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What Online Entrepreneurs Need to Know about Affiliate Marketing

Voiceover: Rainmaker FM.

You’re listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information go to Rainmaker.FM/DigitalCommerce, that’s Rainmaker.FM/DigitalCommerce.

Sean Jackson: Welcome to The Digital Entrepreneur everyone. I am your host, Sean Jackson, and I’m joined as always by the diligent Jessica Frick. Jessica, how the frick are you today?

Jessica Frick: I am diligent, Sean. How the Jackson are you?

Sean Jackson: I am well. I am well as always.

Jessica Frick: You sound so much better, Sean. You haven’t been feeling well. You sound great.

Sean Jackson: You know, again, as I’ve always said, it’s for the audience. I feel like absolute pounded poo poo but I am going to make my way through it.

Jessica Frick: It’s that show biz flare. You got it.

Which is More Important: the Quantity of Leads or the Quality of the Process

Sean Jackson: There you go. So we left everyone hanging last week with the question of, “What matters more? The quantity of leads or the process of converting leads?” I’m going to go ahead and take the quantity argument because I want you to go in depth on the process side. Okay? Here is my argument for quantity of leads matters more than the process for converting them. Okay?

Jessica Frick: Okay.

Sean Jackson: If you don’t have leads, who cares what your process is? So you need to get them.

Jessica Frick: Well, that’s a good point.

Sean Jackson: You want a ton of them because being a small business, there will naturally be what I call spillage, right? There will just be people that are coming in who are, you’re just not going to be able to get to. Something is going to break in the system, and if you had a bigger team, if you had a bigger organization, then you can take care of spillage. But at the end of the day, being small, you can’t deal with it, so you might as well get as many as possible so that the few that don’t spill out, you can convert them. That would be one argument. What say you?

Jessica Frick: Well, the argument that I have would be the better argument, but you know, we are a customer-first company, and we always think about that customer perspective, and unless you have processes to treat them right, not only are they going to bail, but they’re going to tell their friends to not talk to you. They’re not taking their ball. They’re taking their ball and all of their friends with them.

Sean Jackson: Ah.

Jessica Frick: Acquisition is hard, but activation and retention, that requires process. And not only that, but if you don’t have process, your team is going to burn out fast. If you don’t have a team, what difference does it make if you have a million leads? You can’t do anything with them.

Sean Jackson: Yeah, very good point.

Jessica Frick: So process is more important, because the amount of leads that you have can be adjusted, but if you can’t activate and retain them, it doesn’t really matter.

Sean Jackson: Well, see. That is a good argument, and I will counter with this. I think that when you have a process, then you’re going to want to fill that pipeline up as much as possible, right? Now, it may not be a perfect process. It may be something that is good enough to get you to some sort of revenue for the business enterprise.

At that point, once you have a process, then of course, stacking as many leads into that pipeline then become paramount. If we find the middle ground, which I don’t always like to do, but if we found the middle ground, I would say that you have to have a process, but then once you have that process, then you want to stack up the quantity. What say you?

Jessica Frick: I think that sounds reasonable.

Sean Jackson: Okay.

Jessica Frick: I think it has to happen in that order. I think you need to have some leads, then work out your processes, then you get more leads and you tweak your processes, and you’re just always growing and changing with the demand.

Sean Jackson: Yeah, and I think that’s a part of it. I think really where the end output of this discussion is, is that it is a constant feedback loop, right? You have to have somebody who wants to buy what you’ve got to begin with and you’re going to have to put a process in. I would say start with the process first, right? I’m giving my honest opinion on this. I’d say have a process, get some leads into it, and then continually refine both the acquisition and quantity of leads and the process that goes with it so that spillage, which is natural, can be addressed through the continuous feedback loop and continuously addressing what is occurring in your little ecosystem.

I will say this. One of the things, it’s always hard to take a side of an argument is that if you are only closing 1% of the leads that you get in, then you could double the size of your business by just improving the process in closing 2%, right? But, if you’ve only got five people. You know what I’m saying?

I think the end output for our audience is very simple. It is a continuous feedback loop. It is a continuous process of putting a process in, filling the pipeline, refining the process, refining the pipeline, and that’s the back and forth. Because literally your business can grow not because you got a hundred million people coming in. It could grow because you’re just taking ten thousand and converting more of them in the process that you have. Would you say that’s a logical statement?

Jessica Frick: That sounds logical to me.

Sean Jackson: Good, and the nice thing about today’s show is that we actually have some experts as our guests who came up with this idea of “growth hacking.” In fact, they’re called the Growth Hackers. I’m going to let Jess really take the lead on this because she really is the process gal, and we’re going to interview the founders of Growth Hackers and the authors of the new book, Hacking Growth.

We are joined today by two, I would say, extraordinary individuals. Jess, wouldn’t you say that?

Jessica Frick: Absolutely.

Sean Jackson: We have with us Sean Ellis, who is the founder and CEO of Growth Hackers, which is convenient, given the fact that he coined the term “growth hacker” back in 2010. But prior to being with Growth Hackers, he was the founder and CEO of Qualaroo with customers such as Uber, Starbucks, Spotify, and Intuit. And he also laid the foundation as the first marketing executive to help grow five different companies including UpRoar, LogMeIn, Lookout, EventBrite, and DropBox to more than one billion in valuation.

Our second guest, who happens to be the coauthor of their book is Morgan Brown. Morgan is a startup marketing veteran with more than 15 years helping early stage companies find traction and growth. He took his first job at a startup in 1999, and then worked for a marketing agency, and then he moved to the startup world again to grow venture-backed startups such as TurnHere and ScoreBig. Morgan also writes regularly at MorganBrown.co. So with that introduction, gentlemen, welcome to the show, and Jess, I’m going to turn it over to you and let you run this interview.

Jessica Frick: I would love to, Sean. So Morgan, Sean, thank you so much for joining us.

Sean Ellis: Thank you Jessica.

Morgan Brown: Yeah, thanks for having us.

The Right Mindset You Must Have to Create a Growth Hacking Culture

Jessica Frick: As I’ve told you both, I’m very excited to read your new book when it comes out, and so since we’re talking about business growth on this week’s episode, I figured you guys would be perfect men to ask these questions. My first question: At a philosophical level, what is the mindset you need to be successful with growth hacking?

Sean Ellis: I’m happy to take that one. I think you have to have this recognition that everything you’re doing, there’s a better way to do it, and the only way to figure out the better way to do it is through testing. And that that testing should really be directed toward delivering more value to users, and when you do that, growth seems to be an outcome of that. That just continuous improvement mindset would probably be what I would latch onto the most. Anything you would add to that Morgan?

Morgan Brown: No, I completely agree. I think just the understanding that there’s always a better way to do things and that you can constantly improve is really at the heart of growth hacking, and I think the only other thing that I would add is that as people, we tend to underestimate how fast things are changing out in the world and how fast people’s behaviors are changing, the competition coming and going. You have to pair that constant improvement mindset with an urgency to move as quickly as possible and not be caught off guard with how fast things are actually moving, so I would add an urgency to that constant improvement.

