How to Add Recurring Revenue Without Ad Spend - Rick Mulready

rick mulready

How to Add Recurring Revenue Without Ad Spend

August 19, 2022


What would your business look like if things were easy?

The path to success in your business isn’t always the easiest. While it’s true that it may be simple to just run a promotion or do a launch to increase your recurring revenue, that may not be the best course of action, especially if you have a high churn rate, for example.

In this quick tip episode of the Art of Online Business, I am sharing how you can increase your recurring revenue by taking a step back and focusing on how to better improve the experience for your existing customers instead of trying to get more.

Even if you do a launch and get more members, you’re not going to increase your revenue if you still have some issues with the foundation of the offer itself. You may need to take a look at your business internally and see what the numbers are telling you about what needs to happen.

You don’t always have to spend money on ads or lead generation to increase your revenue. Sometimes you just need to look at the different areas of your business and determine what can be better leveraged in order to increase your success.


In this episode, you’ll learn:

  • Why a launch or promotion may not be the best route to increase revenue
  • Why more content isn’t necessarily what your audience needs 
  • How to shift your focus to helping your clients get more wins
  • How your launch method impacts your revenue
  • Why looking at the data may help you increase revenue


Links & Resources:

*Disclosure: I only recommend products I use and love and all opinions expressed here are my own. This post may contain affiliate links that at no additional cost to you, I may earn a small commission.


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Oh, right. What is up, my friends? Welcome to Episode 627 here on the podcast. This is another quick tip episode where we’re going to dive into. I want to I want to get a point across today. And so my goal for this episode for you is I want you to think about things a little bit differently, that the path to how you think you should be accomplishing something is not always the easiest thing to do. Right. So one of the questions I always ask are accelerators. They get tired of be saying it, but it’s what would this look like if it were easy? And I’m going to give you a hypothetical scenario here today. And so let’s say you have a membership and it’s a fairly inexpensive membership. It’s $49 a month. And let’s say that your goal is to add $10,000 a month in recurring revenue. So you want to increase your monthly recurring revenue by ten grand. And at $49 per person per month, that’s roughly 200 people. So you want to add 200 people to the membership. So most of us would go right to how do I add 200 people? Do I need to do maybe I should do a launch or maybe I should do a special promo or a better buy. You know, I better do more ads, I better increase my ad spend to build my list more and convert more of those people to into the membership. 

That’s how most of us would think about it. Right. And by the way, this scenario that we’re that I’m going to take you through is really hard to oftentimes is really hard to see yourself, meaning we’re so close to our own businesses that we we really need an extra set of eyes on your business, whether it’s a mastermind, whether it’s a coach or whatever it might be. That’s what my role as a coach, for example, is to. Point out things that you might might be missing. Right. My whole goal is to find leverage for you in your business and make it as easy as possible to accomplish whatever you’re trying to accomplish. So again, let me just repeat the scenario here. You’ve got a membership. You’ve got people in it, right? You’re already doing like say, 10,000 a month on it. And now you want to add another 10,000 a month in recurring revenue? $49 a month. That means you need to add 200 people. So most of us would just go, okay, how do I get 200 more people into the membership? Girl my list, do a launch, etc., etc.? Well, I actually wouldn’t approach it that way. So the first thing that I would want to know in this situation here is let’s just say that that I’m coaching you on this is I’m going to ask you, what is your churn rate on the membership? Right. So what’s the percentage of people who are leaving who are who are not continuing forward that started at the beginning of the month. 

Right. We can do a churn calculation. And so you churn you really, really want in order to have like a really healthy, growing membership, you’re really looking for a churn rate of about 5% or less ideally. So let’s just say that the churn rate for this hypothetical membership is a little over 13%. Now, if you’re over 10% churn, the membership is not going to be around long term. That’s something that you really, really need to correct. Right. And I’ve done episodes here all about retention strategies in a membership. And so that’s the first thing that we would look at. What is the churn rate in this hypothetical here? A little over 13%. So number one way too high. And so that right there answers that sort of rules out. We don’t want to bring more people in to the membership with a churn rate that that’s that is at that high level right now. If we brought more people in, yes, it would decrease the churn rate. But at that level, we’d have to bring a lot of people into it in order to decrease that churn rate. So this is kind of one of those things where I don’t want to add, I don’t want to bring people into a broken funnel, if you will, or a broken program, if you will. 

