Ryan Lee

How to Add Recurring Revenue to Your Business

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Ryan Lee is an internet entrepreneur and the creator of some of internet marketing’s most famous training programs and live events.

One of his hugely popular live events is… The Continuity Summit

In this interview Ryan shows how you can add continuity income (AKA recurring revenue) to your business model so that once you make a sale, you then get paid over and over again, with no extra work involved.

You can listen to the interview or you can read the entire transcript. Enjoy…

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Joey Bushnell: Hey everyone, this is Joey Bushnell, today I have with me one of the worlds top online marketers, his name is Ryan Lee. Ryan thank you so much for being on the call with me today.

Ryan Lee: Joey it is my pleasure and I’m excited.

Joey Bushnell: Thank you! Ryan how did you get into online marketing?

Ryan Lee: That is a great question and the answer is I don’t really remember! It was back in 1998/1999 and at that time I was working in a children’s rehab hospital doing all the recreational therapy, aquatics and fitness programs. I had a personal training business on the side.

The internet was starting to become popular and I thought it would be good if I had a website to promote my personal training business. So I hired my 12 year old neighbor Jonathan and paid him $20-$25 and he helped me put my page up. I was using front page 98 at the time. That was it, that’s how it got started.

I was living at home in my parents basement and I started the site with just a bunch of training articles. I would train a lot of young athletes, I worked with hockey players, figure skaters, baseball players and soccer players. It was just a place for me to put articles for myself and my friends who were trying to get to see coaches and that was the beginning, that’s where it all started.

Joey Bushnell: Brilliant! So Ryan, as an internet entrepreneur, I know that you cover a lot of different topics of online marketing. One of those is continuity, I know you have a very famous event “The Continuity Summit” which you hold every so often. I’d like the focus of the call to be on continuity, is that alright?

Ryan Lee: Joey it is my pleasure.

Joey Bushnell: Great, so my first question is… If someone hasn’t heard the term “continuity” before, what is continuity and why is it a good idea?

Ryan Lee: Continuity in layman’s terms is recurring revenue. Some people say annuity income, reoccurring revenue. Essentially it’s just money that comes in every month.

Now traditionally in the marketing world we do monthly billing so it’s like a membership site that charges $10, $20 a month or your shopping cart that you pay $20-$30 a year for, or your phone bill is continuity, your cable bill, electrical bill, gym memberships and health clubs that’s been really popular forever. For $10, $50 or $80 a month you can come to the gym as often as you want.

However continuity can be quarterly billing, every 6 months or yearly billing. There is a lot of ways you do could do continuity billing but that’s pretty much what it is. If you think about it, it really is the holy grail.

So Joey, name any topic, any niche or market anything, let’s see how nimble we can be on our feet?

Joey Bushnell: OK, Testosterone or how to increase your testosterone

Ryan Lee: Testosterone. So there’s two ways we can do it.

We can either do a physical product like a testosterone boosting supplement or we can do an information product teaching them how to naturally improve their testosterone.

You pick one, let’s see which way we are going to go with this.

Joey Bushnell: Let’s go with an info product.

Ryan Lee: So, 2 ways you can do it…

You can say… “I have this great system, I’m a personal trainer or a 60 year old male and I learned how to increase my own testosterone by doing this method”.

You can either sell it as a one-time digital product. Let’s say it’s an eBook and you sell it for $20. You work really hard and follow all of the marketing strategies that I teach and all the people you interview teach, whether it’s facebook, pay-per-click ads, media buys or whatever and you sell 100 a month.

So month 1, you have $20 a sale X $100 sales, that’s $2,000 gross. I’m not going to say net because I don’t know what you’d spend but let’s just use that number. It’s $2,000 you’ve made which is great. So you had a good month but now, come the first of the next month you’re back at zero and you have to repeat the process and work just as hard to get another 100 people. That is model 1 and that’s what a lot of people do.