Jessica Frick: That makes a lot of sense. I would imagine it’s very easy to get stuck. Now, you guys talk a lot about big businesses and rapid, successful growth. How can a solo entrepreneur use growth hacking, given the huge demands on their time already?

Sean Ellis: Well, we talk about big businesses. Most of the businesses that I worked with were tiny businesses when I started working with them. DropBox for example was less than 10 employees and I know that’s still not a solo entrepreneur, but I think for a solo entrepreneur, you want to be able to think holistically about the customer experience and not just gravitate toward, “I need more customers,” but instead think, “How do I get someone from consideration of my product to actually coming in and experiencing it?”

Really thinking about that full journey from there and just an understanding that there’s a lot of levers that can be flipped. And especially for a solo entrepreneur who doesn’t have a lot of time and, potentially, resources, making sure that the focus is on the area where you’re going to have the biggest impact is really important. And sometimes the biggest impact is not going out and spending a lot more money or figuring out how to get a lot more customers potentially interested, but figuring out how to convert and retain the customers that are already coming to you, for example.

How Understanding Leverage can Rapidly Accelerate Growth

Jessica Frick: That makes a lot of sense. That brings me to my next question perfectly. You talk about leverage being an important part of growth hacking. What does that really mean to you?

Morgan Brown: Kind of to Sean’s point, is that there’s so many things that you can do to try to grow your business and what I always try to think about when I’m working on my own business or working with the companies that I work with is, If I make a difference in what I’m doing right now, will it make a difference to the outcome of the business?

I think that’s the essential idea of leverage, is finding the one or two things that you can do and change and improve on that will create outsized results. As a solo entrepreneur, as a business owner, there’s a million things you could focus on at any one time, but you only have so much time and so much money to really … you can’t do it all. In growth hacking, really one of the first steps is identifying where you have the most leverage, where if you’re able to improve that one or two things, it will create dramatically better results and kind of outsized gains as a result of that.

Sean Ellis: I could give a quick example from LogMeIn about just the power of leverage. Sometimes-

Jessica Frick: Oh, that’d be awesome.

Sean Ellis: Sometimes it’s a little abstract without a specific example there, so at LogMeIn, we tried to grow the business initially, and I approached that as most marketers do initially where I just went out and started buying ads and could actually work on landing pages a little bit, but what I found was we quickly hit a wall at about $10,000 a month and how much we could spend to acquire users and get a positive return on investment.

What I was looking at, though, was optimizing to get people to sign up for the product, but basically, the majority of the people who signed up never actually used the product. So if they didn’t use it, then they weren’t going to pay us anything. They weren’t going to tell their friends. They weren’t going to stick around.

It was really beyond my control to do most of the things. After they registered, all of the things that needed to be done were beyond my control, so I brought the data to our CEO. We were still small enough where it wasn’t that hard to get the company to turn on a dime and realize that this activation area was where our leverage opportunity was.

The signup-to-usage was a goal that we put as an overall team where we all focused our energy on improving that. It took a few months of experimentation there, but we were able to get about a thousand percent increase in the number of people who signed up and actually used the product. Once we had done that, we went back to the same channels that previously scaled to $10,000 a month, and now we could spend over $1,000,000 a month on those channels.

Jessica Frick: Whoa.

Sean Ellis: Yeah, the money was paid back every three months so we got a fast return on that investment, so it just shows that power of leverage, where a lot of people are thinking about growth hacking, It’s this really creative trickery,” but ultimately we were fixing something that was kind of confusing in the onboarding path of a new user and then with no new creativity, we were much more effective on our customer acquisition. That’s really this idea of leverage, is just finding what’s that “choke point” that’s really preventing your growth.

The Importance of Experimentation to Implementing Testing

Jessica Frick: So you’re talking about activation and acquisition as huge levers. One thing that I was reading in the pre-order materials for your book, you were talking about testing at a high tempo. Of course, when I read that I’m like, “Oh my gosh. How fast can you actually do that? Doesn’t testing take time?” How would you recommend someone with a very small business go about something like that?

Morgan Brown: You have to start wherever you are. So if you’re a very small business and you haven’t done any testing at all, the first step is to commit to experimenting and to try to experiment with the things that you’re doing. My mom is a solo entrepreneur. She runs her own little business and I was talking with her about the book and she was like, “How can I start testing?” I said, “Well you send that weekly newsletter out constantly. Have you ever experimented with that?”

She says, “No, I just send it.” I said, “Well great. Start experimenting with the subject lines to see which ones generate the most opens so more people are reading your newsletter.” I think really you have to take that approach of just make a commitment to start experimenting and then try to speed up and build in more experiments as you get more comfortable and more adept at running them.

Once you kind of get the hang of what it means to experiment in your business and experiment on the parts of your business that have the most impact, then you can increase the velocity. Sean and I talk a lot about there’s two ways to go fast. You can go fast like a Formula 1 race car going around a hairpin turn, or you can go fast like a truck whose brakes have gone out on a mountain road. You definitely don’t want to be the trucks whose brakes have gone out.

I think it’s really about trying to build your speed as you get more comfortable experimenting. Sure, some companies like Amazon are going to run thousands of experiments. That’s not really what we’re talking about. If you’re a solo entrepreneur, it’s about trying to experiment just on a regular basis and building up your ability to do more and more tests. Sean, I don’t know if you want to add anything to that, but that’s-

Sean Ellis: Yeah, just a couple of things. There’s tools out there like Unbounce for landing pages and Optimizely. As Morgan was talking about with email, there’s really easy tools for doing these tests where some of these tests take five or ten minutes to implement. They’re super fast with the right tools.

It’s not really something that a solo entrepreneur shouldn’t have the capacity to do and they could be so high impact on the business that banging your head against the wall when it’s because you have the wrong headline on your page and that headline is really easy to test in something like Unbounce. It’s worth doing those tests.

Jessica Frick: Absolutely. Another thing you guys were talking about in hacking your funnel is retention. A lot of these things that we’ve been discussing, talk about acquisition and whatnot, but subject lines on newsletters, that’s retention focused. And you can also just keep them coming back for more.

Sean Ellis: One of the things with retention is the right first experience is probably the most powerful way to drive retention.

Jessica Frick: That makes perfect sense to me.

Sean Ellis: Yeah, if they don’t use a product correctly the first time, they’re not coming back.

Jessica Frick: Now, do you think people should be giving more focus to existing or new when it comes to growth hacking?

Sean Ellis: I personally feel like the highest leverage that I see for most companies who are just getting started is around activation. It kind of sits right in the middle of the existing and new. It’s essentially that first user experience, and really I like to start with the most passionate customers, really understand how they’re using the product, the benefit that they’re getting, and then build messaging that reflects that on the surface level, and then start to make the actual experience of a new user coming in. Experiment to get them to the experience as quickly as possible, that will make them a passionate customer.

