CHAPTER 11
YAWN: PASSIVE INCOME
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HOW MUCH DID WE MAKE OVERNIGHT?
NEVER VIEW products as “sales items.” View them as value extensions. You’re not trying to make money; you’re attempting to provide your value in a variety of forms and configurations that allow diverse people to learn in varied ways.
Make that your mindset.
My partner in The Odd Couple, Patricia Fripp, whom I’ve alluded to earlier, has a shopping bag available at many of her events where the full array of her products are present. On the side of the bag it says, “Take Fripp home with you.”
Exactly.
10 IDEAS FOR PRODUCT AND SERVICE REVENUE GENERATION
Every morning, including holidays and weekends, my e-mail, voice mail, and/or post office box will contain orders for books, booklets, downloads, and newsletters. Sometimes I’m more productive when I’m sleeping than I am when I’m ambulatory.
For a long time, I was not a supporter of product sales. I felt that hawking products from the platform was sleazy, and that even the speakers who were most adept at it couldn’t hide what they were doing. Holding up your own book and quoting it or announcing that you’ll be happy to stay after the presentation to “personalize” books had all the subtlety of a train wreck. If you were perceived as a huckster, it had to detract from your message.
I still feel that way, and I never, ever, promote products in front of a corporate audience. However, I’ve learned that the objective is quite legitimate and that there are means with which I am quite comfortable. I’ve also come to realize that I was ignoring my own message: first and foremost, help to improve the client’s condition.
Whether you’re speaking to a corporate, educational, nonprofit, civic, general public, or pro bono audience, some of its members will want to continue their growth and education beyond your session. The best way to provide for that need is through personalized learning options. My awakening came when I realized that we’re not in the “speaking” business or the “seminar” business or the “training” business or the “keynote” business. We’re in the information business, and information can take many forms.
The good news is that providing additional information in varied forms is an extremely natural aspect of our business. The bad news is that too many speakers see it as having a primary, not a secondary (follow-up), role and create products that are arbitrary, of low quality, and/or obviously nothing more than revenue generators. The more a product possesses inherent value and perpetuates the learning experience that you began on the platform, the more likely it is to be seen as a natural—even required—continuation of the improvement process.
I’ve said frequently that not everyone has a book merely because he or she has a speech. But I do believe that everyone should have products if he or she is a speaker. A book simply may or may not be the right alternative, and fortunately, there are a great many alternatives to choose among. There are at least 12 pragmatic reasons for creating and marketing products:
1. They enable the participants to continue the development begun at your session.
2. They provide the buyer with the opportunity to supply additional value to the audience.
3. They create a lingering presence and visibility that can lead to additional business.
4. They provide revenues from people who have never attended (or are unable to attend) your sessions.
5. They provide promotional opportunities among the media.
6. They provide (in the right context) credibility.
7. They help to differentiate and distinguish you from your competitors, including those in similar geographies, topic areas, or industries.
8. They generate income, which can be vitally important during arid periods in your speaking schedule.
9. They build brands.
10. They are manifestations of thought leadership.
11. They take advantage of the multimedia available today.
12. They are instantly global (and translatable).
There are also downsides to products that can’t be ignored:
• If they are promoted crassly, they detract from your professionalism.
• If they are poorly created, they detract from your credibility and professional image.
• If they are created in isolation without a marketing strategy, they will result in a net loss on the bottom line.
• If they are overly specialized or dated, they will become obsolete rapidly, requiring either their abandonment before they realize their full potential profit or more investment for updating.
• If they are overpromoted or overdelivered, they may cause the perception that more intimate and effective experiences with you are not necessary. (See the discussion of the Accelerant Curve in the section that follows.)
The benefits clearly outweigh the risks if the products are carefully developed, intelligently marketed, and professionally sold. So if you have the inclination at all, products are a natural and lucrative offshoot of your involvement in the information business. The driving force of your business is your speaking, however, and products ought to remain in a secondary position. That means that speakers must first focus on developing a successful speaking career. A premature investment of time and money into product will cripple the locomotive, even as you’re perfecting the observation car.
