How To Package Your Expertise Into A Subscription

December 20, 2019 |  

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About this episode

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Marc-Andre Seguin launched JazzGuitarLessons.net in 2009 to share his knowledge as a guitar teacher. 

To read a transcript of this episode, click here.

Marc-Andre Seguin launched JazzGuitarLessons.net in 2009 to share his knowledge as a guitar teacher.  

Seguin started by offering YouTube videos and PDFs but soon realized his content could be stickier and more profitable if he transformed his business into a subscription-based company (which was strikingly uncommon in his industry). 

In this episode of Built to Sell Radio, learn:

  • How Seguin locked up his content to increase profit 
  • Why creating a bundled package was the key to improving his bottom line
  • The numbers behind cancellations or ‘churn’ you might not be considering
  • How recurring revenue can be implemented in any industry

Want to transform your experience into a subscription model? Leverage The Automatic Customer Builder inside The Value Builder System™ — get started for free by getting your Value Builder Score.

Our guest

Marc-Andre Seguin is the webmaster, mastermind and teacher on JazzGuitarLessons.net, the #1 online resource for learning how to play jazz guitar. He draws from his experience both as a professional jazz guitarist and professional jazz teacher to help thousands of people from all around the world learn the craft of jazz guitar.

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Transcript

John Warrillow:                Hey there, it’s John. We’re going to do something a little different on today’s show because here I want to talk about one of the key drivers of the value of your company. In particular today, we’re going to talk about recurring revenue. This is an idea we’ve been kicking around internally for a while. The idea of focusing on one of the eight key drivers in an episode with an owner who hasn’t necessarily sold yet, but is starting to position their company to be sold. And that is exactly the position that Marc-Andre Seguin falls into with his company, JazzGuitarLessons.net. He’s taken a business, jazz guitar, or jazz guitar lessons, which is traditionally not necessarily known as a recurring revenue industry or model, and done exactly that. Transformed it into a paywall enabled recurring revenue business. Here to tell you the rest of the story is Marc-Andre Seguin.

John Warrillow:                Marc, welcome to Built To Sell Radio.

Marc-Andre Seguin:        Thanks. Thanks for having me.

John Warrillow:                How did you get into business for yourself? Because you’re a guitar player and teacher, I understand.

Marc-Andre Seguin:        Yeah. Actually it’s a long story, but back in 2009 I was a full time jazz musician located in Montreal and as you know, artists struggle to make ends meet. It’s become a cliche plus I was a little bit overweight, I was a fat starving artist, if that makes any sense. But at that point I started a blog where I said “There’s a lot of things happening online.” But that’s even before Google took over YouTube, whatever, the web was, I wouldn’t say young, but it was still 2008 right? So less mobile phones, no iPads and whatnot. So I started this blog at jazzguitarlessons.net where I would just share lessons. I said if I can make a few hundred bucks out of AdSense, which is the other side of AdWords, right? Just make content and have people come and look for it and learn guitar stuff, and chords and jazz, I’d be happy to, I don’t know, pay the rent with that stuff.

John Warrillow:                So this business model was, and for folks who maybe haven’t gone deep in this you’re essentially building a blog, driving eyeballs and then allowing Google to run its advertising on your site. When you see those sponsored by Google ads and those would generate some revenue. That was your original business model.

Marc-Andre Seguin:        That was the original plan because I had no training and no background and no idea how to build online products. Also, I would use affiliate links from Amazon because I know jazz is an American art form. So US citizens looking to learn jazz on the guitar would go there and say, “Oh Marc recommends that book.” And if I use my Amazon link, I made, I don’t know, my record month was probably $75 off of Amazon affiliates.

John Warrillow:                Right. Again, so for people who don’t know what that is, essentially you have a website, lots of traffic. If you put an affiliate link for a book, someone goes from your site to Amazon to buy that book, Amazon cuts you a very, very small check, as a percentage of that sale.

Marc-Andre Seguin:        Yeah, it’s incremental too, it used to be like 5% for your first 20 items and then 6% if you sold more, et cetera. So yes, that’s actually how I started the blog. And I realized that even to this day, the basis, the blueprint of pages that attracts the visitors is actually the same basis that I built back ten years ago. It’s about 300 or so pages and it’s all SEO–search engine optimizations, and I’ve tried several experiments to make things happen with paid ads. So to generate leads from paid sources, I could get leads for very, very cheap, we’re talking 15 cents, 30 cents US per lead.

Marc-Andre Seguin:        However, I realized that the highly converting people are the visitors, the guitarists that search for us, that find a solution and are like, “Oh wow, that’s what it is.” So for the first five years I built a basis of content including YouTube videos, where I put my big face on YouTube and people started to like me, and people started to download those free PDFs and eventually it turned into a business, maybe five years ago. It’s been 10 years. So the first five years were content building. Second five years were on the business side.