And so and I’m not saying this isn’t broken. I’m just saying, like, that’s a really, really high churn rate that we need to address first and foremost. And so then we can look at, well, why are those people why are people leaving? Why are people churning? And the the biggest reason that are two big reasons why people leave a membership is that they don’t have time to go through everything. Maybe they’re overwhelmed and they’re not using it. They’re just not using it. And especially in I’m recording this the middle of August 2022, when we have all this economic uncertainty, this is where people are looking at things in in their budgets and say, okay, I’m going to cut these expenses here. And they’re right and I’m not going to get into it in this episode. But that’s our opportunity to make sure that whatever our offer is is the best thing it possibly can be to help your audience, your people at this very time. Right. How can you provide value to help them with whatever they’re going through? Right. Again, I’m not going to get into that deeply right now in this in this episode. And so the the first thing that we need to address, as I mentioned, is this churn rate. So how do we reduce the churn rate? And we have clues now because we have. Sort of surveyed people, if you will, when they’re leaving.

Right. So when they’re leaving, you say, hey, you know, thanks so much for being in the membership. Just curious, could you tell us why you’re deciding to leave? We’re always, always looking to make an improvement, blah, blah, blah. Can you respond to this email with one with with a one sentence reason or one word answer, whatever it might be. So don’t have time to go through everything. So 

that’s a clue right there. There’s too much in the in the membership, right? So people don’t need more content. We often think that we have to keep adding content to our offers. That’s not that’s usually not the case. The other reason that we said is people aren’t using it, so why aren’t they using it? And we can go we can make a ton of different hypothesis on that. Let’s just say that they’re not using it or they don’t have time to go through everything because we’re not making it easy for them to find the content that is relevant for them. And so one of the first things I would look at is. Improving the onboarding process. I would look at the onboarding processes. What does that look like when somebody joins the membership like they fill out the form, give you their credit card boom, they’re in the membership. What is the next you know, what are the next steps? What kind of emails do they get? What kind of videos might they get as far as showing them around the membership, how to get the the most benefit from the membership? How can you give them a quick win within the first 5 to 7 days of them joining the membership even shorter if possible? Right. 

How can you give them a quick win so that they’re like, holy cow, you know, I join this membership best decision ever because whenever somebody joins whatever offer that you have right after they right after they join, they’re oftentimes going to be like, holy cow, did I just make the right decision? Usually not when they buy like a $7 know whatever template, but if they make an investment in whatever it is that you’re selling, you want them to get as quick a win as possible to calm that voice in their head, thinking, Did I just make the right decision? Well, when you can help them with an immediate challenge that they have and show them that A, you can help them with a win and B, that they’re in the right place that’s going to create momentum for them. Right. And so one of the one of the best things that you can do is look, what is the onboarding process, right? How long are they going before a win is happening for them? So what can you create in the membership to make it as quick a win as possible? How can you make it easier for them to? Take the you know, to go through the content to take it in. 

And so can you provide paths for them? Can you customize a path for them? Can you do whatever possible to show them how easy it is to find content in the membership? Could you do something like, you know what, the most successful members here in our community do these types of things and then show them what those things are. Right. You know, they check into the community at least once daily. They answer questions, they ask questions, they consume the content in this way. They show up at the calls, whatever it might be. Right. And so the more that you can do those types of things, the more that you are getting them off on the right foot and getting them into the community as quickly as possible. Right. And then the other thing, too, is you can look at like, all right, how can I make it easier for people to consume the content? Now, I just did an episode here on the podcast within the past couple of podcasts talking about giving people the content in different formats. And I use the example of one thing that we’ve done in Accelerator as a result of feedback from our members is we created a private podcast within the program a few months ago where we record the coaching calls so that if for any, for whatever reason, if someone doesn’t show up in a coaching call and they don’t want to go back and watch them watch the video replay, they can just put their earbuds in when they’re out in a walk or what have you and listen to the coaching call. 