However if you say, “I’m not going to create just one info product, I’m going to create the testosterone boosting inner circle. Where every month I’m going to interview a different expert about different ways to increase your testosterone”. Maybe this months it’s a nutritionist and next month it’s a personal trainer and the month after that it’s a doctor. There’s different content and now you’re talking $20 a month.

If you’ve got those same 100 people, you got $2,000 for the first month but for the next month you’re still at $2,000. Whereas with option A, you’re at zero, now you’re at $2,000.

Let’s say you work as hard again and you get another 100 people and you’re now at $4,000 for the month. You get $2,000 from your existing customers and another $2,000 from you’re new subscribers versus the other way, if you worked as hard you have $2,000.

So with the same amount of effort your income can rise exponentially.

I’m not even talking about retention and all the other things that can happen along the way but that is really a general idea of the income potential. I personally won’t touch a business now unless there is some kind of recurring revenue on the back end.

Here’s the thing too, psychologically it’s a shift, so if you are doing a content based continuity like a membership site, you get away from “I got to get more customers, more, more!” and you shift to “OK, now I have 200 people, I’m going to take care of them. Now I’m going to deliver incredible content and connect with them.” It’s a subtle shift but it’s so much better to do business that way, at least I feel it is.

I’m a huge fan and plus there is a saleability factor. Down the road if you want to exit, it’s a lot easier to sell a business saying “We have $30,000 in recurring revenue each month, are you interested in buying the business?” versus “Well, we had a good month last month but now we are back at zero.”

Joey Bushnell: So specifically Ryan, for online marketers, what types of products and services lend themselves well to the continuity model? We’ve already mentioned membership sites, are there any other options where we can get recurring income from it?

Ryan Lee: Absolutely, well there is the other side, if we want Testosterone the supplements, so there is physical products delivered every month. Now there are a couple of ways to do that.

Let’s say it’s a supplement, and again using testosterone, every month they are going to get a new supply and they will never run out and they don’t have to worry about going out to the store. Every month they are going to receive this same thing. Supplements lend themselves well to that. Or there is a popular site now called the dollar shave club so every month they are getting the same thing, they are getting more razors, so that is one model.

Another model which is becoming really popular now is more like a surprise when you don’t know what you’re going to get. Birch box is a great example of this. They have about 200,000 people paying $10 a month. Every month they get samples of health and beauty supplies. So there could be a sample of lipstick, moisturizing lotion and eyeliner. So it’s like a little surprise every month.

These used to be popular, the book of the month club, my friend signed me up for a beer of the month club or the wine of the month club. Then there is other physical stuff where it’s similar like DVD of the month. So you don’t know what the content is going to be but it’s the same format. Every month they get a new DVD with new trainings, or maybe it’s an audio CD or in a print newsletter. Those are more continuity models to look at.

There is software, the App on tap type thing, where it’s a service. Maybe it’s a web based shopping cart solution or an email auto responder solution. Or a software that let’s you do keyword search to see what other people have been using. There are so many opportunities in the software space. I’ve had one for over 10 years that helps personal trainers to create online fitness programs. Those tend to be the best.

Then like I said, there is a membership site and you take it to the next level, it’s higher priced coaching. I have a program now where it’s $5,000 and people have access to me through a private Facebook group. That is how it is delivered through Facebook.

There are lots and lots of options to create recurring revenue but I do believe that every business should have some kind of continuity program.

Joey Bushnell: Sure, I think you may have already answered my next question Ryan, I was going to ask what is the best way to offer high ticket continuity is. Would you say that the coaching and mastermind model is a good option for that?

Ryan Lee: Bigger ticket in general doesn’t necessarily mean more content. That is where people make a mistake. They assume “I’m going to charge them $200 a month so I have to give them 100 articles”. Which, it’s actually the opposite. Often, the more you charge the less you give.