John Warrillow:                Got it. And the content is how to learn how to play jazz guitar, which is a form of guitar, which has some unique [crosstalk 00:03:35]

Marc-Andre Seguin:        Improvisation aspect is the biggest differentiator I guess. So it’s like, I know it’s a niche of a niche and when I talk with my friends they’re like, “Why didn’t you make a guitar website? There’s way more traffic.” Yes, but there’s way less competition in jazz. I’m the only one.

John Warrillow:                Yeah. The old niching down monopoly control. Okay. So you’ve got this business, you’ve got a little bit of revenue coming in from AdSense, a little bit of revenue from Amazon affiliates. How much revenue did you max out at on a say monthly basis, from those two sources before you made the switch to subscription?

Marc-Andre Seguin:        That’s a good question and I do remember because it must have been 2011, mid 2011 or 2012. I think combined, it was about seven or $800 in a given month. For a poor jazz musician. And I was a kid. It was a good lump of money. However, that was a dead end because you don’t have any control over that, you don’t have any control over, I feel like percentage, you don’t control over who clicks on your ads or where, and if Google is going to change our policies whatever. So, the other thing that I didn’t mention, I just listed private lessons. I’m for hire. I’m like, you like my YouTube video, take an hour with me, pay me on PayPal. It was a ridiculously small amount, maybe 30 bucks per hour. So I got some people from Australia, from the UK, from the US that get lessons with me, but most of the revenues were AdSense and Amazon.

John Warrillow:                Got it. And so what triggered you to want to explore a subscription model?

Marc-Andre Seguin:        It’s a really long story. Actually you interviewed Scott Miller in Built To Sell Radio, episode 128. I met this guy, and Scott was actually a guitar student who started to give me some business advice and it came at a right time, because I’m a trained classical musician, jazz musician, and I’m also a trained statistician. So when I hit my 28th or 29th birthday, I’m like, I’m not going to be a musician for my whole life. So I might as well get training. And so I’m a total math head. I’ve actuarial training, I’ve worked at StatsCan here and at citizenship for the government. And I wound up looking at my life and going, “Hm, I can’t do the nine-to-five, I’m not interested, let me build something.” Turned around, I had this blog running that would basically pay my rent for no maintenance.

Marc-Andre Seguin:        So coming up with Scott, Scott basically took me by the hand and he said, “You know all these PDFs that you give for free for download, your sheet music that people love, why don’t you lock them up behind, not a pay wall, but just an email address. You know, sure Johnny can get my sheet music, just put your email here, it’s free.” So I started to generate leads and tons of them. So I started to use, not Mailchimp, the other one, AWeber, to send these massive emails, to say, “Hey guys, I’ve got this ebook and you can buy it for 15 bucks, and it’s 15 bucks only this week.” So I started to run these promotional sales, and sorry, the answer is going to be very long on that.

John Warrillow:                That’s okay that’s why we got you here on the show. That’s great.

Marc-Andre Seguin:        And that was going on for about two or three years. And working with Scott as a coach, basically we made a plan to forecast revenues. Like how much money do you need to live and not go into that nine-to-five job? What’s your revenue goal from that blog for which you’ll be selling electronic products? So, first year went well, second year went well, and I realized I was producing more and more content and more and more, and that craze of, Udemy I don’t know if you remember everybody was selling their own, I guess value builder system has its own courses, right?

Marc-Andre Seguin:        And I got to a point where I migrated away from Udemy, I built my own platform to gain control, and eventually I realized that the pressure of running a constant promotion and saying, “Scratching our heads every single month, how are we going to make ends meet? Which products are we going to promote? What’s the spin to the email promo? What should the landing page look like?” Eventually I got, not fed up, but tired of this system and said, “Hmm, let’s bundle this like a Netflix offer and just say, just get in, it’s 20 bucks a month. Just get everything instead.” So that’s the short answer.

John Warrillow:                Good. I want to go more. I want to go further. But once you, before you flip the switch to become the Netflix of jazz guitar lessons, what was your revenue in a typical month from those one off promotions? What would you typically generate, ballpark?

Marc-Andre Seguin:        Ballpark I’d say 5,000 to 8,000 a month.

John Warrillow:                Okay, so it’s started to pick up at this point. So you’re starting to get traction.

Marc-Andre Seguin:        It was a good time too because I would start to hire people to work with me, which was not possible being a single blogger. I have this ebook for sale and I have this video course, and please buy it or else I’m going to starve so it started to be more of, I have people, I’m starting to gain traction. I hired in the Philippines, which was an amazing learning experience and management experience, for spending very little money on employees, but actually being able to train them and show them how to do customer support and things like that. So, the ball was already rolling. But it was time for a change to say, “Well, if I can lock someone in at 20 bucks, but he stays for five months, that’s a hundred bucks for a couple of courses this guy would have purchased. However, the marketing efforts and everything behind it becomes easier. Well, you know right? Once you start getting recurring revenues like, you float, it’s like wow, okay. Things are just coming in nicely.

