Ep 78: Community First Offers with CEO of Smart Passive Income Matt Gartland
Powered by RedCircle
Community First Offers with Matt Gartland
This one thing transformed Pat Flynn’s business and has become the foundation for everything they do moving forward.
When Matt Gartland partnered with Pat as the CEO of Smart Passive Income, they had one focus in mind: make everything we offer community first.
So they changed from selling one-off courses to creating a community-powered membership experience that helps members create even more progress. Plus, their retention is through the roof!
I recently chatted with Matt, CEO of SPI Media founded by Pat Flynn where the focus is on providing more than just isolated courses. Instead, they have built a robust framework of learning journeys that enrich and transform the educational experience for their students. Gone are the days of confusion and uncertainty when choosing the right courses; now, with their innovative All Access Pass, students can embark on a seamless learning journey that caters to their expertise and interests.
Matt is a true visionary, and has over 10 years of experience in the online business space. He's an advisor and investor in early-stage tech startups and venture capital funds.
Matt shared behind-the-scenes insights into being a CEO and the role he plays in the company. He also provided insider insights on how their community-focused approach led to a high retention rate.
College Communities And The Parallel To Community In Business
Shana: Tell us about your favorite community you've ever been a part of and what you loved about it.
Matt: In my college days, I was a resident assistant (RA) where community was a significant aspect. It truly was about building chemistry among students in the dorms, organizing events, and being both a friend and mentor. Wearing various hats in that role was thrilling. It allowed me to be part of a special time in their lives, just as it was for me. The leadership position offered early-stage leadership opportunities as well.
In college, kids face relationships, academic pressures, and the "what do I wanna be when I grow up" questions. Dealing with aspects of identity, there's a lot of parallel to how we think about community in business today. Entrepreneurs wonder about their identity, what they're trying to build, and whom they're serving. Overcoming imposter syndrome, there's much parallel to those critical college years.
Looking back at that time, it's a seminal moment for my attraction to bringing people together, facilitating conversations, and building networks.
The Path To CEO
Shana: What was your path to becoming the CEO of SPI?
Matt: I wouldn't say it was choreographed or a straight line. It wasn't entirely accidental either. So, I'd say it's a blend of the two.
I got into startups after a successful leadership career in enterprise IT. I did well in school and got into a leadership program that moved me around the country for two years right out of undergrad. It was like an in-house MBA program.
I was in data science, dealing with insightful analytics and building progressive software systems with sales and marketing teams. I always was an entrepreneur at heart, like the kid with the lemonade stand from youth. So I got into startups after a good moment before committing to the enterprise career. I've been through at least 10 different startups in different capacities, with some successful exits and some not.
I didn't specialize in one thing, but it was always about finding market fit, differentiation, and creating prosperous relationships with a spirit of community in terms of service and connection. Online-based startups allowed me to explore the intersection of content and technology. I met Pat Flynn around 2010, and we worked on his first book project. We became fast friends and collaborated on various projects.
In 2018, we merged our companies and evolved into a community-powered business model. Community is now our business model, not just an add-on product. Trust and a long-standing relationship played a significant role in our partnership, which is essential when finding someone to lead your team and carry your vision forward.
Community As A Business Model
Shana: Can you just give people a little bit of a perspective on what SPI is now? What is it that you all offer? Who are you serving, how are you serving?
Matt: When we decided to pursue a bigger and more innovative vision in 2018 by merging together, we sensed changes in the market and people's interests in learning, even before the pandemic. We had always excelled in education, offering valuable online courses, but we wanted to be more than just that. We aimed to create an integrated learning environment and a true ecosystem, not just a provider of individual courses or knowledge products.
We developed a community product ahead of the pandemic, which we planned to launch in the summer of 2022. This became the All Access Pass, the fuller manifestation of our original vision. It includes our courses available on demand, along with accelerator events, cohort-based learning, and learning journeys. With this approach, we guide students through a broader arc of learning, helping them build skills, confidence, resources, and relationships to support their entire career journey. The core competency of our business is real community management and facilitation, ensuring strong peer-to-peer interaction and connection for our students. Our goal is to create a dynamic and thriving learning environment for all our students.