I don’t mean less in terms of quality, you want to give higher quality but they usually pay for access to a person, coach, guru, an expert or something. So the higher up you go it tends to be less content but higher quality and better access to whoever this person is, that is the figure head of the company.

Joey Bushnell: My next question was around membership sites. Do you have any good tips for running a really good membership site, that is ideally, making us a lot of money?

Ryan Lee: Here is the overall thing, it’ a question you are going to have to ask yourself at the beginning and it’s a bit of a mind shift. This is what a lot of people do but instead of saying “What is the least amount of work and effort I have to do to create a $97 a month program?” That is the idea they come in with “How do I put it on auto pilot, how do I set it and forget it?”, “What is the least amount I have to give to charge $97?”

That’s one way but here’s what I recommend instead of saying that, you say to yourself “You know what I have this program that is $97 a month, how can I deliver so much value that my members feel like it’s worth $,1,000 a month and they become my biggest marketing source because they can’t wait to tell everybody.” That is the shift.

Now when you start thinking like that in terms of the latter, in terms of how much more can I deliver to them in terms of value, connecting and showing how much I care about them and their success. That is when people have real businesses not just a product at $17 a month and then it fades away after 3 months and then they have to start something new.

Everything has to be run through that filter so whether it’s going to be a surprise bonus webinar, an in person meet up, a free coaching call for everyone, or you just got a discount on this software so they only have to pay this much for it. Things such as that which people don’t expect that you are going above and beyond.

It’s the old saying, people don’t care how much you yell until they know how much you care. That is the key and if you truly treat them like your family and friends and show them that we are here for you, they’re not just there for you to fill your wallets with more cash, they’re going to be there in the long run. I’ve had people who have been paying members with me for over a decade because they know I care about them.

That is really the key, it doesn’t have to do with technology and upsells and look at this cool  plugin. All of those bells and whistles are cool and they are great to add on but unless you have that base and you are building that real solid business, everything else doesn’t matter. Everyone gets it wrong and they focus on the bells and whistles, a cool button and all that crap that doesn’t matter unless you get the core right. That has been my mission to show that “Hey idiots, you’re focusing on the wrong stuff!”

When I first started in the fitness industry all my trainers who were the most successful now in the industry they get it. The ones who struggle are the ones who don’t get it.

Joey Bushnell: In terms of front end offers for things like membership sites and software Ryan, I’ve seen different ways to get people in the door.

Some people offer a free trial, some offer a dollar trial so it’s low price but they have given their credit card details. Some just offer the full price from the beginning.

Do you test different things or do you find that one of these approaches works better?

Ryan Lee: Yeah I’m always trying different things. It depends on your goal.

In general what I’ve seen across different markets is that if you are offering a trial, let’s say a dollar trial for 14 days which seems to work pretty well, again depending on how much content you have and what the model is you are going to get more people in to try. You are going to get some tyre-kickers but at the end of the day you’re going to get more people in. It’s always good if you can offer some type of trial.

What I’ve been doing lately is offering one year memberships to show that people come in and they’re committed as opposed to just monthly.

Those are two things but what I’ve done which doesn’t work quite as well is charge a sign up fee and then a monthly fee. Those tend not to work as well people don’t ant to have to pay more upfront, they want to try something and if they don’t like it after a couple of weeks they are out and they only lost a buck so it’s not a big deal.

Joey Bushnell: What’s your opinion of forced continuity? Is that fair game or slightly unethical in your book, Ryan?

Ryan Lee: It used to be the big thing then what happened was people became really sleazy with it. This was maybe 2 or 3 years ago, all the credit card processors started black listing all the marketers because they would sneak it in.

They would say “You’re going to get this free CD and your bonus number 1 is this info product, bonus number 2 is a coaching call and then in really small letters, bonus number 3 you’re going to get a free membership to my newsletter and then in small print, after the first month it’s only $97” and the people don’t even know that is the only time they mention it so people don’t know they are going in for recurring billing. That is bad.