To Survey or Not to Survey?

Jessica Frick: Now, here’s a question for you. I have my own personal thoughts on this, but I would love to hear your ideas on hacking growth and surveys. How do you feel about directly asking people what they want?

Morgan Brown: Sean, I’ll let you take kind of the mechanics of it.

Sean Ellis: Sure.

Morgan Brown: Sean and I are both passionate about surveying users, going right out and talking to them. Growth hacking, for us, is really a data driven, scientific approach to figuring out what moves the needle in your business and what helps you grow your business. But that data isn’t just the numbers in your analytics. It’s also the qualitative data you get from your customers.

The data in your analytics can tell you what’s happening, but only customer feedback can give you that context to help you understand why the behaviors that you’re seeing are actually occurring. I think at every step of the customer life cycle, there’s a case for surveys and a case for customer input. Sean, I don’t know if you can talk about some different ways to use them but-

Sean Ellis: Yeah. I mean, the only thing I was going to say on the high level question of, “To survey or not to survey,” is that interestingly, I had a VC way back in the early days of LogMeIn who pushed me to talk to customers and do surveys. I told him at the time, “I don’t actually care what customers say. I care what customers do, and I’m going to test, and surveying is really not that important to me.” And he said, “Well I just invested a lot of money and you’re going to do surveying.” So I said, “Okay.”

I really just went through the motions of surveying for several months and then one day I realized that my tests were so much better because I had the insights from the surveys. I was no longer guessing with my tests. My tests were addressing real problems that were revealed in these surveys. I actually ended up, later on, building a survey business that we sold last year. I became such a convert to the importance of surveys that I focused all of my energy on it for a few years.

Morgan Brown: Yeah, and I think one of the things that business owners who are listening should kind of take away is it’s not a one time thing. You don’t just survey people and say, “Okay, I know what people are thinking,” but you have to build it into your overall business process. At the business that I run, we survey our customers once a quarter, just the whole customer base once a quarter to kind of understand how we’re doing. Then we also are running surveys as people sign up for the service or hit a landing page and then go away without signing up. We try to survey them. It’s kind of a continual process of getting feedback and not kind of a one-time event.

Jessica Frick: Interesting, and so as you add more surveys, would you consider that a dovetail with your experimental testing?

Sean Ellis: Yeah, it definitely can, but go ahead.

Morgan Brown: Yeah, I was going to say it’s an input to help you figure out what to experiment on. If you get a bunch of feedback that a particular part of the product or service that you offer isn’t particularly valuable or on the flip side that there’s one or two things that really stand out to people as the ultimate value of what you offer, you should use that input to kind of feed into your marketing and customer acquisition efforts, how you refine and develop new products and so on and so forth.

The Essential Steps You Can Take Right Now to Grow Your Online Business

Jessica Frick: That’s awesome. You know that may be the answer to my last question here. Aside from buying Hacking Growth, obviously, which they could do at GrowthHacker.com, aside from buying Hacking Growth what is the one tip you have for small businesses and solo entrepreneurs who might be listening to this to deploy the growth hacking model to their online business?

Sean Ellis: So my tip, and then we ll let Morgan give his tip, but my tip would be just quantify the number of tests that you’re running. If you run zero tests today, that’s your baseline. Then start to track the number of tests you’re running, and try to get it to the point where you’re running multiple tests per week and when you run multiple tests per week, then you’ll get smarter about which tests you run and where you focus those tests. But for most people it’s about moving from not testing at all or very few tests to actually running more tests and it’s through those tests that you learn about what’s going to work and what’s not going to work. There’s a lot of other pieces that go into place to running really great tests, but start by just committing to running more tests.

Jessica Frick: I love that.

Morgan Brown: Yeah, and my tip would just be to look at your business currently and look at how you acquire new customers and how those customers turn into revenue for your business and identify, like Sean said, the one main pain point, or choke point, where those customers are falling off, where that process of turning a new visitor into a customer is failing and really try to understand that pinch point or that choke point and lean into there to try to improve that.

I think too often, as business owners and marketers, we kind of take for granted what’s broken is kind of the way things are and we go try to find new opportunities, and I think that’s a bit of a mistake. I think the better thing is to look at what’s already happening and then try to find the main choke point or pinch point and fix that first.

Jessica Frick: Love that, and I love that you guys have used that word “activation” as a real important part of the process to really focus on, in the middle of new and existing. So thank you so, so much. I would encourage everyone to visit GrowthHacker.com to learn more from Sean and Morgan. Gentlemen, I know you’re very busy with all of your book launch stuff. I appreciate you taking the time to talk with us.

Sean Ellis: Thank you Jess. We really appreciate the opportunity to share what we’re working on with you and your audience.

Morgan Brown: Yeah, thanks so much for having us. We really appreciate it.

Jessica Frick: And we’ll be back right after the break.

Sean Jackson: Hey, everyone. This is Sean Jackson, the host of The Digital Entrepreneur, and I want to ask you a simple question. What is your business framework for selling digital goods online? Now, if the question perplexes you, don t worry you re not alone. Most people don t realize that the most successful digital entrepreneurs have a framework or general process for creating and selling their digital goods in the online space. One of the best free resources is Digital Commerce Academy. Digital Commerce Academy combines online learning with case studies and webinars created by people who make a living selling digital goods online. The best part is that this material is free when you register.

Are you interested in joining? Well, I ll make it easy for you. If you are listening to the show on your phone and are in the continental United States, I want you to send a text message to 313131 with the keyword DIGITS. When you send that text message, we will send you a link to the registration form right to your phone.

Are you outside the United States? Don t worry. Just send us an email to Digits@Rainmaker.FM. Either way, we ll send you a link to the registration form so that you can sign up for free for Digital Commerce Academy, and as a special bonus, we will also subscribe you to our newsletter when you text or email us, so that you can stay informed with the latest insights from the show.

And don t worry we respect your privacy, and we will not share your email or phone number, and you can easily unsubscribe at any time. If you want to start building or improving your framework for selling digital goods online, then please send a text to 313131 with the keyword DIGITS, or send us an email at Digits@Rainmaker.FM. You won t be disappointed.

Recommendations for the Week

Sean Jackson: Welcome back from the break everyone. So Jess, now it’s time for our recommendations for the week. What should be people reading or using this week?

Jessica Frick: Obviously, I have to go with the book Hacking Growth.” I know this show is going to launch just before it comes out and they have some pre-launch bonuses, but it’s going to be worth every penny after it comes out. I have preordered the book, so I can’t wait to read it, but I know that just the information that these two gentlemen have in their head is worth every penny spent. I cannot wait.

Sean Jackson: And that’s at GrowthHackers.com, is that where it is? Or GrowthHacker. GrowthHacker.

Jessica Frick: Yes, GrowthHacker. I know there’s two of them-

Sean Jackson: Right.

Jessica Frick: But that’s my recommendation. What’s yours Sean?