Speaking Up: As a rule of thumb, it’s probably wise for you to have been supporting your current lifestyle solely through your speaking activities for at least a year before you try to develop products as a separate pursuit.
I know speakers who are struggling to make a living, working a day job, and delivering most of their work pro bono or at very modest fees, but who are also busy churning out self-published books and creating videos. This is not an innovative business strategy. It’s egregious ego. If you want to tell the world that you have a book or audio album because it makes you feel better, I can guarantee that there’s at least one organization that won’t be interested: the bank that supplied your mortgage.
Here, then, are 10 sources of the most lucrative products and services. The list isn’t meant to be exhaustive, but I believe it does represent the most propitious areas for any speaker, whether that speaker has been on the platform for 2 years or 20 years.
1. Books
The moneymaker here is self-published books, and we’ll focus on them. (For those who also publish commercially, as I do, see the footnote.1) There are two flavors of self-published book:
• Make an arrangement with a publisher/distributor, who might or might not share some of the production costs, and who will publicize and distribute the book in return for a (sometimes substantial) share of the revenues. I don’t favor this approach, although it has proved successful for some people, because it involves many of the disadvantages of a commercial publisher (shared revenue; concessions on titles, covers, and even text) and few of the advantages (promotional campaigns, major bookstore chain sales, cachet of the major publisher’s name).
• Locate a good graphic designer and printer who will work specifically to your specifications on a book, which you totally control. The advantage is that you’ll reap far more net profit and produce exactly what you intend with flexibility and timeliness. The disadvantage is that all of the marketing and promotion is in your lap. People do not knock your door down as soon as word leaks out that you’ve published something. In fact, word doesn’t even leak out. (Just-in-time printing and print on demand also lower production costs.)
You can self-publish hardcover or softcover, lengthy tomes or booklets. I’ve found that a booklet of about 60 pages covering any one of my speaking topics (or even a portion of a topic) is a very good investment. Of the 60 pages, there are only about 30 pages of text. There are another 20 pages or so of highlighted points, quotes, and learning aids. The remainder is autobiographical materials, information about other products, and order forms. I invest a lot in the cover art and the quality of the paper. The cost is about $2 per book for a 2,000-copy initial run (including the one-time costs of the artwork, typesetting, and so on), and $1 per book for each successive 2,000. I keep the runs limited, even though larger amounts would generate additional savings, for two reasons:
1. Inventory requires both room and expense.
2. I want the freedom to update easily without worrying about 10,000 books stored in someone’s basement.
On the initial sales of 4,000 booklets, for example, at $6.95 each, I’ll net $21,800. At the moment, I have five booklets in my catalog. If I sell one press run of each every year (2,000 × 5 × $6.95), the net is $59,500. That pays the mortgage.
Create books or booklets that are easy to read, contain a multitude of graphics and models, and are attractive to the eye. That’s why you’ll need both a professional designer and a printer, but those costs are minimal in today’s competitive marketplace. Use a sliding scale for multiple purchases—it’s common for clients to buy hundreds of copies of my leadership or innovation booklets at a time for distribution well beyond the immediate audience.
Books and booklets can be produced during “down-time” and can be used as value-added for the presentation (purchased in conjunction with the speech), as follow-up sales either in the back of the room or by mail, and/or as opportunities for others who haven’t been able to hear you personally.
One final note that applies to all product sales: if you’re going to sell products at the presentation site, have someone other than yourself staff the table and handle the transactions. You can always sign books for people off to the side, but it’s a better idea to remain aloof from the actual purchase. And it’s far, far superior to have your introducer and the program’s written publicity stipulate that your books have been made specially available for the audience than for you to do it from the platform.