Now we have accelerator events where we take students in cohorts and guide them through the curriculum, helping them stay accountable and fostering a peer study group mentality. This approach has significantly improved completion rates, going from single digits (which is very normal in DIY courses) to probably around 40-50% using community-powered course models and cohorts.
Learning journeys are also a big part of our offerings. It's not just about guiding people through one course, but it's about a broader arc. For example, if you're an aspiring creator or entrepreneur seeking financial independence, completing one course may lead to another learning journey, setting you up for the next step in your entrepreneurial path. It's like college. We provide a freshman level orientation, starting with certain classes, and then we suggest the next ones. We assist them in building confidence, skills, resources, and relationships that will benefit their entire career. That's the essence of all this: to create a robust learning environment for our students.
Community Accountability and High Completion Rates
Shana: Can you elaborate on the pathway aspect? I'd also be interested in learning more about the cohort element, specifically how community accountability within the cohort contributes to achieving such high completion rates.
Matt: Regarding the pathway aspect, one crucial point to highlight is that it reduces the pressure on our students to figure out which course comes first and if they are ready for it. In the prior model, with numerous courses available as one-off offerings, it could create marketing confusion and uncertainty for students trying to choose the right fit for their level of expertise.
Now, we offer the All Access Pass, which simplifies the decision-making process. Once you make the initial purchase, you have access to all offerings, eliminating the need for ongoing individual purchase decisions. This way, students can comfortably explore the pathway that suits them best without additional barriers.
The pressure is lower, so people are more willing to take a chance and be less reserved about it. These economic psychology aspects are crucial when convincing and persuading someone to join a journey. As for the pathway approach, we have 101 level courses that serve as a baseline experience, getting students curious and aware of different topics. In our ecosystem, we offer various ways to learn about subjects like email marketing, accommodating different skill levels. Whether it's an entry-level workshop or an advanced accelerator, students feel safe in the community, knowing others are on similar learning journeys.
We have one core offer that includes everything, fostering a sense of togetherness within the community, regardless of individual levels. Our accelerators are designed to guide students through the curriculum in cohorts. We offer different experiences at different moments, and the focus is on inviting and serving rather than constantly selling. Currently, we run multiple accelerators, and they provide a structured cohort experience, led by facilitators who guide students through the curriculum.
The staffing operations team dynamic is crucial for the healthy functioning and growth of any business. As we continue to expand and hire more staff, we'll be able to offer multiple parallel accelerators. Cohort-based courses (CBCs) became popular during the early months of the pandemic.
Maven is a platform entirely rooted in this type of offering. It provides a hybrid experience that blends self-paced and live elements. It's not entirely DIY nor is it completely live—it's a combination of both. As the creator and entrepreneur offering a cohort-based course on Maven, you get to make the decisions and shape the learning experience for your audience.
The Cohort Experience
Shana: What is the length of the experience?
Matt: The point here is that the cohort-based courses are time-bound and don't go on indefinitely. From a strategic business standpoint, they usually involve a one-time purchase, especially if you offer them on platforms like Maven or outside the community component. Typically, these courses have a higher price point. As an entrepreneur, you can think about your product suite and offer a cohort-based version of your existing DIY course at a higher value. The curriculum remains the same, but participants get a more hybridized experience with live access to you and a sense of community as they go through the course together. This approach has been successful for us in designing our accelerators.
Shana: Are the Cohorts Evergreen Or Are There Deadlines To Join?
Matt: We're running these accelerators exclusively within our community, so there's no additional cost to participate; it's an invitation. We've observed significantly higher completion rates when people go through these accelerator events. They also serve as powerful conversion offers for marketing purposes. When we want people to consider joining the community, we provide a real and genuine incentive, like starting the next accelerator for podcasting on Monday. There's a sense of urgency to join before it begins. This approach allows us to be sincere and transparent with our customers, emphasizing the effort and resources we invest in these experiences and maintaining an honest relationship with them.
