What Can We Learn from Etsy Connected to Building a Successful Membership Business

What can we learn from Etsy shop owners who have had their business accounts suspended or permanently down after years and years of hard work to build their businesses on Etsy.

Why do membership businesses fail

First mistakes

When it started falling apart

The reality of running a membership

Why Ownership is Important

Final thoughts

This Week’s Sponsors

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The Show’s Main Transcript

[00:00:17.000] – Jonathan Denwood

Welcome back, folks, to the Membership Machine Show. This is episode 168. In this episode, we’re going to cover the topic: what no one tells you about starting a membership website. The good, the bad, the ugly. We’re gonna go in it all. Um, the reason why I chose this topic, because it was triggered, I was watching, I don’t know why it came on my feed, folks, but, um, I was watching a bit of YouTube as you do, folks, and came up on my feed was about Etsy and about people that have built businesses on Etsy and they’ve just been thrown off, um, with hardly any notice. So that’s going to be part of the discussion. I’ve got my great co-host with me, Kurt. So Kurt, would you like to introduce yourself to the new listeners or viewers, and also, um, introduce us to what you think of this particular topic? Yeah.

[00:01:13.290] – Kurt von Ahnen 

So my name’s Kurt von Ahnen. I own an agency called Mañana No Más. We work directly with the great team over at WP Tonic. And you know, this topic, I know you centered the topic on Etsy, but it’s very similar to how I used to feel, especially during the pandemic. I remember people would be getting kicked off or censored off of a ton of social platforms, you know, whether it was X or Facebook or whatever. And that’s when the, you know, the Facebook challenges were super popular, right? A 7-day challenge to increase your sales, a 5-day challenge to lose 14 pounds. Um, I knew people who would initiate these challenges and then get kicked out of Facebook and not be able to even sign into their own challenge or manage their own challenge. Which of course, was a huge obstacle if they had collected funding to run those challenges. Because imagine charging someone $50 to participate in something and then you don’t even show up for your own thing. But Facebook was kicking people out during the pandemic over all those different topics. And so ever since—

[00:02:15.740] – Jonathan Denwood

Why? You don’t mind me asking why? Why would they be kicked out?

[00:02:19.360] – Kurt von Ahnen

If you put something negative about the vaccine, your account will be cut. And so if your account got cut, you lost access to everything in your account. So you lost access to your groups, your Facebook fan page, or whatever you want to call it. You lost access to everything. And that happened with other platforms like YouTube. And during that time, it was really tumultuous. And during that time, that’s when I really doubled down on the whole concept of you know, self-hosting something in WordPress, using the tools in WordPress, owning your platform, and having it so that, you know, you wouldn’t get shut down. Now I realize the censorship thing over the pandemic isn’t what it was in 2021, but now you’re seeing people that are being held accountable to, um, you know, all of the conditions, policies, terms, all those things that are in the back of these websites, well, they count. And a lot of people start these accounts without reading the terms and conditions, and then they, they break the rules without even realizing it. But now they’ve started a business based on it, and eventually you’re going to get shut down and kicked out.

[00:03:29.620] – Kurt von Ahnen

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[00:04:03.270] – Jonathan Denwood

Um, so let’s start down my list. Why do membership businesses fail? First mistakes. Well, I think the first mistake is they’ve got no tribe, and it doesn’t have to be a massive tribe. Actually, it would go against you if you had a massive tribe unless you, you’ve got people helping you run your membership business, which we can do at WP Tonic. Uh, um, but, um, most people, they’ve got, they’ve done no preparation. Like, the preparation is getting the first course, um, and they haven’t really bought— really built up through a Facebook group, um, through a following, through their YouTube channel, their TikTok, their Instagram. There are a lot of ways now to build a small tribe, but it’s always, um, the first sign, the first first red flag that they, they don’t discuss building their tribe, as I call, or they have no indication that they’ve got any tribe. And that’s normally linked to them wanting to build a massive course and spend months building this multi-layered course and very complicated marketing automations, and it’s endless, the things that they need to get done. Where to have a successful launch, you’ve got to try and keep everything as simple as possible, really.