At this writing, my newest book, Thrive! Stop Wishing Your Life Away is a hardcover, 230-page book, printed by a printer that also prints for major publishers. It’s self-published and is in the top 20,000 on Amazon, a number that includes both fiction and nonfiction. (Million Dollar Consulting, published by this book’s publisher, McGraw-Hill, is at about 14,000, by way of comparison.)
2. Downloads and CDs
These are very popular because they can be used in iPods, iPhones, computers, cars, and so on, where a large number of people do their learning and self-development. You can sell these singly or in albums and series. There is a plethora of production houses that specialize in everything from the artwork to the album configuration and from the tape editing to the duplication.
Teleconference series are perfect to create in these forms to leverage the expense and effort into additional products and learning alternatives.
All of my audio works are the result of either recorded platform deliveries, teleconferences, or radio interviews, where there is audience participation or where the interaction with the interviewer compensates for the lack of audience participation. I try to keep them under one hour. I sell some singly, some in sets of three, and some in large series or albums with textual material.
Have your work edited by a professional. If the introducer at the event did a poor job (not at all an uncommon phenomenon), have a new one dubbed in. Remove extraneous noise and dead spots, such as the five minutes of an audience exercise.
You can obtain tape editing, duplication, labels, boxes, and ancillary services for extremely good prices in what’s become a hugely competitive industry. Shop around and ask other speakers what their experience has been. Despite economies of scale, I recommend that you create and maintain relatively limited inventories until you can project sales reliably. That might mean an initial run from a few hundred to 1,000, and reorders of 2,500 for hard-copy duplicates. Downloads, of course, don’t have these drawbacks.
My approach is to have my technical experts put all of my recorded work and downloads on iTunes. I also place them on my blog and my Web site, where they are archived.
Self-published tapes face the same challenge as self-published books: marketing. We’ll talk about that in more detail later in the chapter.
3. Videos
Videos must be done professionally. I’ll never forget the guy I saw standing in front of a camera, drawing on an easel sheet. His video price was only $10. It wasn’t worth it.
The best alternative for video as a product is to collaborate with a client to help produce one. That means that the client allows a production crew to shoot both you and the audience, and to light and mike the venue as required for top quality. In return, you provide the client with the option of free copies of the video, a reduced fee, and/or a video of the remainder of the conference for the buyer’s purposes. Many clients will graciously consent to such a quid pro quo, which is more than worth it in terms of the live audience and professionally equipped environment.
You must adapt your presentation to your video product intent. That probably means refraining from citing the client or specific client examples during the talk, avoiding time-related examples, including devices (humor, questions, requests) that generate audience involvement and responsiveness, and using only those visuals that will tape well. You’ll need a signed release from anyone who appears on camera, or one from the organization that covers everyone.
In my experience, videos for sale as products should be no longer than an hour and can be as brief as 30 minutes. Retail sales prices vary from about $15 to $95, depending on the factors we cited earlier. The production expense, however, can be substantial (unless you’re crafty enough to work out some reciprocal arrangement with the production house, such as internal training, references to other speakers or clients, or something similar). A professional two-camera production, with all the related equipment and editing, could cost anywhere from $5,000 to $10,000. The good news is that DVD duplication, like audio duplication, is very inexpensive and can be as little as $5 to $10, depending on quantities.
A taping that costs $5,000 to produce and 100 copies at $10 apiece results in an initial investment of $6,000. If the product sold for $60, that would create a first run that broke even, and I’m being kind in the cost and the price. Video products are best created either with a producer/distributor who will underwrite the costs and pay a royalty or when your name and repute will produce enough momentum to drive sales. Typically, videos are a product that makes sense for established speakers who can rely on past book and/or tape sales for repeat business for new products.
You can run video excerpts on your Web site to whet the appetite of prospective buyers. You may also be able to use this as a “demo” video for buyers who demand one.
4. Newsletters
I’m not talking about the blatantly self-promoting, mostly free fliers that many speakers distribute. I’m talking about a monthly, bimonthly, or quarterly publication of from 4 to 12 pages that people actually buy, or an electronic version of one or more “screens” on the computer.