John Warrillow:                So tell me about the transition. So you came up with this offering, which was get everything, all the white papers, all the YouTube content for $20 a month. What was the reaction like?

Marc-Andre Seguin:        Actually it was cheaper than $20 because I was still experimenting. So reaction was good. I would say, okay to good. Because there’s a crucial part of it that we only found out in the past 18 months or two years. And I’m going to tell you about it, on a marketing side it would be very obvious to say get all of this value, right? Like Netflix, you pay 10 bucks or whatever, 10, 12 bucks, and get all of this. And it means that your wife gets to choose her TV shows, and you can have a kids account that it’s like, okay, it’s based on the amount of content that you get, that makes it worthwhile.

Marc-Andre Seguin:        For music and especially for jazz, which I often compare it to chess. If you want to learn chess, you start to learn how the the pieces move around and you’re like, Oh, this is it. Okay, I got it. Then you play a few games and someone beats you all the time, Oh, I need to ramp up my game? Where do I begin? Or lesson one? And then there’s a certain point where it opens up to such a large extent that you don’t know where to go. So the crucial key, learning factor is, stop selling the jazz guitar subscription like an everything Netflix deal. But start selling it like this is what’s going to help you organize your stuff and we’re going to provide you with, it’s like start right here, and do this first. And once you’re done, go here, go here.

Marc-Andre Seguin:        Because we’re not providing more value than there is already on YouTube. Even on my free stuff, we’re just providing an order of execution, a systematic, A to Z, step-by-step, week by week programming. And that was like the switch to “aha moment” where we were like, people are overwhelmed, don’t sell them more stuff. Start selling them less but put the blinders on and focus on one thing. So that was a crucial learning part. Then selling it became really easy.

John Warrillow:                So that’s interesting. Thanks for sharing that insight. How did that play out in a marketing stats? Because if you have a linear trajectory to what you’re passing out, section one, then it would imply there’s a start and an end to this subscription, how do you avoid implying that, that’s the case? That people should start and end, go ahead.

Marc-Andre Seguin:        It’s a good question. And the answer is super simple. Nobody really gets to the end, because we have a massive amount of materials and we’re still producing it on the paid side. So, I’ve devised a system, I call it concierge, because it’s a nice French word. And actually it’s like the meta-course above all other courses, that takes you by the hand and go, this week it’s actually a weekly program, almost like a workout program. You print it out and it’s like this is week one. Actually if you are already in jazz, you might look at your week one, it’s only three days. If it’s really challenging for you, your week one might be 18 days. It’s really up to you. But, to answer your question, by playing it out week by week like this and because of the amount, the sheer amount of materials that used to be an overwhelming factor and now it’s playing in our favor. Totally, because you’ll never get to the end of it.

Marc-Andre Seguin:        And the other thing is, we know by the demographics and psychographics and by the type of customer we’re looking at, the entry level is you play guitar but you are interested in jazz. And we’re taking the barrier of entry and we’re really lowering it, so it’s easy to get in. Less like elitist jazz, like this classical art forms. So we’re lowering the entry and the ends point. Someone that completes everything in our curriculum, will be that guy that goes to university or college, like Berkeley college or McGill in Montreal, will go I want to audition, I want to become a first year undergrad student. So that’s how we avoid people seeing an end to it. Because to be frank, no one has actually reached the end or they come in and they’re already too qualified. So this is not for me, like they’re above that level.

John Warrillow:                Right. Right. Got it. What’s churn like for you guys?

Marc-Andre Seguin:        Currently I would say between 9% and 11%.

John Warrillow:                So, that means, per year? Per month?

Marc-Andre Seguin:        Per month.

John Warrillow:                Per month. And do you measure that by customers or by revenue?

Marc-Andre Seguin:        By customers. Yes. I’m a statistician, right? So I have a detour way to look at data that tells me what I want to know. I do know that people paying nine or 11 or 15 bucks have the higher churn, than people that are really interested in getting at that 30 or 40, 39 US. And it is the ultimate goal within a reasonably short amount of timing or two years, to ramp up the amount of students, MRR students, people on the monthly to 12, 13 or 1500 and lower the churn to 3%. Because churn is, I learned that in the John Warrillow, The Automatic Customer, the more people you have at a 3% churn as a thousand people, is not the same as a 3% churn in 10,000 people. A big lesson on my end.

John Warrillow:                Yeah. Just the sheer number of people you have to go sell because, 3% of a hundred is three, but 3% of a thousand is 30, right? Interesting. Okay. So your churn, that may sound quite high to people who are used to hearing about business critical software, or where you make a huge investment in infrastructure in order to subscribe. But relative to information products, I would say around 10% is pretty common in fact good. I think, so you set another way for, if you had a hundred customers coming into a month, 10 would cancel at some point in that month. And so the average lifetime of a subscriber is just under a year, right? Is that fair to say?

