$250 vs. $250
So a client has two sets of $250.
One says $250.
The other says $250.
Do they look exactly the same to you?
They do, don't they?
But how the client spends the $250 on your business is what's crucial. If they spend one type of $250, they may consume a bit of it and never come back, or come back infrequently. If they spend another type of $250, they come back over and over, and then spend far more than $250.
In some cases, they move from $250 to $500, even $10,000 or more. And over the lifetime of the client, they may not just be very profitable for your business, but also get in other clients just like them, thus adding to your reputation and revenue streams.
But which $250 will you choose?
Heh, heh, I've been teasing you, but let's get to the point with an example, shall we?
Let's say a client is a member of your membership site. And the annual fees for the site are $250. A membership site is a lot like a gym membership. If you use the gym facilities, you keep paying for it over the years. But if you don't use it, along comes your New Year resolution day, and you let your membership lapse. The same applies to a membership site that's not being used.
And there's a reason why membership sites are not used to their fullest
But now that client has paid $250 for the membership, and so they feel the need to dip in their toes from time to time, but it's not enough. It doesn't matter what's in the site—doesn't matter at all. You could have the most amazing content, the greatest interviews etc.
It doesn't matter for a good majority of the people on your membership site. That's because your fantabulous content is driving the clients nuts. They want to consume the content, but for most of your members it comes too thick and fast. And so, like the gym membership, they don't consume and the renewal doesn't go through.
But what if the clients were to do a $250 course?
Now things change. This course has changed the dynamics completely. They've got their membership and yet they want to further their education, and so they spend the second $250 on the course.
The course may be something like learning how to draw cartoons, or how to write headlines, or write articles etc. It may not necessarily be a very long course and may just last four-eight weeks. But the value of the additional paid course is often greater than the membership.
“Of course it is”, you say aloud!
“The membership has a ton of information, but it's not always specific to a person's needs. A course on the other hand is specific. ” Fair enough. But that's not the sole magic of the course. The magic of the course lies in the factor of identity.
The moment the client is segregated from the rest of the member's group, there's a shift in their brain. They're now a select audience. And this gives every member a sense of identity. Being in a smaller group is critical (this is why at Psychotactics we have just 33 participants at a workshop, and no more than 20 people on any given course).
Now they consume at a far greater level
And more importantly, they get a sense of identity. A member that hasn't participated at all in a larger group, when encouraged well, will suddenly sprout wings and become exceedingly prolific in their contribution. The more prolific they get, the more they're respected and accepted by the group. And the identity grows.
Now the member is not just a member of a boring membership site. Now the course has made them feel relaxed. Made them feel at home. And it just so happens that the member is learning a new skill and gaining enormous confidence as well.
What happens next?
A course is a drug. If conducted well, a member will want to be part of another course and another and another, always upgrading skills as they go along. But with every minor upgrade, they get more confident and wander into the main membership area where they start to contribute as well.
So someone doing the cartooning or headlines course may stay well the limits of the cartooning course for the duration of the course, but once the course is over, an inevitable emptiness fills the space.
That emptiness has to be filled
And it's filled by the main membership area. Almost the entire group will then move to the main area where they will participate with invigorated gusto and bonhomie. The identity factor has kicked into top gear. They no longer feel they're just another name or number. They feel part of the group and hence participate willingly. Incredible as it may sound, they need to pay the second $250 to get the greatest value from the first $250.
The membership did indeed cost them $250 (that's the first $250) but it's the second $250 (for the course) that makes the difference to ease the transition of no identity to identity. The more they participate in the course, the more they tend to participate in the general area.
Makes sense, doesn't it? After all we're all slightly unnerved when we get into a new space, or travel to a new city. But give us a few days in that city and give us a few friendly faces, and we're happy as clams. Makes perfect sense!
But if this is so effective, why charge $250? Why not have the course free?
For one, courses take enormous time and planning. Even if you've done a course before, there are still squillions of things to consider. So unless you've got tons of resources and time, it's better to do a paid course. The second factor is that of increased consumption.
A member that joins a paid course is thrice as likely to completely the course as one who hasn't* paid for the course. This doesn't mean you can't make a free course extremely valuable. It can be done. However if you can charge a client, it's important to do so, both for the client as well as you.
But this is where the first $250 comes into play
If the client is not a member of your site, then they go out into the ‘wild open spaces' once the course is complete. But if they're a member, they go right back into the community and start contributing. This enhances their sense of identity.
In their own minds they're no longer newbies. But more so, and I know you've been paying attention, they are part of this group. This is their herd, tribe, hangout—whatever you want to call it. This is where they have a space to congregate and participate.
So goody, this applies to some fancy information site. But how does it apply to a cafe?
Or a yoga class? Or an online site that sells tea?
It does. And the moment we go through the first example, you'll work it out for the others as well. Let's say you have a yoga class. And heck yeah, you get people to show up to that class on a regular or irregular basis. But see, there's no identity in place. Everyone shows up. They unfold their mats. They nod politely to their neighbour next door. And they're off. No one cares. No identity at all.
Now change the identity dynamics
Offer a weekend course, or even a 5-hour course. Keep the numbers small. Then make sure everyone knows each other at the start of the course. And as the course advances, get the participants to work in groups (there's safety in numbers).