So these are things like we want people to consume if our goal and since you’re listening this podcast, I have no doubt that this is your goal, is you want to have a big impact, right. And the way that you have a big impact is people consuming whatever it is that you are teaching and putting out there in form of your offers, etc. So you want people to consume the content in your membership. Notice I didn’t say more content. You want to make it as easy as possible for them to find what they need and how to be successful in that membership. Share more successes with them, for example. So this is all like we’ve we’ve just done one thing there. We’ve just looked at the onboarding process. Now, keep in mind that this could literally be everything I just mentioned there. This could be like a 30 day sprint or a or two week sprint or whatever it might 45 day sprint, whatever it might be. You’re working on the onboarding process, but keep in mind, it’s probably going to take about 90 days or so for you to see any effect of did improving our onboarding process lower the churn rate? Right. 

So you’ve got a benchmark in this case here, a little over 13%. How did all the things that we did by improving the onboarding process, did that affect the churn rate? It’s not something you’re going to see within the first couple of weeks or whatever. You have to let a few months go by. Usually about 90 days. You can see you can see the benefits of that or if it didn’t work, right. So by lowering the churn rate, that means you’re keeping more of the people in your membership and thus you are increasing your monthly recurring revenue. Remember, our original goal was to add 10,000. We haven’t done anything yet about adding new people to the membership we’ve just fixed. The biggest problem is we’re not able to keep people into the membership or keep people in the membership. So by keeping more people, we are going to increase our monthly recurring revenue. We haven’t spent any money on ads or lead generation or anything like that. Right. So most people, again, going back to what I talked about in the beginning, most people look at, okay, well, how do I maybe I should do a launch, maybe I should grow my email list or what have you. We haven’t done that yet. We’ve just were fixing internally. First, we’re looking at fulfillment first. Now the next thing that you can do, now that we’ve taken care of that.

Right. And again, we’ve put things in place for that. The next thing I would look at in this hypothetical scenario is how am I selling the membership? How am I getting people into the membership? Is it evergreen? Is it always open? Which, you know, if you’ve been listening to this podcast for any period of time that I’m a big fan of, or are you doing launches, right? So open, open, close launches. And there’s two things to think about when you are fully evergreen on a membership, for example, versus doing launches on a membership. So number one. Let’s look at the numbers. Right. So how many people on average are joining on an evergreen basis every single month versus when you do a special promotion, i.e., a launch? What are what are those numbers look like? And so then you can compare the two because if like your evergreen stats are way bigger than your promo slash launch stats, well that answers that question. Just keep doing more of the evergreen and get more people in on the front end. Well, if your numbers are much bigger in when you do the launch promos, then just on an evergreen basis, that’s telling us something. And so let’s just say in this hypothetical that the numbers that you bring into the membership are basically double. When you do a launch. So when you do a launch, a special promo, again, doors don’t close at the end, but there’s some form of bonus being given or what have you. 

And so let’s say when you do a launch, those numbers are double than when you sell on an evergreen basis. Well, that tells us that’s great information of what we should really be doing more of. And so in this hypothetical here, I would actually be going to a launch model where it’s open and close. And then in addition to you can have an evergreen offer that’s sort of running in that’s sort of running in the background. But first and foremost in this situation here, I actually would go to an open close launch method here. And the reason for that is because the numbers are telling us when we do a launch, we’re getting double the number of people into the membership than we normally do on an evergreen basis. And again, most of you, if you’re thinking right now, you’re listening right now, you’re like, well, wait a minute, Rick. You say all this other stuff about launches and how we you’re not offended launches. That’s completely true. And here’s the caveat to this point right here. Again, if our goal is to have as big a impact as possible and we want to get as many people as possible, we want to help as many people as possible in the membership. And in this situation here, when we do launches and promos, it tends to work better. 

Okay, let’s do more of that because that is that’s working to get more people into. Into a membership. Right. And we can do special one off, you know, evergreen type stuff. That doesn’t make sense. One off evergreen type stuff. We can still do, you know, a funnel with an evergreen, a special evergreen introduction into the membership with like a special offer would have you. So we can still do that. But again, so notice that we’re basing this, this our plan here off of the data off of what the data is telling us. You’ve heard me say it a million times. The data, you know, has no meaning other than the meaning that we give it. You know, data is neutral. The data in this in this case here in this situation, this hypothetical is it’s telling us that we bring about to X the number of people into the membership when we do some sort of special launch or promo. So that’s another thing that that that I would do. Another thing I would look at is let’s just say that you have a a lower priced. Offer. You’ve got like a little mini course or something that you sell and it’s on Evergreen and you sell a lot of it and it’s like $37. Well, what I would do with that is continue obviously with that, but then have a follow up. 

