This is a transcript of the OMGrowth Podcast episode 59.

I’m Lanie Lamarre and today’s guest is none other than the course consultant herself, Melody Johnson…. and Melody and I taaaaalllllked. I think I thought I had one of those hour-long interview podcasts – in fact, talking to Melody made me wish I had one of those because we went on… and on… because running a group program or membership successfully is flipping magical to me. There’s so much work that goes into acing the onboarding for every single person who joins, the processes and content creation it takes just to maintain that recurring income and membership, the constant improvement mode you’re inevitably in with this business model – we talked about it all but I had to shorten what we recorded to fit this podcast episode format and it still feels like it’s bursting at the seams. There’s so much misleading information about how easy it is to make a gazillion dollars overnight with a membership that will be your money faucet that Melody’s super-professional, grounded in reality expertise is exactly the point view I want to hear from and I’m stoked to be bringing her and her OMGrowth-based insights on what you have to know to run a successful group program to you today.

Lanie Lamarre:
Melody, welcome.

Melody:
Hey, so excited to be here today.

Lanie Lamarre:
I am so excited to have you. Let’s get into it. So, with data, talk data to me. You dropped the MRR and ARR. What are they and why do course creators and membership owners, membership founders, why do they care about MRR and ARR?

Melody:
Yeah. So ARR is annual recurring revenue and MRR is monthly recurring revenue. So, for instance, when we’re tracking the income that’s coming in, whether that’s through monthly recurring revenue from our membership, our group program or our cohort or our subscription-based business, we want to know what is the money that is generated from the base package. That’s the monthly recurring revenue. And as we continue to receive that revenue, that is contributing to the annual recurring revenue. So we have our monthly and we have our annual. Makes sense. But what can be challenging to track for membership owners and group founders is all the data sources. Where are we getting the dollars from, right?

Melody:
So for people who will listen to this, you’ve probably used some sort of payment process or maybe used a course platform to receive payments. And, of course, well then, maybe you have some deductions because of the processing fee or whatever and then you’re trying to track all of these other metrics. Maybe you have one-off products that are not really related to your main offering, which is your membership or your group program. And now you’re just looking at the numbers and thrive cards saying, “Is this accurate? Are the numbers inside here a true representation of what’s actually in here? Because I have to go do my taxes and I’m not quite sure what’s going on here.”

Lanie Lamarre:
Worst feeling ever.

Melody:
Yes. And I’ve done that because I myself have a membership and I’m looking at the numbers going, “What the heck is going on? I’m so confused. These data sources are saying this year, this is saying here and now I have this other stuff. And what’s going on? I’m not a numbers person.”

Lanie Lamarre:
Okay. So, what do you do?

Melody:
Yeah. So what I recommend doing is using a single source of truth. And what I like to use personally that has worked for me is to use a software that’s free called ChartMogul. That’s chartmogul.com. It’s a free tool that will help to input your data sources, specifically payment platforms like PayPal and Stripe, and will take that data and it will actually create this beautiful dashboard with a full graph visualization chart that will actually share with you the data of what’s actually the monthly recurring revenue every single month. And you’ll also have something that’s called a cohort analysis. And, essentially, what a cohort analysis is, is it will actually track when students came in during this month, how many continued on and where did they fall off.

Melody:
So what you might see is you have a big launch, okay? So you have a group program launch, certification launch, membership launch. You have people join and then you have something that’s called churn. So churn is actually the rate at which you lose customers. So it’s actually a percentage. And, obviously, the lower your churn rate is, meaning the less people leave, the better it will contribute to your annual recurring revenue. Meaning you generate more sales from the front end and you retain your customers, which contributes to the growth of your annual recurring revenue, right? So you have, instead of people falling out the funnel, you have it where it comes in and it grows at the base.

Melody:
And so I talk about this a little bit more inside of a free training that I have. But, essentially, what ends up happening is you can actually see money coming from your main users or however you call them. Your visitors, your customers, your clients. You have main income coming from those customers. And you also have something called expansion revenue, which is basically revenue that’s not tied to the original purchase price of the main product that you’re selling, but it’s actually additional revenue. And most business owners are already doing it. They’re just not aware that that’s what it’s called. It’s just supplementary services or products that will complement the main package or offering. So for a group program, that might be annual retreats, it might be a one-on-one intensive, it might be a power hour or a licensing agreement or something like that.