Shana: How are the cohorts led?
Matt: A lot of our flagship courses are still led by Pat Flynn, and I am also working on creating some new business courses. Pat is the teacher for many of the audience building related courses. He joins live for the celebratory kickoff event at the beginning of these accelerators and tries to make it to the graduation completion event at the end as well.
However, it's crucial to emphasize that as the business grows, you can bring in other skilled individuals to take on certain responsibilities. Pat doesn't have to teach the entire accelerator; we have hired talented educators who excel at facilitating classrooms. Our two full-time community managers are former educators.
Shana: I believe teachers make excellent community managers. Even my executive assistant, who handles a significant portion of my business, is a former teacher.
Matt: For example, Ashley is in charge of our academy, the SPI Academy, which is where our All Access Pass membership lives. Currently, she serves as the Chief Accelerator Moderator, personally overseeing and successfully running the accelerators. Students love her and find her guidance valuable. On a weekly basis, she leads Zoom calls for accountability check-ins, addresses curriculum-related questions, and acts as a nurturing teacher, supporting students through the material, holding them accountable, and challenging them in a positive way.
The structure of these accelerators involves synchronous activities on a weekly basis, sometimes even twice a week, depending on the subject matter and the cohort's level of advancement. More advanced subjects may require additional interactive touch points, while fundamental topics may have fewer. Designing these experiences within a community context requires some artistry to ensure they are engaging and effective. These accelerators have been tremendously successful, and I am delighted because I have a client who does something similar.
Maintaining Community As The Center In A Cohort Experience
Matt: This concept of helping people implement is crucial, and our community's goal is progress, not just engagement. The model facilitates real, meaningful progress towards desired outcomes, and the results can compound, leading members closer to becoming established full-time entrepreneurs who achieve financial independence and turn their ventures into successful careers.
The Psychology Of The Offer and Retention
Shana: I'd love for you to talk just a little bit about the psychology of the offer and how you all package and present the offer differently.
Matt: These days, we want and need to create more time and space for people to truly learn, adapt, and apply what they're learning. Thinking that someone can become successful in a week after taking an online course on their own (a DIY experience) and then expecting them to implement it successfully is becoming increasingly challenging. If things don't go well, the lifetime value of that customer could be compromised or diminished if they lack feedback and flexibility.
Inside the community, within the experiences we have created, this supportive environment is ingrained. Even if members have to step out of an accelerator, it's okay; we are here for them, and they can rejoin when ready. This psychology of our approach also minimizes the need for additional purchase decisions. With a recurring revenue subscription model, it benefits the company's overall health.
The key aspect is providing students with ample time to learn and apply without feeling rushed or pressured. They can rely on the support of the SPI team, including Pat Flynn and we often bring in external experts with whom we have established relationships. The presence of supportive peers also makes it easier for them to take breaks and return when they are ready to continue their learning journey.
From the billing standpoint, we offer both quarterly and annual billing options. So even if it takes them three months to reach the next renewal point for their All Access Pass subscription, hopefully, they've made significant progress in that time. Three months is a good timeframe to allow sufficient space for our members to apply what they've learned.
Shana: It's a genius approach, and I recall mentioning my friend's successful membership in the guitar space. He's a data scientist and constantly tweaks his strategies based on data insights.
Their findings showed that quarterly billing was the most effective way to retain people and help them achieve better results. In my cohort retention analysis for all my clients, I often observe a drop-off between month zero and month one to month two.
Matt: Many people don't give themselves enough time to fully immerse in the experience and see real progress. That's why our three-month approach is so valuable. It gives members ample time to explore the resources, achieve small wins, and decide if the community is the right fit for them.
Retention is a critical focus for us, and as retention improves, churn naturally decreases. Admittedly, we didn't have all the answers at the beginning, and there was some guesswork involved. When we launched our first community in the summer of 2022, we initially offered monthly and annual billing options. However, we learned from our experiences and made important adaptations. Moving to quarterly as the baseline turned out to be a significant improvement.