This is a tough market, but also a lucrative one. The ability to create periodic contact with constantly new information and be paid for it meets every criterion mentioned earlier for the success of a product. If you’re in a position in which you constantly receive new ideas and information or are crafting new approaches and techniques or have responses and resolutions to ongoing issues of interest, then you might want to consider publishing a newsletter.
One of the great disadvantages is the pressure on people’s time to read a myriad of sources related to their work and interests. One of the great advantages is the nature of renewal subscriptions: if people like the product, then the original sale will result in annual business, which is a powerful revenue generator.
An eight-page, two-color, professionally designed and printed newsletter can be produced for about $500 an issue, with postage dependent on circulation size (after an initial, one-time cost of perhaps $2,000 for design, plates, artwork, and so on). If your newsletter is a quarterly that sells for $45, and you attract 300 initial subscribers, then your first-year profit is $9,500 (300 × $45 − $4,000). If you grow to 500 subscribers in your second year, your profit is then $20,500, less postage ($45 × 500 − $2,000).
You need to have the organizational skills, inclination, writing ability, and time. Most of all, however, you need the readership. Newsletters are ideal when they are highly targeted toward specific markets, are backed by a credible name in that area, and contain high content. Newsletters of this kind are not the place to promote your latest book, your speaking schedule, or your awards and honors. Focus on bringing value to the buyer. No one wants to pay to read your promotional propaganda. They can do that for free.
Electronic versions are harder to charge for and are more likely to be free vehicles that promote your brand and repute.
I think that newsletters are highly specialized products that are probably best for speakers who have a customer base that has purchased other products. However, they are also often overlooked products that are the perfect vehicles to both generate annual revenues and softly promote your credibility and stature. By sending the newsletters to publications such as Bottom Line Business, Training Magazine, or the local newspaper, you’ll find that excerpts will be printed citing the source.
People complain that there are “too many” newsletters. That’s because people are subscribing to them and reading them! Competition opens markets; it doesn’t narrow them.
5. Advice and Counsel
Most speakers’ most valuable asset is their intellectual property. Unless they are simply parroting someone else’s ideas, they provide expertise and a unique source of improvement. Those qualities are salable beyond the platform.
Several years ago, I appeared at a series of presentations for Coldwell Banker. The buyer found that my approaches to consulting were of far more than merely informational value to the firm’s internal service people and wanted to provide “real-time” help for those people around the country. As a result, a toll-free number called “Ask Alan” was established, and those service people were encouraged to call at any time to leave a question about a client situation that they were currently facing. They were guaranteed a response within 24 hours. In return, I received a retainer for the three months that the program was in effect. The next year, I appeared on interactive television originating from my home and administered completely by a third party. Who knows what happens the year after that?
I don’t refer to postplatform advice as “consulting” because the objective from an income standpoint is that it be remote and not dependent upon your being on-site.2 It’s passive in the sense that it can be recorded, requests can be received but not answered until later, and/or it provides access to you. Some clients will want their executives to be able to talk to you prior to their own presentations to obtain some presentation tips, some humor to insert, or some techniques to involve the audience.
6. Teleconferences
You can conduct teleconferences from your home with your feet up on a desk for less than $100 a session these days, and you can charge anywhere from $29 to well over $100, depending on your brand, value, and timeliness.
I run 10 teleconferences a year (I don’t work on them in January and February) and charge by the series or by the individual session, all obtainable on my secure Web site shopping area. There are more than 70 available at this writing, which include interviews, case studies, role-plays, straight presentations, and so on. They are all recorded, were originally sold as CDs and in albums, and are now solely downloads. The downloads are provided free to subscribers, but cost more than the original teleconference for those who order after the fact.
These also establish you as a thought leader, can easily accommodate question and answer sessions, and can go directly to venues such as iTunes if you so desire. They are typically an hour in length.