[00:05:42.500] – Jonathan Denwood

What do you reckon, Kurt?

[00:05:44.830] – Kurt von Ahnen

Well, I want to go off what you were starting to go down the path on, and that, and that is, you know, talking about the size of this tribe. And I think there’s some missed assumptions along the way, like getting someone to join a free, uh, Facebook group, or getting someone to follow your X account, or to follow you on TikTok. That’s one thing, right? That, that’s one thing. But if you’re trying to convert that free audience in a social swiping newsfeed environment to, you know, a hosted membership where people are going to pay you 19, 20, 50, 100 bucks, whatever it is, um, you have to know you’re only going to get 2 to 4% of your overall audience to monetize something with you. Like, the numbers really do have somewhat of a drive. And so, you know, if you’re, if you’re connected to 1,000 people online, you know, you might get 20 or 30 people to sign up and come off of a credit card to join your membership. And while that sounds disheartening, I don’t mean that to sound disheartening. If you get your first 10 paid members, you’re already a success.

[00:06:56.650] – Kurt von Ahnen

Like, because then you can take that and leverage that. And then the people that are already paying, that’s your energy to get more people, you know, through referral, through sharing, through an affiliate program, through something like that. But you’ve got to get that ball rolling, right? And if you think it’s just going to happen magically, It’s not.

[00:07:15.940] – Jonathan Denwood

Yeah, I think, you know, it is just getting the ball rolling. It’s about, it’s about having your first course and having it, you know, there’s always, there’s always variables to this, folks. Nothing’s black and white. But normally, based on my experience, having a short course introductory price, getting your first batch of students in, actually talking to them, actually providing more value than what the initial price, um, you should have to offer. But you want to build those relations and find out what the real problems are, what their real concerns are. And, um, it will help enormously on the next stage of your membership business. Um, yeah, when do things start falling apart? Well, they start falling apart in two ways. Either you’re lucky enough and you get a lot of interest because you’ve done some initial investigation, you found some real need, um, and you’re a real pain point and you’re getting a lot more people. Uh, it’s quite easy, especially, and it should be really, and, um, a side hustle. Um, you’re, you’re getting inundated with, um, all sorts of requests. Um, or you, you didn’t build any tribe. You didn’t have any plan on launch about getting that first batch and you’re just getting crickets.

[00:09:02.710] – Jonathan Denwood

They tend to be the two factors, and people just— I’ve seen more of the cricket scenario than being overwhelmed, but I’ve seen people totally underestimate, um, because they, they did have a good tribe, they did have a good presence, and they got a lot of interest, and they just got overwhelmed.

[00:09:26.140] – Kurt von Ahnen

Well, you know, we shared a couple of videos that were case studies, Jonathan, and, and I think about one of those case studies, and that was she had had a good tribe and she had had people sign up. But the tribe that she sourced from was a very specific niche. And then the community that she was trying to grow was more of a general purpose. And I believe she suffered from the same thing I suffer from. Right. That’s something I have to be very cognizant of is like, I’ve got enough expertise in powersports, I’ve got enough expertise in web design, I’ve got enough expertise in hosting, I got enough expertise in bicycling. And one of my fears— not fears, but one of my tendencies to try is I kind of put all those things in a blender, blend them up, and I’m this general-purpose business consultant. Well, a general-purpose anything doesn’t really find a mark of success anywhere in our corporate space. And so she sourced her tribe from a very specific niche, and then she tried to put that tribe into a general-purpose community group. And then she said over time people lost interest and didn’t participate, and it just kind of grew stagnant, you know, over the months or over the year.

[00:10:39.380] – Kurt von Ahnen

And then she tried to reinject it by bringing in new members from that same original source, you know, niche tribe back into that general platform. And so there was just a misalignment. And I think a lot of people who launch membership sites actually start with a misalignment on who their tribe actually is and what’s going to bring them the most value. I think they try to add to this. I think they try to add ingredients like you don’t want to add to your brownie mix. It’d be nasty.