Every community may have different dynamics, and offering annual billing may work well for certain segments. It provides a year of value, making renewal decisions more obvious. For us, the quarterly option seems to be the right fit, given the type of customers we serve. It allows enough time for our members to experience the value and progress they desire.
Shana: It's crucial to recognize that there's no one-size-fits-all solution when it comes to community models. Testing and understanding your market's preferences are essential. For instance, one of my clients chose to offer only monthly billing due to the operational load associated with annual billing and the need for specific backend strategies. It worked well for them, and they grew to 10,000 members.
After careful consideration, they decided to remove the $200 buy-in fee, realizing that it was a barrier preventing people from accessing their membership and receiving the help they needed. Surprisingly, as soon as they dropped the fee, their evergreen funnel conversions tripled, going from $200 buy-in fee on a $67 monthly membership to a more accessible and welcoming approach.
While the change did impact their retention rates, especially in the first month, it made more financial sense due to the significant increase in conversions. They acknowledged the hit on the retention side and have been actively working on addressing it. In the end, they found that removing the buy-in fee resulted in a more successful and inclusive membership model.
Role As CEO
Shana: I’d love for you to share what it takes to run a business like this and what is really your role as the CEO in helping bring all of this to life alongside Pat Flynn.
Matt: Over the last two years, the biggest challenge has been leading through a truly challenging transformation. It's like the butterfly metamorphosis, where the caterpillar goes into the cocoon and emerges as something completely different. Inside the cocoon, there's a lot going on, and it can be messy and challenging.
Our trick was to intentionally cannibalize our original business while simultaneously building a new one without disrupting the entire company. We had to make significant changes to our original model, moving away from the classic open and close cart system for one-time course offers and also promoting our community growth. This required finesse and adaptation. It meant dealing with transformations in our revenue sources and changing patterns while keeping the team motivated.
To sell the new offering, we had to adjust our funnels, including a complete rebuild of our email ecosystem. Leading through these changes and managing the transformation has been challenging, but it's essential to develop change management as a crucial skill for any leader.
Change management and conflict resolution have truly tested our leadership capabilities. Some people doubted our ability to navigate through these challenges, but we have successfully led the way. It hasn't always been easy, especially when it comes to managing team dynamics and fostering a positive company culture. However, investing in our team is crucial, especially at our current scale. We have a dedicated in-house team consisting of nine full-time members, making a total of eleven with Pat and me. It's not a huge team, but it's also not small; it strikes a balance.
The North Star Objective
Shana: How do you keep your team motivated and focused?
Matt: My main focus over the last two years has been leading our company through this transformative phase and guiding us to the other side. At times, customers might be resistant to changes in our offerings, and we encounter this challenge frequently, especially in our inbox and other areas.
We have successfully navigated through the challenging phase of implementing changes in technologies, email funnels, and our billing system, as we discussed earlier. It wasn't a smooth ride, and it felt more like a time of difficulty, similar to wartime, rather than a period of ease as depicted in the cliché. However, we have now entered peacetime, where things are running smoothly, and the numbers are showing positive results. As a result, my role has shifted and evolved.
The team’s current focus is on spreading the word about the progress we've made and continuing to invest in the team's resources. As our membership grows, we anticipate the need to hire more team members. The decisions regarding hiring and team building are no longer solely mine to make, as I have a competent and reliable team supporting me.
Now, we carefully consider factors such as our financial position and the specific role we want to fill. We weigh the options between hiring someone new to community management, which involves training costs, both in time and resources, or seeking a seasoned professional with relevant experience, which may come with a higher salary and associated expenses.
Managing budgets and related tasks is important now. With the transformational phase behind us, the focus of the job is solely on continuous growth and expansion. Our business model operates like a software company, following the SAAS (Software as a Service) playbook. However, I like to refer to it as "Community as a Service" due to its unique approach.