Sean Jackson: Mine’s going to be Clearbit.com, and I’m going to tell you why. If you are familiar with it, you’ll understand. If you’re not, let me explain what it is. Clearbit.com has an API which is a fancy way of saying they have a way for computers and systems to talk to each other, and what it does is it can take email addresses and append additional information like people’s Twitter, Facebook, LinkedIn profiles, the companies they work for, their titles, where they’re located all automatically.

The one feature that they have that I really do like, which I think everyone who is listening should put it on their site right away, is they do have the ability for you to take the Clearbit API. Clearbit.com, get the API key, and you can put it into Google Analytics. So all of the visitors to your site, it can start appending information to the visitor data. Isn’t that cool?

Jessica Frick: Creepy and also awesome.

Sean Jackson: I’m a huge fan of that system and trust me, we have tested so many of them out. If you haven’t had a chance, go to Clearbit.com, sign up, get their API key, put it into Google Analytics. It is totally worth it. They also have a Google Sheets feature, so you can take email addresses in Google Sheets and append additional data.

It’s probably one of the best tools out there that I’ve found for augmenting customer data with additional data points. So we’ve got Hacking Growth at GrowthHacker.com, and we’ve got Clearbit API at Clearbit.com as our recommendations for the week. So Jess, to end the show, what is the question for the week?

And of Course, our Question for the Week When Should you Bring in Outside Help to Grow Your Business?

Jessica Frick: You know, talking with the guys, we were discussing all of this growth and I wondered, Sean, when is it the right time to bring in help?

Sean Jackson: Hm. You mean outside help right? When should you outsource some things versus trying to do it all internally?

Jessica Frick: Yeah, or when do you need to augment your team with someone to keep you from going crazy?

Sean Jackson: Yeah, I think that’s true because there is definitely an idea of the fact that we as solo entrepreneurs want to do it all ourselves, right? Maybe we do need some outside help. When do we bring that in? When is the decision? What do you say, you? When do you think you should bring them in?

Jessica Frick: I think you bring them in early before you lose your mind.

Sean Jackson: Uh, no, see, I’m going to take the opposite. I’m going to say later. You got to figure out what you’re doing so you can instruct them with the data. But you know what, Jess?

Jessica Frick: What’s that?

Sean Jackson: This deserves a bigger conversation, and we’re going to do that next time on The Digital Entrepreneur. Everyone have a great week.

Jessica Frick: Thanks for listening.

The Transcript

How to Do Simple PPC Advertising for Your Online Business

Voiceover: Rainmaker FM.

You are listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information, go to Rainmaker.FM/DigitalCommerce. That’s Rainmaker.FM/DigitalCommerce.

Sean Jackson: Welcome to The Digital Entrepreneur, everyone. I’m your host Sean Jackson. I’m joined, as always, by the analytical Jessica Frick. Jessica, how the Frick are you?

Jessica Frick: I am still deciding. How the Jackson are you, Sean?

Sean Jackson: Always well. I am excited to continue our debate from last week about PPC. In fact, the whole show is about PPC, so we might as well put it at the top — our question — which was: is PPC for everyone? You say?

Jessica Frick: I say that it’s not.

Sean Jackson: Okay, tell me why.

Jessica Frick: I think that digital entrepreneurs should have a varied marketing mix, but I don’t think pay-per-click is for everyone. I think it’s certainly a good idea for most people, but I don’t know that it’s going to be the right play for everyone. Now, I think there’s some validity in saying you don’t know until you try it, but that’s not what we asked.

Sean Jackson: Right.

Jessica Frick: What we asked is, “Is it for everyone?” and I don’t know that it’s going to pay off for everyone. I don’t know that everyone’s business is the right model for that kind of conversion.

Sean Jackson: Yeah, I think that’s an important point to make, is that you really have to look at how your business operates. When we say PPC, we of course mean pay-per-click online advertising, etc. I would say, Jess, in support of your argument, if you were selling something very inexpensive, you may not have the margin to actually afford to advertise that way, with PPC. You may not even have the margin to do an experimentation, especially if you’re strapped for cash. Would you say that’s an accurate statement?

Jessica Frick: Absolutely.

Sean Jackson: But those cases, I think, are far and few between. I’ll let you have that argument in very niche cases. I’m going to give the affirmative. What I’m going to tell you folks is this: I think you do yourself a disservice if you don’t at least test things out. Now, it could be that PPC is not right for you because of you. You may be the actual problem. So, while others may see success in it — you, your business, how things are run, how you operate — you may not actually be ready for it.

But, if you can do the basics of online marketing, which you probably do today. You have a website. You’re selling something online. You are out there communicating to social media. You’re looking at search engines and how to improve your placement in there. Then you’re going to have to, at some point, put PPC in the mix. Because you’ve done everything else. I think that for most online businesses, they do a disservice if they don’t test it out to start with and then — I’ll caveat it this way — give yourself permission to fail at it.

Jessica Frick: Now, Sean, when you fail at a normal thing it’s really not so bad, but when you fail at paid placement, you’re losing money. Why is that okay?

Sean Jackson: Because we spend all sorts of money to fail. How many times have you gone on a new business pitch, and you spent the time and money to do the pitch and you never got the business? We, as entrepreneurs and online people, constantly do things that fail. We take the time to write a post that we think is going to be a hit, and it fails. Failure is, I think, a very important part of success, because it means you’re trying new things. Yes, it can be painful when you’re spending money in the hope that it comes back to you in something. But we do that all the time. We just don’t have that actual moment where it’s, “Put in your credit card and keep your fingers crossed.”

Jessica Frick: True.

Sean Jackson: I would argue that PPC is for everyone. If you’re of the mindset of continuous improvement, knowing that you don’t know what you don’t know, and you can’t know something until you try it. How’s that as the good compromise between?

Jessica Frick: I think that’s a good one. You don’t know it until you try it.

Sean Jackson: That’s right. In this episode of The Digital Entrepreneur, we actually have a very special guest on who is truly a master of PPC for a variety of different industries. When we get back from the break, we are going to interview Sean Dolan of PushFire, who not only is a great, awesome human being, he’s also done work for our company. So we’re definitely talking to someone who we believe and trust, and has helped us. He also has some really unique insight into not only how to start doing advertising, but also some of the things you should be looking for once you get good at the basics. So make sure you stay tuned, and we’ll be right back.

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Sean Jackson: Welcome back from the break, everyone. Jessica, this may actually be the most confusing interview we’ve ever done, given the fact that we’re about to interview our very special guest who happens to share my name. Please introduce our guest, and make sure when we’re talking to him, we direct it to the right Sean, not to me.

Jessica Frick: Yeah, that’s a good point. Sean, I’m excited to introduce Sean. But Sean Dolan, who is president and COO of PushFire. Sean is a recognized name in the paid placement industry, and he is a keynote speaker and an all-around great guy. He’s actually done work for us here, so I can think of no one better to talk to about paid placement than Dolan.

Sean Jackson: Mr. Dolan, welcome to the show.

Sean Dolan: Thanks for having me, Mr. Jackson.