[00:11:10.860] – Jonathan Denwood

But I think I’ve really been encouraged by the success of Skool because it just really shows you a lot of people after the pandemic was saying that membership and there’s been a few like, um, Pat Flynn and Amy Porterfield and a few other people saying that membership has ended, really. But they, they, um— I’m sick and tired of watching on my YouTube feed the constant advert of, um, Roger— is it Rob? Um, my mind’s gone. Um, the guy that owns the resort on, uh on an island.

[00:11:51.390] – Kurt von Ahnen

Um, oh, Branson. Richard Branson.

[00:11:53.960] – Jonathan Denwood

Oh, the other— the, um, Robert’s, um, the guy that, you know, I don’t know. Well, I don’t know, you know, what was one of the biggest, um, like Amy Porterfield, she actually worked for him. Um, The tall guy, the big tall guy, he said the sales guy Robinson, Robinson, Tony Robbins. Yeah, Tony Robbins. I’m sick, I’m sick of here of seeing his adverts on YouTube because they’re having this virtual conference, you know, he does it like one or two times a year and totally free, totally free for the VIP pass. Yeah, or the upsell, the $1,997 upsell. And it’s about AI, this, this particular, they’re going to, they’re going to teach you and all about AI folks. And but on the other hand, I’ve been really encouraged by SCORM, you know, about how many communities, a lot of them have failed, but it just shows you, um, there is still a lot of energy and people can make a good living out of a community. Um, it’s totally possible, folks. Now, um, what’s we doing for time? I think it’s time for us to go for our middle break. As like last week, I forgot to do my start break for some reason.

[00:13:38.040] – Jonathan Denwood

So we’re gonna go for our middle break, folks, and And we will be back in a few moments, folks.

[00:13:44.610] -Jonathan Denwood

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[00:14:22.140] – Jonathan Denwood

We’re coming back, folks. Also want to point out, we’ve got a fabulous resource. We’ve got a course available done by Kirk that shows you how to build a membership website from beginning to end. Um, also we’ve got some great deals from the sponsors of the show and a curated list of other resources that will help you build your website on WordPress. You can get all these goodies by going over to wp-tonic.com/deals, wp-tonic.com/deals. So onto our little list, the reality of running a membership website. Well, it’s a, you know, you’ve got quite a few things to learn depending on your experience. The actual admin isn’t, shouldn’t be that difficult. You are, you are going to have people leave the course. That’s one of the reasons why having groups, online group meetings, I think it does sponsor stickiness myself. Um, having an element of that, having your traditional course, um, materials as well. Um, having a sequence of email, getting them to sign on your newsletter. Just depends on the volume, but I think until you get to 100 people, you’re not gonna have too many problems. Your main problem is gonna be slippage, is gonna be drop-off.

[00:15:55.830] – Jonathan Denwood

Um, but after that, um, it can— and you can also get into where there’s enough people but it’s not exactly growing either. But that’s, that’s another thing we could discuss. What do you think, Kurt?

[00:16:14.900] – Kurt von Ahnen

I’m driven to something you said earlier before the break, and it was just a single, you know, compound word that you put in one of your one of your phrases, but you had mentioned side hustle. And I keep hearing people refer to their membership programs as an addendum to, or a side hustle, or this, you know, passive income idea that they’ve got in the back of their mind. And then I think a lot of them are dismayed when they find out how much work it is to actually build, initiate, promote, And then, of course, moderate a membership. You know, and I’m not just talking about courses. I’m talking about actually moderating the membership. And sometimes you can get members to volunteer to moderate certain channels or discussion groups or things like that. But, but all too often, Jonathan, and, you know, I’d be interested to hear what your thought is on this. I’ve talked to people a year, 18 months, 24 months into a membership project. They seem dismayed because it hasn’t answered all of their dreams and goals. And when I actually press them for like, well, how much work did you actually put into it?