Melody:
So there’s two kinds. I don’t want to give everything away because we could talk about this for hours, but there’s different kinds of expansion revenue that you can use in your business. And what’s important to actually track first are those two numbers. What is the rate at which you’re losing customers in your group program or membership? And then, also, what is your monthly recurring revenue and what do you want to improve? How can you increase your monthly recurring revenue so that you retain the customers you already have? Because as we’ve said, the money that comes in, we want to keep and we want to grow.

Lanie Lamarre:
You had me at dashboard, first of all. Oh, and you can see how all of this plays out on a dashboard. I love the creativity behind that, because you can actually wrap your head around what the numbers look like. My mind is already spinning in terms of, how does that information apply to everything else that you do? Because you’re essentially calculating what the client lifetime value is for your membership. And when you know that number, you know how much you can afford to spend on ads, you know whether you can afford to sponsor that summit, you know how you can spend money to be able to generate more. Not only that, you can forecast how much more money you can afford to make when you invest in these other strategies. Which that’s exciting to me. That’s the most exciting to me.

Melody:
Yeah. And I think that we’re just not taught this, right? We don’t sit in school saying, “Can you explain to me what the customer lifetime value of this is for Susie and Jared?”

Lanie Lamarre:
Yeah.

Melody:
We don’t learn this. And it’s kind of a funny, interesting world that we live in. Because in the SaaS world, this is very common knowledge. The whole process of the cohort analysis, the customer lifetime value, calculating what your cost per acquisition is and then seeing how you can increase your recurring revenue. And that’s why that ChartMogul software is there. It was actually created for SaaS or subscription-based business models. However, group coaching program founders and memberships could absolutely benefit from it. And it’s free until you hit 10,000 monthly recurring revenue.

Lanie Lamarre:
And at that point, if you’re bringing in those kinds of numbers, you can afford to pay for the dang software. So bring it on.

Melody:
Yeah, exactly.

Lanie Lamarre:
Tell everyone not only where they can find you, but where they can find that training you mentioned. Because for selfish reasons, I will be tuning in as well.

Melody:
Yeah. So, well, I do have a free tool that I created myself and it is called a retention calculator. So all the numbers that I was talking about-

Lanie Lamarre:
Yes.

Melody:
Yeah. So we were talking about churn and you’re thinking to yourself, “Well, how do I calculate that? What’s the actual calculation?” Well, I do have a retention calculator that will do all the heavy lifting for you. So if you go to http://www.thecourseconsultant.com/retentioncalculator, and I’ll share the link with you, Lanie, you will be able to input the data sources that you have. And the free training that I was talking about, it’s actually a three-day workshop series called The Customer Success Sprint. And there’s a group program audit, basically a workbook that’s associated. Yes, you can type it in. It’s cool like that. And you’ll be able to take a look at all of the important things we talked about. Calculating churn, identifying what your monthly recurring revenue is, what your goal is for ARR. And then also to identify some opportunities for growth in your membership through curriculum design, which is how I kind of got started in instructional design, and then creating just a checklist of what ways are going to make this change. At what point are you going to help to make and iterate this change with your team and with your customers.

Lanie Lamarre:
And I want to emphasize, look, if all this sounds like, “Oh, wow, I’d really like to know that, but I’m not a numbers person. I can’t do this sort of stuff.” Listen, you have a team. I would assume if that’s how your thought pattern is. Get somebody on your team to take the training and do this heavy lifting for you and report back numbers because that’s what the boss does. That’s what wearing the bossy pants means. It means knowing your numbers and having a plan for how you’re going to use those to improve how you’re operating. So, even if you’re not the person doing this in your organization, you need somebody in your organization coming to you with those numbers. So set yourself up for success on that front by either registering for it yourself or signing somebody else up for it.

Melody:
Yep, absolutely. Yep, it’s a great training. And I’m always open, if people have questions, to talk about it. Because not many people, at least that I’m aware of, are talking about this.

Lanie Lamarre:
That’s so great. You’re so great. I’m so glad you’re here. Thank you so much for being here, Melody.

Melody:
Absolutely. Thanks for having me.

And she’s right, you know? Not a lot of people are talking about what numbers you need to know to be and to stay profitable in group program and membership models. It’s a lot easier and sexier to talk about how recurring income is like a money faucet stream, but what do you need to get that tap flowing in the first place and then keep it flowing is a totally different thing. I love Melody for that and you know I’m signing up for that retention calculator, and you can too in the shownotes. There will also be a link to that 3-day training in the shownotes as well. And I actually met Melody on Instagram so I know she’d love if reached out and said hi to her there too https://www.tiktok.com/@thecourseconsultant
https://instagram.com/thecourseconsultant