Sean Jackson: Exactly. Our poor audience is going to be like, “Which Sean are they talking about?”

Sean Dolan: You guys can call me Dolan.

Sean Jackson: I’ll just call you Dolan, exactly.

Sean Dolan: I’ll roll with whatever.

Is PPC Right for Every Type of Business?

Sean Jackson: Well, the good news is you actually spell your name correctly, so I’m happy about that. Sean, we have been debating — Jess and I — about the role of PPC. Is it for every business online, or is it for only certain types of businesses online? Please answer the question for us. Is PPC for everyone?

Sean Dolan: Yeah, when Jessica actually reached out and asked me that in setting up this interview — she asked me that question — I said that PPC is not for everyone, it’s just for winners.

Sean Jackson: Ooh.

Sean Dolan: While it’s funny, I often find people that are asking the question of whether they should do PPC. To me, it’s so self-serving and testable, that the time you spend thinking about it, you could have just tested it and figured out if it works for you. I’m a big fan of “shoot and then recalibrate,” so I always tell people, “At least rule it out. Rule it out and then tell me it doesn’t work.”

If you haven’t tried it, the billions of dollars being spent on it … There’s some bad advertisers out there and big corporations that waste a lot of money, but I don’t think they’re wasting billions of dollars and not getting returns. That’s the argument I usually make to people. We do PPC for our own company, for obvious reasons, and it’s money in, money out. At the end of the day, it works or it doesn’t.

Jessica Frick: That actually brings up one of my questions to you, because as you know, I actually took the negative. I don’t think PPC is for everyone. I know that it works, but I also know that there are a million other ways you can get business. Didn’t you get business off a bathroom wall?

Sean Dolan: Yeah, we did. We had a guy call us — and we ignored him, we didn’t understand the lead. If someone fills out a lead and they don’t know how to fill out lead forms, then we rule them out as potential clients. There was something weird about it and suspicious. Anyway, we actually finally … He was very aggressive and got a hold of us. He’s like, “You guys aren’t going to believe this, but I saw PushFire in a bathroom stall in Sugar Land.”

I still don’t quite know how that came about. I’m not complaining, but I’m also not pursuing that either. Yeah, they come from everywhere. One of my clients teaches real estate investing, and something that he always says … We generate the PPC leads for him, motivated seller leads for his real estate flips, and people always ask him, “What’s the magic marketing? What works? What’s the best?” His answer is, “Everything works. Everything. All of it works. Some better than others, but sitting around not doing it definitely doesn’t work.” That’s where I try to get people, is just try it. Just do it.

Jessica Frick: How do you generate leads for PushFire?

A Super Simple Way to Generate $100,000s of Dollars of Business with Just a Few Hours of Work

Sean Dolan: Over the last three or four years, we’ve been fortunate enough that Ray is good at SEO. We rank one or two for PPC management on Google, depending on the day. It’s us and WordStream, neck and neck. That generated a lot. The problem with that is we would get leads from various sources. We would get a lead for women’s underwear, and then we’d get a lead for trailer hitches. My team is mastering and understanding the landscape of two completely different industries, so the scalability there is weak. We did that for a long time, and we were very successful at it. We have clients from all different industries.

I was spoiled that we were getting all these leads coming in through SEO. I decided that I wanted to take control of that and actually go out and acquire a specific type of lead. I went for the investors. I have a lot of investors we work with that are very successful. I’ve been doing this for over eight years in the real estate space, doing advertising. I get that space. I went online and I Googled “real estate forums.” I recommend, if somebody is trying to generate leads — find that water cooler. Find out where everyone is. If you think there’s not a water cooler for your industry, Google “chewing ice forum,” because there’s a forum for people that like to chew ice.

Jessica Frick: Dude.

Sean Dolan: Yeah. It’s real, look it up.

Jessica Frick: They talk about chewing ice.

Sean Dolan: Yeah, just a group of people that just enjoy chewing ice. That’s their thing. There’s plumbers forums, there’s attorney forums. Whatever is your market, there is a place online those people go. If there’s a website, that means there’s AdSense. That website has to generate money. If there’s AdSense, that’s your in.

I found this online real estate forum. They had three ad sizes across their website. I created three ads while sitting in Starbucks. They were not fantastic ads. I wanted to do all of it myself because I’m putting together a case study on how anyone can do this. I threw the ads together and I put together a landing page. It was very in your face. I understand the real estate investors enough to know how they speak and how to get their attention. I threw it up. I spent about $2000.

Actually, in four days, I got 20 leads at about $50 a lead. Right out of the gate, I was generating leads. I closed 10 of those lands, and I will probably close another five. This is just two or three weeks ago that we ran this. I had to pause it because I couldn’t take all the calls. Even at the 10 leads that we closed, the minimum revenue for that is $120,000 a year, assuming those 10 stay with us, which they tend to do. A third of those tend to spend more than the minimum. As their business grows, they’re spending $3000 to $5000 a month. Conservatively, from a few hours at Starbucks, I generated $200,000 a year in revenue.

If you do the math on that, 10 minutes of Googling the forum niche and finding out where the water cooler is, four hours at Starbucks creating the landing page, 20 minutes setting up ads in AdWords, 20 hours doing calls and sending contracts — that’s about 24 hours and 30 minutes to generate $200,000, or $8,163 per hour in revenue generated. This is literally overnight. There’s certain variables, like I had to be able to sell them. But when it comes to generating the leads …

Why Even a Failed PPC Test Is Better than No Testing

Sean Dolan: People dismiss display because the intent’s not there. “I have to figure out the intent based on the website they’re on.” With search, it’s very easy. People that are looking for PPC links for real estate, they’ll Google that. Through display, I have to identify where those people are. But it’s so easy to do. To me, if you have $1000 that you wanted to test — even if PPC fails, you have purchased data.

If you spend that on radio or TV, the data you get back is very weak. If you spend it on PPC, the data you get back is very specific. You know exactly what doesn’t work, and you can move forward from that. Obviously I’m biased. I’m in the world. I’m in it every day. But when I’m working with companies and they have other marketing channels … Man, I constantly feel like we outperform all the other channels.

Sean Jackson: Isn’t that part of the scary part? If I’m just doing this, if I’m just starting out, I don’t know if it’s going to work. And even if I think it may work, isn’t it too hard to put together? You gave a very specific example, but again, isn’t it just … I think there’s a lot of fear from the potential complexity of it. “I’m not a designer, I’m not a copywriter, etc.”

Sean Dolan: Yeah, and I don’t want to downplay my Photoshop skills that much. If we’re talking about just an average person, I definitely understand Photoshop enough to create an ad. It’s not a spectacular ad, but it’s enough to do the job. You can get people on Fiverr for $50, $100 to create you that great ad or maybe a set of ads. In fact, if we do the math I just did and instead I outsourced all of that work that I did, the 24 hours — it would have worked out to, let’s say, $1000 for the landing page, conservatively. You can get them a lot cheaper than that. But $1000 for the landing page design and copywriting. $500, let’s say, for the ad creation.