7. Podcasts
Working with software such as GarageBand on a Mac and any good microphone, you can record podcasts (with music and sound effects already licensed for use). These are typically brief (10 to 30 minutes) but can be longer. You can create a series or independent sessions.
It’s harder to charge for podcasts, but you can easily set up subscriptions and circulate them to selected audiences. They are more informal than teleconferences and they usually can’t accommodate question and answer sessions, but they are excellent devices to provide very timely and provocative information.
8. Manuals and Guidelines
One of the members of my Mentor Program was an expert in heat loss and energy costs in plants and buildings. He developed a simple, nonelectronic little cross between a slide rule and a Rubik’s Cube that enabled a maintenance engineer or site manager to determine energy waste quickly. He soon converted this to an item for sale.
An attorney in my Mentor Program found himself developing simple guidelines, manuals, charts, and checklists for small businesses (which rarely had their own legal or human resource experts) to handle hiring, termination, evaluations, benefit administration, and so forth. He gave up his formal law practice to sell these items on his Web site, including annual memberships that permitted unlimited downloads.
9. Devices
You might consider the energy indicator just mentioned a “device,” so I’ve included the category here, as well. Some image consultants provide illustrated charts (often with movable, matchable indicators) that enable you to tell which colors go best with which skin type, which accessories best match outfits, and what the proper attire is for varying occasions.
What value do you have that lends itself to this type of self-learning and personal use?
10. Chat Rooms and Forums
When you create communities, value accrues to you for having brought the component parts together, irrespective of whether you are actually involved in every transaction. If you go to AlansForums.com, for example, you’ll find a membership-only chat room (the general public can read parts of it) that offers conversations, case studies, referrals, and advice on a 24/7 basis, globally.
The members value the experience (we have 70,000 + posts at this writing), for which credit accrues to me by dint of my creating it and being there frequently. People who “own” certain niches, as I do solo consulting, form vibrant, long-term communities: for example, Jeff Gitomer in sales, Seth Godin in creativity, and Marshall Goldsmith in coaching.
THE ACCELERANT CURVE
I’ve organized an annual gathering of the Million Dollar Club, which is a small group of entrepreneurs who generate seven figures of revenue on an annual basis. At our first meeting, one of our members, Mark Smith, shared a diagram with a right angle and a curved line from the top left to the bottom right. He explained that the vertical axis had low barrier to entry for clients at the top, and the horizontal had high fee and high intimacy at the bottom right.
I dubbed this the “Accelerant Curve,” because as people purchased your products and services through varying offerings, they moved toward higher fees and higher intimacy. Trust—and/or a brand—speeded people down the curve, and the idea was not to allow for “chasms” where there was no easy next step in the progression.
As we began applying this to businesses, however, I became increasingly uneasy with it because so many of my clients would purchase a book—exactly like the one you’re reading—and “bounce” to a point much farther right on the curve. In addition, word of mouth and branding often brought people directly into offerings on the extreme right without ever sampling the left.
What you see in Figure 11-1 is the revised Accelerant Curve:
• From left to right, products and services usually migrate from merely competitive, to distinct, to breakthrough.
• From left to right, offerings are usually higher fee, higher intimacy, but also less labor intensive.
• “Bounce factors” enable you to propel clients forward dramatically (e.g., a teleconference that creates an appeal for hiring you for a series of keynotes).
Figure 11-1 The Million Dollar Consulting® Accelerant Curve
• “Parachute business” is that business that “drops in” directly on the right.
• Your “vault” comprises those offerings that are unique to you and on your terms, for example, retainers, licensing, guaranteed appearances, and so forth.
My advice to you, therefore, is to
1. Make sure that you have at least three competitive (e.g., booklets), six distinctive (e.g., topical keynotes or training sessions), and three breakthrough (e.g., proprietary training the trainer or “boot camp”) offerings.
2. Fill your vault with retainers, licensed programs, franchised intellectual property, video and remote offerings, and so on.
