Attracting new customers is the hardest, most expensive aspect of any business. Getting attention from your prospects, encouraging them to trust you and to take action, to do business with you, takes a tremendous amount of work. For a small business marketing nationally, it can be impossible to break through the clutter and get your message heard.
However, a membership program instantly positions you as an expert in your field, making your communication welcomed by your prospective customers. It makes you a celebrity in the eye of your consumer. And, when it comes time to sell your business, you generate the sales price from your core business and you can sell your membership as well.
My longtime client, David Lucca, was co-owner of an investment management firm. His firm worked exclusively with airline pilots, and he was looking for a way to attract airline pilots to become clients of his firm, versus all of the financial investment choices out there. David launched a new stand-alone company, the Airline Pilot Financial Association, to become the marketing arm of his financial management firm and provide great custom created financial resources for airline pilots across the country.
I recently interviewed David for my Membership and Subscription Growth podcast. He has moved on from the investment management firm and the association he created, but what he has to share about his experience is astounding. He reports that, after starting the association, he grew his firm by over $150 million in just a few years. David shares some advice for how others can do the same.
A Membership Establishes Yourself as an Expert
Rather than competing like everyone else, you distinguish yourself by being the leader of your membership. David shares, “Before we started the association, nobody knew who we were. We had a few clients who were pilots. They flew with American, and they had just come to us by way of referral. I decided that I would like to reach out to that group as a primary niche for our firm. The wonderful thing of course about entering a niche with something like that is you have instant credibility. So, when people say, "Who are they?" The answer was, "Well, they're the ones that started the US Pilot Financial Association. They're the experts on our retirement plans."
By creating a membership association, David was able to jump in front of a long line of competitors. The membership association established a relationship of trust, expertise and authority with the members. When you’re doing business in an area of heavy competition, where there are tens of thousands of other businesses trying to get in the face of your customers, this can be a game-changer.
It's easier to be an expert when you tightly refine your niche. They didn’t just narrow their target audience to pilots, but went as far as limiting it to the pilots of just 3 airlines. This narrow niche allowed them to be more specific in their message. “As soon as you speak with one voice, that process of creating value that results in a transformation is just so much easier. It's just like instead of your brain going 10 directions, your brain just has one thing to think about. And the process of looking at their specific dangers and the specific opportunities that are in front of them, it all just becomes so much clearer as to what you can do to solve their biggest problems. Every time you go through another round of value creation, what you're offering to your niche is more and more powerful,” advises David.
Celebrity Power to Generate Referrals and Excitement
No one likes salespeople. And, ordinarily, a chance meeting with someone who is looking to sell you something is not an enjoyable experience. However, everyone is excited to meet a popular celebrity.
David shares a memory of being in line at an airport. talking to a man sitting next to him. “A pilot came up behind me and I could see he was with one of our airlines. So, he started to talk to me and we went back and forth, and finally he said, "What do you do?" And I said, "Actually, I write the newsletter for your pilot group for the 401K plan." And he stopped and looked at me and he said, "Are you Dave Lucca?" "Yep!" "Oh, wait until I tell my friend, Bill, that I met Dave Lucca!"
“If you try and be everything to everybody, you can't really write a compelling message for your website or your marketing materials, because you're trying to satisfy everybody and many of them have competing interests. But as soon as you speak with one voice to one group and they read it, and they know that you work with them, it changes everything. It makes your job easier. It makes your marketing messages more powerful. It makes their response deeper,” David says.
Get an Extra Payday When You Sell Your Business
Sell your membership together with your core business, and get paid more because you sold your marketing system as well as your core business.
David shares, “When we went to sell the company, we hired a business brokerage firm that did a nationwide search, and we had a number of firms competing to buy the company. It was set up as the purchase of two companies. Anybody who wanted to buy the investment management firm would have been a fool not to buy the main source of new clients coming in (the association). So not many companies end up being able to sell their marketing platform too, because they don't think of it that way.”
“As entrepreneurs, we tend to focus on income or cashflow, but the truth is value always follows assets.” David adds, “One of the best things you can do is break out the different value your firm has into separate holdings, even if it's not a business. If it's just an LLC that's owned separately, whoever buys it, if that's a valuable thing, they're going to want to have that too. And the way most businesses are valued is, simply, some multiple of EBITDA or net operating income, depending on the type of business. As you break it out, not only will you still get the multiple of that operating income, but now you're selling other valuable assets.”
For businesses looking for new ways to grow, the marketing platform of a membership model is certainly one to consider. When you create a narrow niche in the market, it allows you to really get to know more specific needs and desires of your audience. When you’re seen by your target audience as an expert, a celebrity of sorts, you will gain them and keep them as a client in your business. All that with additional income to look forward to when you choose to sell!
To discover more insight into this unique marketing platform, listen to the full interview with David on the Membership and Subscription Growth podcast.