If I hired a sales guy to do all those calls for me, pay him $500 per lead he closed … If we take all that out of the $200,000, I’m left with $193,000 for 30 minutes of work. Do you know what I mean? Which is $96,000 an hour. Yeah, people get caught up in trying to do everything. This is huge in the real estate investing space. I keep bringing it up because a lot of my clients are in that space. But all these other guys, they’ll be on these forums and they’ll be like, “Hey guys, I’m trying to learn SEO.” I’m just like “ugh.” “I’m trying to learn PPC. I’m trying to learn all these things.” Then I ask them, “How is your flooring? Do you do flooring really well? How’s your roofing? Are you a good roofer?”

Are you going to buy a house and re-habit yourself, and hammer and nails? No. You hire people that know how to do that. I think people, they get caught up in wanting to do everything themselves. But when you outsource it, the math just makes so much more sense. Your time is valuable. Me and Ray always go over this. It’s been a mantra. If we find ourselves doing something that costs less than we make per hour to have somebody else do, we need to have them do it. That’s really helped us directly change our business and improve the revenue that we generate. That would be my response. Unless you’re passionate about graphic design, or unless you’re passionate about landing page design, man, just hire somebody. Just pay the money, have someone who is a pro do it.

What will happen is, if you do it wrong, you’re getting a false positive. You’ll disprove PPC where it might have worked had you hired someone who is competent and can create a good ad. Nobody is that far away from doing what I did in putting together the landing page and ad themselves, but at the same time, just hire someone who is good and learn from them. Prove the concept, prove the math. If you generate revenue from it, then you can go into the details and maybe play around with ads. That’s my recommendation, is outsource.

Jessica Frick: Sean, you’re pretty strong about outsourcing. What would you say the minimum amount of money is for someone to need to properly test whether paid placement is going to work for them? And should they just go straight for Google text or display? Should they experiment with social right out the door, too? Or do you suggest they use a budget and tier in? What do you think is best?

How to Find the Right Budget for Testing in Your Niche

Sean Dolan: Okay, I had a conversation with somebody yesterday whose wife is starting an event planning company. Or it’s been running, and she wants to help market it. The advice I gave to him for his wife was Facebook lead ads for their very specific area. If you want to test out PPC with the very minimum cost and lowest barrier of entry, you create a Facebook business page and you do Facebook lead ads. For her, it was event planning. It’s this bride who is frazzled. It’s like, “Don’t let this be you on your wedding day,” and you target people who are engaged within five miles or 10 miles of her home. She doesn’t have an office.

That’s my first step. I tell people that it’s either that or go to Google search and advertise on the exact product that you sell. If you sell blue shoes, you go to Google and you advertise on the term, “I want to buy blue shoes today.” I don’t care how expensive that term is, that’s not really the point. Bring people in that have the highest intent to convert for your product. If you can’t convert those people, you have a business problem. You have a lower funnel problem. A lot of people confuse that and they think that PPC didn’t work, when really it was the sales didn’t work. The follow-up didn’t work. In real estate, how many realtors do not answer their phone when my wife is calling them to check out a property?

That would be my biggest advice. If you’re going to test PPC, you want to make sure that you rule out your business as maybe being a problem. A good trick to do that is to advertise on the most obvious term and test it out. If you’re able to convert those terms — again, at whatever price — then you know you at least have your sales funnel together. It would be different if we’re talking about someone who has an established sales funnel, but I think here we’re talking about someone who is maybe getting started. If that’s the case, that’s how I would test it.

Sean Jackson: That’s a really good point, talking about the initial people that are just getting into this, going after the intent. I think it’s the question of budget, to follow up with Jessica. Part of it is, maybe you shouldn’t be playing in Google to start with. Maybe something like Bing, or a second or third tier place where you can make mistakes and it not cost you a fortune. You go after intent on a cheaper scale to test it out. Would you say that’s the case? If so, what would do it, $500? Do I need $1000? Do I need $10,000?

Sean Dolan: Yeah, it’s tough. When people come to me, if they’re not spending $5000 a month, for my business to work, it doesn’t make a lot of sense. I obviously give lots of people advice on the phone even if we’re not a good fit. For me, putting a price on it’s hard. If you’re an attorney who is wondering about PPCing for “truck accident attorney,” that’s hundreds of dollars per click. If you’re looking for “local hair salon,” that’s going to be a ridiculously cheap click. It does depend on the industry that you’re in. You can guess based on the lifetime value of the customer what that bid might be in general. There’s also tools you can look at.

It’s really hard for me to answer that question without knowing what their business is, but I will give the answer of, seek somebody out. There’s a lot of actual Facebook groups and there’s a lot of LinkedIn groups that discuss PPC, Facebook. There’s so many people on there that are very giving of their knowledge, and you can crowdsource that. I would suggest somebody like that. Either talk to somebody who is a professional, or go to an organization — even a meetup. DFWSEM up in Dallas. We’ve got SearchHOU in Houston.

Go to a meetup and ask somebody. Say, “Hey, this is my industry. What sort of amount should I spend?” You don’t want to spend too little and have it fail because you didn’t let the math run. You have to have enough sample data to really know statistically how that’s going to play out. A lot of people stop short. If they would have spent 10 more dollars, they would have gotten the lead that justifies it.

Sean Jackson: Right.

Sean Dolan: I would recommend going and seeking that advice out from someone in person.

Sean Jackson: Let’s move the conversation up. We’ve talked a lot about the beginning things that you have to do. I think you’ve covered through the basics. Let’s talk about the pros. You are obviously a pro. There are trends that are affecting the industry. Where is it going? I want to specifically key in on a couple of things. I want to talk about mobile and I want to talk about video. That’s how I’d like to end our interview. I want to go to the more advanced topics now. We’ve covered the basics, let’s talk about mobile and let’s talk about video. What do you see people are not doing that are currently advertising? What should they be doing better? And what they should be on the lookout for.

Future Trends in PPC and How You Can Stay Ahead

Sean Dolan: It’s an interesting question, because when I hear, “What’s on the horizon?” I immediately think, “98% of the people aren’t even doing what’s available today.” Do you know what I mean?

Sean Jackson: Right.

Sean Dolan: So many people aren’t doing what’s available now. But I think for horizon, if somebody were more high level, I think Facebook and Instagram are definitely — there’s opportunities there. Be first to try out new tools. New social network, whatever it is. Reddit recently released advertising. For anyone using Reddit, they see them. Obviously the targeting is not great right now. I think because the advertisers are not utilizing it very well. I’ve peeked in. I’m looking for the right client to try on Reddit. That’s what I’d recommend, is trying to stay ahead of the game and get into these new opportunities before all the competitors.