3. Build your brand and viral marketing so that parachute business increases.
If you want to increase your success exponentially and climb to the top of this profession, you need a cogent, evolving, personalized Accelerant Curve. Use the illustration to fill in your intent. (Or feel free to engage me to help you! That’s the “bounce factor”!)
BUILDING COMMUNITIES: REV—CREATING EVERGREEN CLIENTS
The iPhone has apps. Everyone knows this. At this writing, it has about 150,000, and by the time you read this, it may have twice that many.
Apple creates an iPhone, and people buy it; others create applications for those people, and still more people are attracted to the apps; the iPhone creates more advanced versions of itself, and more apps are created, attracting still more sophisticated users. You get this never-ending picture.
This is what I call reciprocating, exponential value, or REV. It is a community that builds value continually, attracting more and more people who provide still more value, thereby making it yet more attractive to others. It is a perpetual motion machine.
My communities act the same way. I referred to chat rooms in my examples of passive income. People who commune in my chat room are deriving value from me irrespective of whether I am present or not, because I’m the one who is responsible for the medium they are using. As their own quality and contributions attract still other valued people, my value grows, even though I personally may have had nothing to do with the entry of those newer people.
Now multiply that by a dozen communities that I’ve created that overlap in numerous ways, and you can begin to see the perpetual motion machine of attraction and value providing clients for life and referrals for life. For instance, people in my Mentor Community meet at least once a year in a free Mentor Summit, during which smaller communities form and reform around my workshops (the Million Dollar Consulting College graduates have actually staged their own reunion), experiences, and groups.
Similarly, you can form communities within your client network that reinforce and continually revisit your value. As a speaker, trainer, facilitator, or any related expert, your communities might include
• Buyers at certain levels (e.g., sales vice presidents)
• Participants
• Venue management
• Those interested in your topics and expertise
• Aspirants in your specialty
• “Graduates” of some of your specialized programs
• Trainers you’ve trained in-house
• Subcontractors
• People who read your blog
• People who subscribe to your newsletter
• Teleconference audiences
• Podcast listeners
• YouTube viewers
• Social media platform groups
• Readers of your books
You get the idea. I could easily triple this list. What are you doing to create, nurture, and grow these specialized communities so that they are exchanging information, forming subgroups, and attracting others, all under your aegis and within your purview?
Speaking Up: Frequently, your value multiplies without your speaking at all!
With technology at our fingertips, we can organize, monitor, and develop these communities by judiciously providing intellectual property, making introductions, creating new experiences, and exploiting our brands. As I said earlier, you may not agree with us, but if you’re in sales and you don’t know of Jeff Gitomer, or you’re in coaching and you don’t know of Marshall Goldsmith, or you’re in solo consulting and you don’t know of me, then you’re simply not in the mainstream and are an amateur.
At this advanced stage, you create clients for life by raising your profile as an object of interest, and enabling people to profit and improve from the company you keep.
SUMMARY
This can be a risky business. It can also be a hugely profitable one. How can one endure the former without capitalizing on the latter?
Create passive income through products, remote coaching, teleconferences, and so forth. (If you use a definition like mine, passive income can include workshops and “live” experiences close to your home.) Use the Accelerant Curve to ensure that you have no “chasms” in your product and service offerings, and to propel clients toward more lucrative and less labor-intensive relationships. Bear in mind that the greater your clients’ trust in you and the more you have a powerful brand, the more this will occur.
When your “sizzle” is sufficiently loud and clear, you can build communities in which reciprocating value enables more and more people to join in a variety of ways on the curve, making the community still more valuable to others. You’re then able to demonstrate value merely by dint of allowing people to come together under your auspices.
If you do this continually and intensively, you’ll develop clients and loyalty for life. Referral business will explode, viral marketing will take hold, and you may become a well-known name within your field of expertise.
Ironically, the more you produce passive income opportunities, the more power accrues to your brand, and the more powerful the brand, the more people will flock to your passive income options.
That’s not a bad cycle to get into.