or a knee specialist? Right. Of course she's going to want to go see the knee specialist. Um, and so this is my point is that people want to learn from, to get help from, to buy from people who are known for something specific that solve a specific problem or serve them in a specific way in which they're wanting to be served.

Julie: 12:06

And to take it a step further, I think that it just makes the sale so much easier too. So when I see something that's made just for me, I'm like, I need it. I'll buy it. Like the same thing with the knee specialist. I'm sure once you saw that they were a knee specialist, it's like done. We found our person.

Speaker 3: 12:24

Totally! Yeah. You just, you're exactly right. The conversation is so much easier. The sale is so much easier because people are coming to solve a specific problem. You solve that problem. There's, there's literal convincing or selling that needs to happen.

Julie: 12:39

Right. I agree. So, u m, okay, so you teach six types of memberships, physical, the boxes, you know, physical subscriptions being one of them. So how do you see multiple types of memberships working together? And I a sk this because you know, this podcast is geared t owards aspiring subscription box entrepreneurs. So how have you seen physical box subscriptions kind of compared with other types of memberships, maybe like coaching or digital, that type of thing?

Stu: 13:10

Well there are two different dynamics and the one major dynamic that's different is, Oh, actually there's two. One is the costs and expense of a subscription box and two is the fulfillment of the subscription box. So a digital membership doesn't deal with the number of decisions that a subscription box owner would need to deal with in terms of like, you know what, uh, you know, the, the, what's going into the box, the packaging of the box, the shipping of the box.

Julie: 13:38

A lot of moving parts.

Stu: 13:39

There are, there are more moving parts. Now. It's not to say one is better than the other because there is this beautiful moment with a subscription box when that lands on somebody's doorstep and it's like Christmas time, you know, when they get to crack that box open and there's that joy that comes on their face. And there's those Instagram moments when people are unpacking that box and they're sharing it. And people love to get something physical in the mail because that everything has turned digital. So that physical component is such a joy. It brings such joy. So there's a different side of it and it's a different experience. But the main thing to keep in mind is that, um, is more of the economics. And so with a subscription box, and I know you teach this, cause I've heard you teach this, but you, you've got to keep that in mind because, um, we can't have a subscription box that costs us$50 and only charge$60 for the, uh, the box cause we're never gonna make any money. And so we've got to factor that in in terms of what your bar, your subscription box is going to cost you each month and be able to create a buffer for that. Like we have a physical, uh, membership. My, my kids and I, and my wife and I, we started a membership, uh, called Cheeky Monkey Books and it basically started because every night my kids asked me to tell them stories and I dunno, uh, if any parents listening have experienced this, but sometimes like when you're trying to teach your kids a lesson, like, you know, be nice or be kind, like don't hit your brother, like, be nice to your sister, that kind of stuff. Um, we, it, you know, sometimes when you're saying like, okay, Marla, you know, be nice to your brother. Like that's going to go in one ear and out the other. But what I found to be effective is like, if I tell a story about cheeky monkey, Molly, AKA my daughter, who is being mean to her little brother, silly Willy Bailey, my son Sam, the lesson was landing. And so my kids love these stories. I tell them all all the time and um, and I'll just make them up and so forth. And then one day my wife said, you know what? Like, why don't we turn these stories into books? And uh, and so we did and we started a subscription. It's a quarterly subscription. And so we send those books out and the kids, like they helped me write them. And then we have like little crafts that go with them. And so little craft kits, it gets sent out. And so bottom line, I'm sharing it with you because like I love a subscription that has a physical component to it. There's just more that we've got to factor in. Um, however, with that one way that you can immediately raise the perceived value and not raise the expense in delivery is by adding digital components. And so I think a mix is really the home run combination because then you get the benefit of digital with higher profit margins, but you get the benefit of that, you know, a physical experience of it's like Christmas morning, uh, with the, uh, with the, the subscription box component. And it's like the best of both worlds. So I think ultimately at the end of the day, the ultimate subscription is, has a physical component, has a digital component. And I would dare say also has a community component, um, wrapped around it to really bring it full circle.