Currently, we are primarily focused on growing our MRR and diversifying revenue streams to enhance our average revenue per user, a crucial metric for us. Extending our customer's lifetime value (LTV) is also a priority, and we are exploring various strategies, including building new partnerships.
My role now involves reaching beyond our legacy network and expanding our reach and awareness. This means opening new doors, exploring different channels, and creating new pathways for potential community members to discover us. Continually motivating people to join our community remains a significant aspect of my job as well.
The Backbone Of Success In Your Business
Shana: Do you believe creators and entrepreneurs are often hesitant in building a team?
Matt: Yes. Many entrepreneurs who have been running their businesses solo for a long time are reluctant to bring in a team. But having a supportive team is crucial for success. You need to create a culture within the team that fosters motivation, encouragement, and involvement, just like you do with your community members or course customers. Treating your team like a community and providing the right guidance and support will help them thrive and contribute significantly to the overall growth and success of the business.
Change Management and The Future
Shana: Change Management is not a one and done process. There also is a fear that change will cannibalize your offer. But, what I’m realizing in my own business is that if you have a new offer that is so good, it will cannibalize the old offer. How did you navigate through the change and what does the future look like?
Matt: We currently have two memberships - the All Access Pass at $59 per month, billed quarterly and annually, ungated, targeting early-stage individuals and those curious about entrepreneurship. Our goal is to cater to beginners and advanced beginners, offering a wedge product or hero sku, derived from my experience in e-commerce.
On the other hand, we have our gated pro membership, launched in the summer of 2022, which requires an application for approval. It is aimed at more advanced entrepreneurs seeking a community of support, networking, and assistance with business-related questions.
The primary focus of our pro membership is on the community aspect, and this has proven true based on our numbers and feedback from members. Unlike the All Access Pass, pro membership doesn't contain many courses or independent content. Instead, it offers a pure community experience with a strong emphasis on advanced networking, addressing bigger business questions, and supporting entrepreneurs at a more advanced stage in their journey. People join pro membership for the connections and community support it provides, rather than simply seeking more content. As for our future plans and direction, we aim to explore new opportunities and continue growing our offerings.
In the future, I will be developing more business-focused courses, covering topics such as strategic planning, leadership principles, budgeting, financial forecasting, revenue modeling, and organizational design team building. These subjects are geared towards a more advanced audience, emphasizing the business side rather than pure marketing or audience building. These courses will be available exclusively within the pro community, just like our current courses are accessible through the All Access Pass.
As for our pro members, they receive access to everything offered in the membership tier below. This includes All Access Pass, accelerators, and on-demand courses. It follows a classic and proven SaaS model for the more advanced membership level.
If they prefer to access the courses on-demand, they can do so and receive additional benefits. They will gain exposure to the pro community, which is separate and distinct from the All Access Pass community. Currently, we offer two membership options, but we are looking to expand and explore new opportunities, such as private mastermind groups or small group coaching.
We have already started testing the waters with a pilot group, which I personally lead, and it has been very successful. This pilot group consists of around 15 to 16 members who pay a higher rate for exclusive access to premium content. As of now, our All Access Pass is priced at $59 per month, while the pro membership is priced at $99 per month. We are also considering offering the private mastermind at a monthly rate of around $299.
Stay Connected
Shana: How can people stay connected with all you are doing with SPI?
Matt: Pat regularly shares insights and updates about what we're testing and learning within our community in his newsletter, the Unstuck Newsletter. I highly recommend subscribing to it atsmartpassiveincome.com/unstuck.
For those interested in exploring the All Access Pass and how we position it, you can visit smartpassiveincome.com/all-access. There, you'll find more information about the offering and how it could benefit you.
Stay Connected with Shana Lynn
To learn more about the ADKAR model listen to Episode 11 of the Community Creators Podcast.
Watch on YouTube | Listen on Apple, Spotify, or Google Podcasts
To learn more about what I do and how I can help you, tap here.
*This article has summarized the interview to the best of our ability. To hear the exact words shared, listen to or watch the full episode.