The more they work in the group, the more they get to know the others within the group. And by the end of the course or weekend, they get to know everyone. They may not need to get along with everyone, but to know everyone and develop additional knowledge on the subject is enough to create a solid sense of identity. Once the identity has been melded into place, this spills back to the regular yoga class.
Now when they get back, they're no longer just participants.
You got it! They have a sense of identity. They're part of something and better at something and they know someone. The same applies to a cafe. Yes you drink coffee at the cafe and you do the same nodding at familiar faces, but there's no sense of identity. But have a special event just for the cafe folks—even a small wine and cheese evening, and watch the change in dynamics. But what if you're that online tea company? There are ways to create a niche group.
Everyone gets to meet and introduce each other. Then everyone is tasting the same tea. The person from New Zealand is drinking the same tea as the person from Paris, Texas. And they're interacting. They're getting a sense of identity and expertise. And you're getting a sense of the importance of identity as well, aren't you?
But you may well miss out on the important aspects of this second $250 exercise…
The most important factor is not to simply have another course. If the yoga class instructor has a weekend course and doesn't get the group to work and mingle, this concept of identity doesn't come to the fore. If the groups are not made into smaller groups, it won't work.
Then all you're really doing is taking the big yoga class and creating a mini yoga class. You're not getting the group to mingle and meet. And it's in that mingling and meeting that you foster the sense of identity.
This is one (just one) of the reasons why a Psychotactics course has such a high rate of success
The Article Writing Course course is the toughest writing course in the world (one participant said it was the toughest in the universe). Yet between 80-90% stick out the entire duration of the course (we're talking three months of daily grind here. Think of 90 days of slog and you'll get the idea).
And the same applies to the Headlines Course. We've seen more drop off in some courses, but it's work in progress. Sometimes the course itself needs tweaking. Sometimes it's the group dynamics. Sometimes it's the pricing (higher priced courses get higher consumption). But we're going off track here…
So the high rate of success is because every course is firstly, small.
Yes, we could easily have a group of 500 people, but it wouldn't help foster any sort of lasting identity. Then every group within the course is split into smaller groups.
So a group of 20 will be split up into 4-5 groups. The sense of identity is greatly enhanced in the tiny group, then taken over to the main group and finally finds a voice in the larger group (that is the membership at 5000bc). The small, small, small groups are critical. The merging into the bigger groups are also critical. This isn't about just having a workshop. This is kinda like making buddies. People you know and trust, at least on some level.
Which is why we'll have a Psychotactics workshop
We live in New Zealand, and yet we'll fly half way across the planet to have a workshop in the US or Canada (Yes, we're coming to Europe) just so that we can do this very thing. We need the Psychotactics group to meet at a course, get smarter, get into smaller and then bigger and then bigger groups. If a person is part of a course, they are more likely to join 5000bc to keep their sense of identity and expertise going. If they don't join 5000bc, they go their own way.
The members that stay within 5000bc consume more and buy more
This boosts revenue and longevity of the client. But the client isn't an idiot. They would buy more and consume more only if they're getting a return on their time and money investment.
And they do, so they keep coming back. This becomes extremely important for the group, because now the group has members with a solid sense of identity, expertise and hence the conversation becomes extremely rich and diverse. And confident. You see passion and confidence oozing and this spills over to other members, who in turn benefit. This allows the participants in the course to give back, when they can. And participation soars, even with a small community.
But what happens to the person that goes their own way?
They may come back. They may not. If they don't join the membership site, their identity isn't forged. It's possible to get them to come back and start anew, but the whole process is a lot more time-consuming. Therefore you need to have a place where a client can spend $250 and $250.
$250 gets them into a membership.
$250 gets them into a course.
Which one is better? If I had to choose, I wouldn't. Because it's a bit of a toughie. The key is the understanding that over time you need to have both the elements in place. You need the course and you need the membership area. So you need to have your regular yoga class and you need to have the course. You need to have the coffee addiction and the special event. You have to have the membership site at 5000bc and the live workshop.
But what if you don't have both?
Then a good place is to start somewhere. Somewhere a person can get a sense of identity. A membership site may well be some distance away. So announce a course. And get people to join and interact. Then you can move them onwards. If you don't have a course, put together a book (or a booklet).
When we started with Psychotactics, we had no book, no membership. But we did have a tiny list and they bought into The Brain Audit (which was just 16 pages long at the time). That group of buyers were invited to join 5000bc in the year 2003. At a annual membership of $7 a year (yes, a year). They joined. Later the fee went up and up—and it continues to rise. But the members stayed. We had courses that they attended and they came along. And it reinforced their identity. So they stayed.
We obviously do things a lot better than we did back in the year 2003, or 2004 or 2010 for that matter. And you want to start somewhere. And realise that having a course leads to the membership, which leads to the course, which leads back to the membership, which leads back to a course, which leads to the membership…you're getting the picture aren't you?
You may not charge $250. You may charge $7.
The concept is the same. If you want lasting revenue, you must create a sense of intense identity with your clients. They in turn will repay this identity by adding to the group and learning from you, and buying your product or service over and over again.