By the time Walmart and Chevron have gotten buy-in from upper management to venture into Reddit, it’s a little late. The competition is going to be there and the cost-per-click is going to go up. As far as mobile, man, people talk about advertising with PPC. They’re like, “I don’t have a website.” Of course, I’m like, “You’re hundreds of dollars away from having a website. Not a great one, but something.” That aside, there’s “click to call” options in Google, where you can have an ad that only shows up on mobile devices. When the user clicks it, it says, “Would you like to call this person?” You don’t even need a website.

Sean Jackson: Right.

Sean Dolan: You don’t need a website for PPC. I think little things like that, that people aren’t aware of and they miss out on. I think there’s huge gaps. I drive around town and I look at businesses, and I want to save all of them. They’re all missing out on such basic opportunities that would cost them very little to make a huge impact. That’s where I would go as far as mobile. Then, with video — video is killing it, particularly on Facebook. Hands down, every piece of content we put up, video drives more engagement than anything else.

There’s some arguments based on the authenticity of all that and what they actually count as a view, but I know from personal experience video definitely grabs me. I think if you’re an event planner, a hairstylist, or you sell honey from the bees in your backyard, if you go on Facebook and you advertise in a 5-mile radius and you put a video of yourself … Take the video on your iPhone and you post it. You explain your story. I think anybody could do really well.

Sean Jackson: Yeah, that’s a good point. Once you get into it, I think over time — just to sum up our conversation together — it’s not hard to get started in this. It doesn’t have to cost a fortune. But you should have at least a general idea, and ask others for their opinions and advice. Get into it. See what’s working for you when somebody is ready to buy right now. See what’s not working, and it could be that your business is broken. Then, of course, always be willing to go out there. Find new places that are on the forefront. Continue and expand.

But don’t forget the block and tackling. At the end of the day, if you’re not blocking and tackling, then you’re just missing opportunities that are so easy to grab. Then, of course, as the future unfolds with more mobile, video, etc., be willing to take a chance on them. Be willing to take a look. But realize that as you explore in this journey, you’re constantly going to be refining. Don’t forget to do the basics well to start with. Would you say, in summary, that’s pretty much what you said for the past 20 minutes?

Sean Dolan: Nailed it. That’s a wrap.

Sean Jackson: There you go. Well, hey, Sean, not only do you spell your name correctly, and not only do you have great insight, but you are a true gentleman and scholar. Jessica and I really appreciate you being on the show.

Sean Dolan: Anytime. Thank you so much.

Sean Jackson: Thank you, brother.

Jessica Frick: Thanks, Sean.

Sean Dolan: Y’all have a good one, bye bye.

Sean Jackson: Hey, everyone. This is Sean Jackson, the host of The Digital Entrepreneur. I want to ask you a simple question. What is your business framework for selling digital goods online? Now, if the question perplexes you, don’t worry. You’re not alone. Most people don’t realize that the most successful digital entrepreneurs have a framework or a general process for creating and selling their digital goods in the online space. One of the best free resources is Digital Commerce Academy. Digital Commerce Academy combines online learning with case studies and webinars created by people who make a living selling digital goods online.

The best part is that this material is free when you register. Are you interested in joining? Well, I’ll make it easy for you. If you are listening to the show on your phone and are in the continental United States, I want you to send a text message to 313131 with the keyword “digits.” When you send that text message, we will send you a link to the registration form right to your phone. Are you outside the United States? Don’t worry. Just send us an email to Digits@Rainmaker.FM. Either way, we’ll send you a link to the registration form so that you can sign up for free for Digital Commerce Academy.

As a special bonus, we will also subscribe you to our newsletter when you text or email us so that you can stay informed with the latest insights from the show. Don’t worry, we respect your privacy. We will not share your email or phone number, and you can easily unsubscribe at any time. If you want to start building or improving your framework for selling digital goods online, then please send a text to 313131 with the keyword “digits,” or send us an email at Digits@Rainmaker.FM. You won’t be disappointed.

Welcome back, everyone. It’s that time for us to give our recommendations for the week. Jessica, what do you have to recommend for our audience?

Jessica Frick: I can’t believe I’ve never recommended them on this show before, but Raven Tools. I love the Raven Tools team. I love the product. I have been a devoted user for years. When it comes to marketing reports and getting all the data you need in one easy place, Raven is where it’s at. Now that they have their site auditor tool in full force, it is absolutely unmatched and worth every penny.

Sean Jackson: Yeah, what’s the matter with you? Why haven’t you recommended them before? We love that tool, and we love those people. Gosh.

Jessica Frick: I have no idea. You know, I wear the t-shirt all the time. I don’t wear other people’s t-shirts very often, but I wear Raven all the time because I love talking about them. I don’t know.

Sean Jackson: Yeah, I agree with you. Raven Tools, everyone. Definitely check out that tool for the week. For me, I’m going to say to continue in our PPC thought, I have a blog site to recommend, which is the WordStream blog. WordStream.com/blog. Absolutely go and read that if you want to go and get more information about PPC, wouldn’t you say, Jess? That’s a good resource. At least to start out with. It’s going to cover both the basics and they, of course, have a tool that will help you for keywords, etc.

Jessica Frick: They do. It’s funny that Sean just literally said that WordStream.com competes with PushFire.com for SEO traffic.

Sean Jackson: Right. Hey, we’re equal opportunity here. Heck. We’re giving you both sides of the equation. We don’t care, as long as you succeed. That’s all that matters to us. Go take a look at Raven Tools, by all means. Great guys over there, great tool. In addition to our friend Sean Dolan from PushFire, by all means take a look at WordStream.com. Research and see what they have to say on their blog site if you are truly interested in learning more about PPC. All right, Jess, it is time for our question of the week, what we want people to ponder. You ready?

Jessica Frick: I’m ready. I’m ready.

Sean Jackson: What is the most important thing when it comes to growing your business, the quantity and quality of leads, or the process?

Jessica Frick: Ooh. That’s a really good question. Obviously, being the ops chick, I have to say process.

Sean Jackson: Of course I’m going to take the other side, which is the quantity of leads. Give me more to sell.

Jessica Frick: We should talk about this.

Sean Jackson: We should talk about this, and we’re going to do that on the next episode of The Digital Entrepreneur. Have a great week, everyone, we’ll catch you next time.

Jessica Frick: Thanks for listening.

The Transcript

A Simple Framework for Pricing Digital Goods

Voiceover: Rainmaker FM.

You are listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information, go to Rainmaker.FM/DigitalCommerce. That’s Rainmaker.FM/DigitalCommerce.

Sean Jackson: Welcome to The Digital Entrepreneur, everyone. I’m your host, Sean Jackson. I’m joined, as always, by the eclectic Jessica Frick. Jessica, how the Frick are you?

Jessica Frick: I am eclectic, Sean. How the Jackson are you?

Sean Jackson: Oh well, I’m still suffering from this cold that has been going around, but as I said before, our audience is too important and the show must go on.

Jessica Frick: You are a trouper.

Sean Jackson: I’m going to suffer through, but I will make it happen. Jess, where did we leave the last episode? What was the question of the week we wanted everyone to ponder?