[00:17:23.980] – Kurt von Ahnen

It’s precious little. I mean, it’s, it’s, you know, they put up a logo and a couple of blog posts and, and a couple of Facebook posts and stuff. But it’s— they haven’t, they haven’t actively pursued it like it’s a new— you’re an entrepreneur, right? So you want to put time into it. It’s not just something you, you envision and it grows itself. You have to help it grow.

[00:17:46.380] – Jonathan Denwood

Yeah, you know, you know, there, you know, there is short-form video, there’s video, there’s YouTube video. There’s a lot of ways of getting your message out, folks, a lot of ways. But consistency is important, and the marketing’s going to take about half or two-thirds of your time initially. Um, but it’s still possible to build a really nice business that It’s not gonna be passive, folks. You know, you’re gonna have to put time and work in it, but it’s totally possible, folks. It’s really dependent. Did you do your initial research? Did, is it, is your course really, um, and courses have changed the idea that you now, you know, we are in the era of AI, folks. It’s just a reality. So the idea that you can just throw out a handful of videos And, but I say that there’s a lot of people that do that, but I think combining it with a, with a weekly, um, live session with trying to build community is a good idea. It makes, will make your membership more sticky. That’s my opinion. You just got to be realistic about this folks, but you know, it’s totally possible and totally legit to build, uh, build something that can make a real difference.

[00:19:10.380] – Jonathan Denwood

Um, why ownership is important? Well, it’s linked to what I was listening about Etsy, and you’ve all heard Etsy, but it was a, um, it’s a website where they actually do an investigation of people that have been thrown off Etsy. And Etsy has got a bit of reputation that I’m not saying for political reasons or immoral reasons. It’s just that they’ve done something which the system in Etsy for some reason doesn’t like, and they’ve been on the platform for 10 years, 8 years, 6 years. They— so these businesses have built 300, 500, 600, half a million, a million on this platform. And it’s all gone. And they’ve appealed and approached Etsy, and what the frustrating thing is, they’re— they’ve not got an answer, nor does Etsy seem to really care. And it’s the same thing with YouTube. You get 3 strikes, folks, you’re off YouTube, you know, um, for whatever reason, for copyright reasons, Um, you can be struck off, and a lot of these platforms are like that, aren’t they? That’s why I think having ownership of your platform and using these other platforms as a way of promoting and driving people to your platform, which you actually own the most, which is self-hosted using WordPress, is really important.

[00:20:54.810] – Jonathan Denwood

What do you reckon, Kurt?

[00:20:57.290] – Kurt von Ahnen

I think you’re really coming into a little bit of the point, but the more that I look at like the YouTube thing, the 3 strikes and you’re out, um, it’s not always 3 strikes, at least the way you and I would defend 3 strikes, right? It’s kind of like how they want to run their own thing. Um, Etsy’s in that space too. If you are— Patreon did the same thing to a lot of folks. People would build a membership in Patreon and they thought they had a, you know, their, their you know, maybe rated PG-13 version of an OnlyFans or something. But then Patreon came along and said, hey, we don’t like your messaging, we don’t like your theme, we don’t like your whatever, you know, that’s against our terms and conditions. You’re out of here. And everything you work so hard to build is just plain gone. And, you know, there are some people that would hear this and say, well, don’t offend people and you won’t get thrown out. You know, there’s some people that say, you know, toe the line, read the terms and conditions, you know, know all the details about everything that you’re doing in your business.

[00:22:00.260] – Kurt von Ahnen

But that’s just not realistic in the digital space, right? I think what is more realistic is self-hosting something, building something, or having someone build something for you that’s affordable, flexible, scalable, and then taking a stab at it. You know, And I’m going to go out on a limb here, Jonathan. The reason that I, I’m so emphatic the way I am about the whole ownership and scalable is let’s say you do just want to do a membership site. You do a, you do a Fluent Community, you do a BuddyBoss, you do something and you launch it. The cool thing about self-hosting and being scalable is let’s say that through the process, over 2 years of running your community site, it just comes to light. Like, half of your audience really wants information on how to catch bass in a stream or how to fix a mountain bike or, you know, whatever it is that your group was talking about. And you go, man, I could probably build a course about that. Well, instead of having to find some other third-party course tool and then, you know, hyperlink things together, you just expand it and build it inside your self-hosted site and everything’s consolidated in one space and you still have ownership.