Marc-Andre Seguin:        Somewhat. There are different levels of memberships that we’ve tried experiments with pricing, and we’re still figuring things out. But yeah, the accurate and if you look at the overall, I think maybe I picked only the unlimited, like the Netflix style 9% to 11%, but if you look at the overall picture, I’m a freak for data. So, in the past I would say six months or so, we renew who we lose. So in a given month, lose 30 gain 30, and we’re I would say, flat-lining. The good thing about that is the newer people joining in spend a little more. So the average dollar sale is much higher, instead of nine bucks it’s like 29, so the impact financially is the same. Even though you look at the amount of people, you look at your churn, you look at everything, it doesn’t look good. But when you look at average sale, it’s a win.

John Warrillow:                Did I hear you correctly in saying that the churn rate among customers who paid more, is actually lower?

Marc-Andre Seguin:        Yes, totally.

John Warrillow:                Isn’t that interesting?

Marc-Andre Seguin:        Yeah. It’s like people write me emails and tell me almost how I’ve done them a favor. In making all these beautiful materials available at $39, while people that pay $9, will complain and cancel and want to come back six months later, at the same nine bucks a month. We do exit interviews, we do onboarding interviews to get people coming in and they get on a quick call with me, and we go through the components of their membership. And I’ve staff doing this for me as well, but the exit interview, the finding is, if I could have paid more, like had I known what I know now, these guys that were 15 bucks would have been 50, 49 a month. Because that’s what the value they perceive in it as well.

John Warrillow:                Isn’t that fascinating? Do you think there’s a point of diminishing returns? I mean, have you experimented with going beyond 29 to 50 or 60?

Marc-Andre Seguin:        Not yet, that’s on the play for experimenting. Honestly, I want to try at 49 a month, I want to try 79 a month, at 99 a month, because I haven’t found, I’m a stats guy, and I’m still looking for that sweet spot. The diminishing return, I haven’t found it yet.

John Warrillow:                Yeah, isn’t that fascinating? And so how big have you got in, the website is, jazzguitarlessons.net. If people want to check it out, right?

Marc-Andre Seguin:        Yeah. Absolutely.

John Warrillow:                How big have you got this company now? In terms of your number of subscribers, or revenue, or whatever, however you want to use.

Marc-Andre Seguin:        If we’re going to say it in plain terms and I know it’s not going to be confidential, but say as of last year, a quarter of $1 million per year business.

John Warrillow:                Right. Fantastic.

Marc-Andre Seguin:        Though small, I want to go to the M like SMB, I want to go to the M soon enough. There are staffing issues and churn issues and software issues and life gets in the way.

John Warrillow:                What do you see as the end game for your company?

Marc-Andre Seguin:        1500 paid members a month, so that they will take a while because of churn, et cetera. And if you say like, live the life of your dream, think everything would have been fantastic. If we can serve 10,000 students ongoing, which is not like, I’m not shooting the stars. It’s a pretty realistic goal for the 10 year horizon that will be the end game. But ultimately I’m a retired musician, I don’t play. I had this new album in 2018 but I don’t play anymore. I do this for my students and I don’t even enjoy playing music as much as I used to.

Marc-Andre Seguin:        So the end game, which will be finding a good buyer that knows online businesses and I could stay on for a while, as a content provider, because my face is on everything. But the end game is selling it and moving on. I’ve already started other business ventures with partners. And also that whole expertise of selling things online, that really translates to other business, local businesses. So I’m more interested in that nowadays than… Once that thing has taken off, I get bored super easily. It’s fun, but it’s not fun anymore because there’s no struggle.

John Warrillow:                Yeah. Well, I appreciate you sharing this story, this market. It’s great to have a real life example of someone who’s taken a one-off transactional business, in particular in the information product world and made it into a subscription. So, I wish you all the best on your journey to 1500 customers. Again, if people want to check you out, the best place I’m assuming would be, www.jazzguitarlessons.net.

Marc-Andre Seguin:        Exactly.

John Warrillow:                Is that right? Lessons plural, .net, and you can find the world’s expert in jazz guitar lessons.

Marc-Andre Seguin:        That’s me. That’s my big face. Type it on YouTube.

John Warrillow:                And if you’re going to look for you on YouTube, what’s the best thing to search YouTube on?

Marc-Andre Seguin:        Jazz guitar lessons.

John Warrillow:                Jazz guitar. They’ll find you?

Marc-Andre Seguin:        Yeah.

John Warrillow:                It was great to meet you and it was great to do this together.

Marc-Andre Seguin:        Thanks John. Great interview.

John Warrillow:                Okay, cheers. Bye.

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