Julie: 16:50

Well that makes me feel good because Sparkle Hustle Grow has all those.

Stu: 16:53

Yes, exactly!

Julie: 16:53

And what I find is that people join for the stuff, but then they stay for the community because they just feel supported and empowered there. Um, and I don't know if you knew this, but my husband and my daughter, they run a subscription box as well.

Stu: 17:10

I didn't know that. That's amazing.

Julie: 17:12

It's called Together Unplugged and it's to provide families with tools and resources for screen-free family time.

Stu: 17:20

Oh, super cool. That's awesome!

Julie: 17:21

Yeah. So it's, it's definitely a family business at this time.

Stu: 17:27

That's so cool. Well, and I think like one of the things that I would say is important for subscription box owners to be aware of though is that, um, the stuff is not enough. If you really want to drive your retention rates high. And when we say retention, we're, we're talking about, you know, keeping people happy month after month after month. Because at the end of the day, like I've, I've, you know, case in point, I belonged to some subscriptions where they've sent me stuff and then I haven't used it. And then all of a sudden, like this stuff just starts accumulating and then you feel guilty that you're paying for something that you're not using and worse with a physical subscription boxes, like they physically see it, you know what I mean? And so, so what, what does that mean for us? It means that we've gotta be intentional to educate our people and to encourage our people to use what is in the boxes that we're sending them and to consume it and to, and to show how they're consuming it because now they're going to get value from it. So if they don't use it, they don't get value. But if they use it, they get the value and they stay. So it's really, really important to also teach the consumption of whatever's in your box. So that people use it.

Julie: 18:36

Right. That is really important. And we're, we'll definitely dedicate a whole episode of our podcast to talk about that, about retention and training your customers, how to use your product. So, so other than sparkle, hustle, grow, do you have a favorite subscription box?

Stu: 18:53

There are a variety, like a we, one of my favorites because, um, uh, we, we get it every single week is a, uh, we have a subscription to a, um, a box that gets delivered on our doorstep every Thursday morning and it's organic fruits and veggies. And, uh, so, you know, we, and this is an important thing for subscription box owners to realize like people aren't always just buying the stuff. Sometimes they're buying the convenience of not having to go and get the stuff.

Julie: 19:23

Right.

Stu: 19:23

That's the case. And with the organic fruits and veggies, like, yes, we could go to the grocery store. Yes, we could go to the farmer's market. Um, but it's way more convenient to have that stuff delivered on our door. So, um, I, I love, I love that subscription box. We have another one that, um, Oh, what's the name of it? It's uh, gosh, I, I, it's slipping my mind, but it's for our kids and uh, oh, uh, Little Passports, that's what it's called.

Julie: 19:50

Yeah, I've heard of that one.

Stu: 19:51

Little Passports. Great little, uh, subscription box. And basically we love to travel as a family. And uh, so this one, the kids get a box and it has like, uh, like a little passport and it, uh, uh, has a little activities about different countries around the world and, and different meals that you can cook and, and so there's lots of, uh, lots of little cool activities that are all about different countries and cultures and so forth. And so our kids absolutely love that one as well.

Julie: 20:17

So is that monthly?

Stu: 20:19

Uh, yes, I believe so. I believe that one is monthly.

Julie: 20:21

I'm going to have to look that one up, so, okay. So bring it back to memberships. Did you hear we're launching our membership this fall.

Stu: 20:28

Oh yeah.

Julie: 20:30

It's called Sell More Boxes and it's for existing subscription box business owners, um, that want to drum roll, sell more boxes. So every month we'll unpack one tactic to help them do that. So I'm really excited. Um, so that being said, for our listeners that are interested in memberships and in the TRIBE program, um, what's the scoop? When is that launching? And I'm going to share a link after your, you tell them about it. Um, so they can get on our list to learn more about it.