If you are completely upfront about it and say “You can try this free CD because I’m offering it to you as an ethical bribe for you to try my $97 a month program.” If you are completely upfront about it then it’s fine. But you have to say it 3 or 4 times, put it near the checkout button, on the email and everything.

But I don’t like the term forced. If you think about it words mean a lot, so if someone forces you to do something how do you feel about that transaction? Not very good. “Join this program, Joey is going to force you in to pay” who the heck wants to do business with that guy?

I’ve done optional, I had one big launch where you were able to do a dollar to download this whole program and it would give you for $97 my newsletter however on the checkout you were able to remove that $97 a month. I had about 20% of the people just do the dollar for all the videos and then remove the $97 a month, which was fine because they were going to cancel anyway. Less customer support and less headaches. If you are going to go that route be completely upfront or at least make it an option.

Joey Bushnell: So how do we retain people for as long as possible?

Ryan Lee: That is really the big question. How do you? Because if you don’t have good retention, you don’t have a continuity program. If everyone stays for one month you basically just did a one-time deal, it’s not recurring revenue.

What I found that works well is curiosity, peaking their curiosity and teasing. The two most powerful words in recurring revenue and continuity income are “Coming Soon”. Telling them what is coming.

Using that testosterone example if someone is in a Testosterone boosting club and you say “Coming next week or next month we are going to do an interview with a doctor whose patient gained 17lbs of muscle in 3 days by eating this natural supplement. Stay tuned that is coming next month.” If you were thinking of canceling now you’re thinking “I’ve got to stay for another month I have to see what this is”.

All the other things like using points, values and contests, all of that stuff helps a little bit. But I like to focus on the big stuff which is curiosity and getting them excited by what’s coming next.

Joey Bushnell: So in a membership site Ryan, do you like the model where people put all the information in there and anyone can access it at anytime or do you prefer the route of drip feeding the content with a set timer and whenever people enter no matter when they enter, it’s drip fed. Do you know what’s the best option there?

Ryan Lee: There are two things you are talking about because it depends if you are talking about evergreen content or content that is always updated. So when I say evergreen content and then is it a fixed term, so give me another topic Joey.

Joey Bushnell: OK let’s go with what we know, let’s go with marketing funnels.

Ryan Lee: Let’s say it’s “how to get more traffic to your website” and let’s say it’s an evergreen topic that has an end date. So it’s a six month program and every week the are going to get a different video lesson. It’s $29.95 a month for 6 months so the first day they come in everyone is getting that first video I don’t care if you come today or 2 months from now everyone is getting video 1. So that is ever green and that is fixed content and that’s fine.

If you give it to them all at once they might get overwhelmed, however if it’s new stuff that’s coming on, let’s go a little bit deeper and say it’s all about “social media traffic”. You know how it is, everyday something is changing. Everyday there’s a new rule on Facebook, Youtube or LinkedIn so it’s always changing. You can’t have that same content, it’s got to always change.

So if someone comes in are they going to have access to everything that you’ve done in the past and now? Or are you just going to give them all of the latest stuff?

There are some people on one side who say just give them the new stuff and others who say give them everything. I still go back and forth. I see the value in giving them everything.

I like to put myself in my members shoes so let me ask you Joey, if there were 2 memberships about social media traffic and they were both $29.95 a month. One of them says come in and you don’t only get access to the latest stuff but you’ll get access to every single thing we’ve done in the past, that is option A.

Option B is it’s $29.95 a month and you get this newsletter, this update and all the latest ones but you don’t have access to the archives. Same price which one are you going to take?

Joey Bushnell: I’d take the first one.

Ryan Lee: So that’s the big thing we all struggle with. There is what’s best for the members and the member experience and what would you want? Then there is the business sense if you give it to them all at once are they going to get overwhelmed. Is it going to lead to more cancellations because they have access to 50 hours of training video and you add a new one and they just can’t keep up so they cancel.