[00:23:14.800] – Kurt von Ahnen

No censorship and control of your content.

[00:23:18.890] – Jonathan Denwood

Yeah. So, so, because I, you know, like I say, it’s totally doable, folks, but I want to build something on a SaaS platform and for some reason they change their, and it doesn’t have to be anything you’ve done. They can just change their business model. They no longer, you, the type of membership you’re running no longer fits into their business model, and, um, you’re out. Uh, um, and I’ve seen it all before, um, on various platforms. And I think having the most control over your platform as possible is really important. It’s the difference between leasing a retail business and own freehold. You know, um, it’s really that simple. You know, you wouldn’t— I think if you’re leasing a building, you’ve got to be realistic. You probably have to invest so much money into the property, but yeah, the remodel. But that, but that’s one of the nightmares about it because you’re not— it’s not yours. Um, it’s— you’re just making that high investment, and in 5 years, 3 years, 5 years, um, you, you know, they might, depending on your lease contract and your ability to renew and what was agreed, you might be facing an enormous rent increase.

[00:24:52.100] – Kurt von Ahnen

Um, being there, that’s happening in our town, that, that’s happening in real time right now. You know, people, uh, started a business 3, 4 months ago, you know, on Main Street in our town, and then the people that own the building fell into bankruptcy, lost the building, but of course didn’t tell the tenants all this stuff as it was happening. And now they’ve got, you know, like no notice to pick up all their stuff and find somewhere else to run their business, you know? And that’s after building the whole thing out and getting inventory, you know? If you liken that to the online space, Jonathan, it’s exactly like putting in all the work, putting on all the content, and then a lot of these SaaS platforms you can’t get your content out, at least not easily. So you’d have to—

[00:25:37.250] – Jonathan Denwood

Well, that’s one of the good things because I think using AI, it’s probably— I haven’t done it, but I think the days— they use that as a way of stopping people from leaving because, like what Kirk said, folks, none of these SaaS platforms give you an automatic way of getting your content. But I think using something like Claude, and some of the other AI platforms, you probably could, um, depending if they provide a reasonably open API, a lot of them don’t, or it’s very limited, but there probably is more ways of getting your content out, but it’s still, it’s still more possible, but it’s still going to be depending on the size of your community and what you got in it. But I just want to finish, you know, WordPress, um, WordPress is moving forward. It’s getting some great, um, updates around AI. Um, what we offer at WP Tonic is a whole package of hosting, the technology in one coherent bundle, plus we give support and training to get you going. We are unique at WP Tonic. And it’s just a great package, folks. And like I say, you get the maximum ownership with it.

[00:27:00.680] – Jonathan Denwood

So do go over to the WP Tonic website and have a look at that. So Kirk, what’s the best way for people to find out more about you and what you’re up to?

[00:27:10.690] – Kurt von Ahnen

Well, they could get in touch with me on LinkedIn. I’m the only Kirk Van Ahnen on LinkedIn, so I’m easy to find. Or go to mananano.com. That’s our business.

[00:27:20.410] – Jonathan Denwood

It’s fantastic. And he works at WP Tonic as well. Um, or also go to the WP Tonic website and have a look at what we’ve got to offer as well, folks. We will be back next week with another great insight that will hopefully help you build a great membership website for yourself and for your family. We’ll see you soon, folks. Bye.

[00:27:45.590] -Jonathan Denwood

Thanks for listening to the Membership Machine Show. Make sure you subscribe so you don’t miss any future episodes and leave a rating to support the show. Until next time.

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