Stu: 21:01

Yeah. Well, okay, so bottom line, Mark down the date, April 23rd Mark it down and everybody know April 23rd is the beginning of a free workshop. Now the reason I'm excited about it is because we do this one time a year. So this is it. This is the time of year to mark it down on your calendar and you'll want to join us because in part one of the workshop, we are really going to be unpacking all the different types of memberships that are available and, and how a recurring revenue subscription or membership can fit into virtually any type of business. And we, we, we, we talked about the big businesses, we talk about the little businesses and we talk about all kinds of different markets. As I said, like, one of the great things is that with the work I get to do, I get to be involved with and serve literally tens of thousands of entrepreneurs in all kinds of different markets, from photography and calligraphy to fitness and finance and music and art and health and dog training and so many more like it, there's so many markets that we get to work with. And so in part one, we help you understand what type of membership would be a right fit for you and your business. And then in part two of the free workshop, we then unpack, okay, what do you, what should you provide inside the membership? Because again, people get their knickers in a twist, uh, thinking about this, like, Oh my gosh, like should I do this or should I do that? Or the worst, like, Oh, okay, I'll just give them all this. And it's like, that's the worst thing that you can do. In fact, overwhelm is the number one reason that people cancel from a membership. And so you don't just want to give them everything. You want to be very intentional about what you give, not only so you don't overwhelm them, but also so you don't overwhelm yourself. You know, we want to design this business to really serve our life. And in the, the good news is that it doesn't require you to be on a content treadmill, work in day in and day and night to create a whole bunch of content because your market doesn't want that. And, and we'll show you what they do want and how to structure it in the second part. And then the third part, uh, this is like probably one of my favorite parts because we zoom up to the 30,000 foot view and we talk about the five key areas of a successful membership and subscription. One is your foundation strategy. Two is your content strategy. Three is your marketing strategy. Four is your retention strategy, and five is your growth strategy. And in that we break each of them down. You're going to get this incredible mind map and report. We would break each of those sections down. In fact, last year we had people who took that one free report, that free blueprint and launched a successful membership. I literally, I got my phone here, I should show you. I got a, um, um, let me see here. Bump a bump. I got a, uh, a message from somebody just the other day. Um, Oh, I'm not gonna be able to find it. Okay. I got a whole bunch of messages I shouldn't have. I should've, I should've prepared this before we jumped on.

Julie: 23:58

That's okay.

Stu: 23:58

But, uh, it was literally two days ago. Uh, her name was Cynthia, who took that free blueprint and launched a membership on the back of that, uh, and she welcomed 387 paying members. And she said to me, she said, Stu, like I'm blown away. She said, I cannot wait to join you for the workshop this year, because she said, not only have we generated that, but that's allowed me to bring my husband home. And so now he's home working in the business. And, uh, it's just, it's, it's amazing. So this workshop, it's free. We do it one time a year and I really encourage people to come and join it. Even if you're just, you're just thinking about it. I would encourage you to do it because what you're going to come away with is clarity around how it fits, what to do next and how to really make it a success.

Julie: 24:41

I love it. You guys can't miss that. So if you want to be on the list for when tribe reopens, head to SparkleHustleGrow.com/TRIBE and we'll make sure that you get all the information when those come live. That's what you said, April 23rd right?

Stu: 24:55

April 23rd. Yep, exactly.

Julie: 24:57

Awesome. So Stu, thank you so, so much for joining me today. I cannot wait to share more about TRIBE when it reopens in the upcoming weeks as well as launching our own membership. And guys, thanks a bunch for listening to this episode. As always, if you want to be on that list when tribe reopened, it's SparkleHustleGrow.com/TRIBE. We'll put that in the show notes and I'll see you in the next episode. Thanks, Stu.

Stu: 25:21

See you again!