It depends on where you want to go with it. I still don’t know the answer. Personally I like to put myself in the shoes of the clients and give more and if it’s too much, it’s too much, but I try not to overwhelm them I try to make it simple to consume.

Joey Bushnell: For membership sites do you have a membership site software that you recommend?

Ryan Lee: I’ve used member gate for a long time. I’ve been using wishlist lately and I’ve literally just signed up with a new software program 2 days ago but I don’t want to mention it yet because I want to test it before I fully recommend it. But it looks really cool and I literally was on the phone last night with the tech person going through it and there’s some really cool things. But I don’t want to say it yet until I’m fully in and decide if it’s really good or crap. So stay tuned.

Joey Bushnell: I know what you’re referring to Ryan I bought it as well and I’m hoping it’s going to be as good as it looks as well! (Sidenote: I can’t speak for Ryan but I was referring to OptimizePress 2)

My final question was how can we make money on the back end? Assuming someone has been a customer of ours for a set period of time how can we monetize them further? Upsell them perhaps, maybe get them into a different program, do you have any tips for that?

Ryan Lee: There really is no specific tips it’s making sure you are delivering on the first things they buy. If you’re into memberships or you have some type of program to buy you have to make sure it’s a great experience for them because if not I don’t care how good your sales process is you are not going to sell them again. It’s like fool me once shame on you, fool me twice shame on me.

You need to make sure, again without the risk of sounding repetitive, you’re now in it from the start. But with that being said, let’s assume you do and you are doing a good job, the beauty of that is you’ve already built trust and a relationship. It’s much easier to sell on the back end.

I did a video recently for selling an event, it was me sitting by the pool then 2 of my kids came into the middle of it during the video. They were playing ball and said “Oh Daddy what are you doing?” It almost doesn’t matter but I will say the big money will happen and the way you get to the next level is by creating more and more products and by being more prolific.

I’ve made the mistake in the past saying “I don’t want to offer too many products or feel like I’m always selling stuff” but if you are just giving them options by offering this program and that program then give people more chances to buy. They will buy what they want and they won’t buy what they don’t want and that’s fine. That was a little internal barrier I had to get over.

But the bottom line is create sales processes for the buyers that are honest and full of integrity. It could be as simple as you saying in a video “Hey it’s Joey, thanks for being one of my loyal members. It’s a great new program and it’s going to help you with this, this and this. If you are interested click the button below and if not that’s fine too”. That’s it. You’ve already built trust, you’ve shown that you are here to help them and then the back end sales is easy but again be prolific and create a lot. That is my advice create a lot.

Joey Bushnell: Would you have a range of prices in there as well? Maybe someone comes in at low ticket, you deliver on that first thing. Then you try selling them to a medium ticket then a big ticket?

Ryan Lee: Yeah but it doesn’t have to be so linear, in other words I’ve had people come into my funnel at a free email, at $100 product, a $500 product and people come in at $2,000. They come to a $2,000 workshop and say this is the first time I’ve ever bought any of your products and it’s a big investment right from the beginning.

That is why you have to be prolific and create a lot of different stuff because you just don’t know what is going to work. Something you might think of as a throw away program might fly off the shelves. Something you put 2 months into might just bomb. You can’t be afraid to fail, you have to put yourself out there.

Joey Bushnell: Brilliant, well thank you Ryan for taking time with me today and giving us some really great information. Hopefully everyone is really excited, if they have not tried it already to get some continuity going in their business. If they are already doing it then they have some tips to improve and make it better. Thank you so much for your time. Where can people find out more about you and get more of your great information?

Ryan Lee: The best way is probably my site Ryanlee.com, I have a free newsletter I put out, blog posts and content almost every day. Quality stuff I hope, I think a couple 100,000 people would agree!

Joey Bushnell: Great, I’ll put a link for everyone to go and check that out, Ryan thank you once again for taking this time out with me today.

Ryan Lee: My pleasure, thank you for having me.

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