Once somebody purchases that, that leads them through a funnel and gives them a special offer into the membership. If we weren’t taking advantage of the fact that this offer was normally sells pretty darn good every every month on Evergreen without really much promotion. Then. Och, well, that’s another front door, if you will, into what it can be, another front door into the membership. So notice here, we really haven’t. You know, we haven’t spent any money on ads or anything like that except for the previous previous point here about the launch notice, we’re looking first at what do we have available to us? What is the data tell us and how can we test different things to improve upon that data? And then finally, when it comes to the offers, whether it be a launch, whether it be on the evergreen funnel, I was just talking about testing different offers, you know, whether it’s a, you know, a two week free trial or, you know, 30 days for a dollar, whatever it might be, whatever they all they all work. It’s all how you position, etc., etc.. What I would be testing different offers into the membership. And so. The last thing you could do there. Right. Once you have lowered that churn rate, once you have shored up that lower priced offer that sells really, really well on Evergreen, that’s another pathway into the membership. And let’s just say that you are going to go to a more of a launch model, getting people in open clothes, by the way. 

The there’s definitely pros and cons to and again, I don’t want to get into I’ve done a whole episode on launching, but there’s definitely pros and cons to a a launch model on a membership. What it can do and you have to be really careful in this you really want to watch this is if you’ve got a vibe, if you will, within the community of your membership, and then you introduce a whole bunch of people all at the same time. Because you’re doing a launch that can mess up the the vibe, if you will, the feel of the community and for the people who are in the community. They might not like that. And so that can cause. So this is why you really want to be watching the data that can cause, you know, a higher churn rate. So you really want to be careful of that. You really want to be careful of that. Just just keep an eye on it. Now, you’ve done all those things. You have looked at the churn rate you have gone through and looked at the scenarios of like, okay, how can I improve the onboarding process? Look at. Okay, how do I get people into it? What’s more effective? Looking at an existing funnel that you have. But notice that you’re not taking full advantage of that.

How do I shore that up? What other offers can I test? Now you can start to think about, All right, how do I. I should be growing my list here. Getting more people onto my list. Nurturing them. Building a relationship with them. And then you’ve got a bigger audience. You know, you’ve got more people to when you do a launch or when you do a special promotion or whatever it might be into your membership. Now you’ve got a bigger pool of people that you’ve built a relationship with and added value to that are more likely to join the membership. And I’ll just finish off this. This episode here is let’s just say you’ve got this situation here and your your churn rate is really good. Let’s just say it’s at 4% churn, but you still want to increase the. You want to increase your monthly recurring revenue. Well, I would still I would. Obviously, you don’t don’t need to focus on the retention part because your churn rate is so good. But I would look at what other areas in the business or in the fulfillment and getting people into the membership. What can be improved? Right. Are there front doors, if you will, coming into your business that can be better leveraged to get more people into the membership front doors, meaning get a lead magnet or you’ve got a, you know, a lower ticket offer, what have you, and maybe you’re not even leading. 

Maybe the you’ve got an email marketing funnel that’s leading nowhere. Well, if those things are working, let’s get them leading all to the membership. Right. In this case here. All roads would lead to the membership. So hypothetical situation here, but this is how I would look at this type of question. If you came to me and said, Rick, I want to increase my monthly recurring revenue for my membership or even like my group coaching program or whatever it might be by, say, 10,000. That’s how we’re going to look at it. We’re going to look at it first and foremost. Okay. What’s going on internally? What are the numbers tell us? Because, again, most people would just go to like, all right, well, I should do a launch. I should spend more on ads, get more people in. Well, let’s first look at what’s going on internally before we go, adding fuel to that, because we don’t want to waste that money coming in to a broken system. Ask yourself, what would this look like if it were simple? All right, my friend, thank you for tuning in. I hope you got a lot out of this episode here today. Thank you. See that part again. I’m a friend. Hope you get a ton out of this episode here today. Thanks so much as always for listening. And until next time? Be well and I’ll talk to you soon.

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