Jessica Frick: See, here’s where I know that you’re pretending like you’re doing this just because you believe in the audience, but I know secretly you have been looking forward to this conversation. I have been having so much anxiety about it. Just the idea of it makes me anxious. Last week you’d asked me what I disliked the most about online business, and my answer was pricing.

Sean Jackson: Ah, yeah.

Jessica Frick: You know, I thought more about it, and just the concept of pricing is enough to put me into analysis paralysis. I won’t launch anything because I’m too afraid to put a price out there. Then you can’t really change it once it’s out there. “Did I go too high, too low?” Sean, what is your best piece of advice for someone like me who is not a numbers, math, or money person like you and can just say, “This is the price”?

The #1 Rule That You Must Follow When Setting Your Pricing

Sean Jackson: Yeah, your fear and anxiety around this is very common. I think especially when you’re starting out with anything new, you’re always worried, “Am I going to set the right price?” I think at the end of the day it helps to remember the fundamental rule, which is you control your pricing. That control gives you both responsibility, but it also gives you a lot of latitude. To address that fear, we have to realize that there’s no set book that says, “All things must be priced accordingly.” That you actually can pick a price. And picking that price — the goal is to defend the price, to make people not even question it.

When I was in sales many years ago there was a great quote that I used, which is that if they question the price you haven’t sold it enough. I love that quote, because it says that really pricing is a function of justifying it through the sales process. How you support it is what makes that price seem reasonable. Let’s do this, Jess. Let’s go to a break, and then when we come back, let’s get into the mechanics of this. I want everyone who’s listening to this episode to feel empowered that they are in control.

In the next part of our show, we’re going to talk about how they can actually do that, but I don’t want to leave this section without everyone sitting there going, “I have control. With that control, I can do what I need to to make my business successful by pricing the right way.” Is that a good way to end this particular section?

Jessica Frick: I am in control.

Sean Jackson: That’s right. When we come back from the break, we’re going to talk about how you can maintain that control. We’ll be right back, folks.

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Welcome back from the break, everyone. Jessica, we left the last segment with you wanting to know how to price your online product. Is that correct?

Jessica Frick: It is. There’s so many things that I feel like you need to put into that total price. What all goes into it, Sean?

Sean Jackson: Okay. Well let’s start with a very basic idea. Let’s use this as the example for the show. Let’s say you want to make $400,000 in revenue. Is that a good target? Would that be okay for you, $400,000 in revenue for the year.

Jessica Frick: I wouldn’t kick $400,000 out of bed.

Sean Jackson: Sure. You sit there and say, “Okay, I want to have $400,000. That’s my target for the year. That’s the amount of revenue, money, that I want to bring in for the year.” Let’s use that. “I want to do that by selling some sort of digital goods online, membership, ebook, etc.” All right, so we want to make $400,000. Let’s start looking at that number in a little more detail. Jessica, let’s say you want to sell some sort of membership site or some sort of training program or something like that.

Jessica Frick: Okay.

Sean Jackson: You want to make $400,000 in revenue. That’s our target. How many customers would you need to reach $400,000 in revenue? The response is, “Well, it depends on the price,” right?

Jessica Frick: Totally.

Sean Jackson: If you have one customer paying you $400,000 … But let’s go through the math a little bit more, because I want people to understand an important part of that $400,000 number. All of the money you are going to spend to make that is going to be taken out of that $400,000. And part of that $400,000 is the cost for you to deliver your product.

Jessica Frick: Okay.

Why Understanding Your Costs is Key to an Effective Pricing Strategy

Sean Jackson: Now this is different than the expense of running your business. An expense of running your business is like your Internet connection. That is an expense for the business, but it’s not a cost of you providing a product or service to a customer. Let’s look at what I mean by cost. In any online business that’s selling a digital good, your target should be around 20-25% of the money you collect should be the cost of providing that product or service to the customer. All right?

Jessica Frick: Okay.

Sean Jackson: Let’s use 25%. You want to make $400,000, right, Jess?

Jessica Frick: Yeah.

Sean Jackson: But 25% of that money is going to be the cost of delivering that product or service over to your customer. So what is 25% of $400,000?

Jessica Frick: $100,000.

Sean Jackson: That’s right, $100,000. By the way, every business has a cost to provide the product or service, every single one of them. 20-25% is a very good rule of thumb, simply because there’s a lot of money that you spend to give that customer the product or service. Even if you’re giving a training course, you still have to do customer support, right, Jess? That’s a cost, right?

Jessica Frick: Yeah.

Sean Jackson: You still have to have a website for them to go to. That’s a cost. There’s a lot of costs. Even if I bought your training program and it’s all online, I still have a cost of supporting you. I have a cost of collecting your money via credit card.

Jessica Frick: Yeah.

Sean Jackson: When you look at it … Now let’s go back. Jess, you want to make $400,000. You know that $100,000 is going to be the cost of providing that product or service to your customer. The question is, Jess, how many customers can you support for $100,000? That is the key. If you know it’s going to take you $100,000 of costs to support them and you have $400,000 of revenue that you want to make, how many customers can you support for $100,000 a year? To make the math easy, I’m going to say it’s 1,000 people. Would you say that feels about right for your training course, let’s say, that you’re trying to put up?

Jessica Frick: On average, because you know, again, there’s a 90/10 rule.

Sean Jackson: Sure.

Jessica Frick: 10% of the people are going to take up 90% of your time.

Sean Jackson: Right, but if I come in and I want to buy your training course, I want to buy your ebook, I want to buy your membership system, or I want to buy whatever digital good you have — your software product, whatever — then you have to say, “For $100,000, how many people can I support?” Now in this example I’m going to say 1,000, because it makes the math real easy.

Jessica Frick: Okay.

Sean Jackson: Let’s go through. You want to make $400,000, right, Jess?

Jessica Frick: I do.

Sean Jackson: You know that if you spend $100,000, you can support 1,000 customers. What is the average price you have to charge to make that $400,000? You’ve got 1,000 customers and you want to make $400,000 in revenue. How much do you have to charge on average?

Jessica Frick: On average, about $400.

Sean Jackson: That’s right. See, this is where it becomes kind of fun.

Jessica Frick: But Sean, that assumes that all of the things that I sell are going to be $400. What if I want to scale it?

Solid Guidelines That Will Help Demystify Pricing

Sean Jackson: Ah, that’s right. This is where we come through the next part, because we know we need to make $400 per sale. If we have 1,000 customers at $400 a sale, it’s $400,000 a year. I got my $400 average. Now let’s put the price together. This is why we have to know a little math, folks. We know we need to make on average $400. Here is how you get that $400 average. You don’t do it by selling one product. You do it by providing three to four options for people to buy online.

There’s a whole science and study around this, but I’m going to make this easy because, again, we’re trying to figure out the price of what we want to sell. We know we have to make $400 because we’re going to sell it to 1,000 people. That $400 is going to be the average between the things that you sell online. Now let’s do this, Jess. We’re going to create up a product that we’re going to call the anchor product.

This is important psychologically, because the anchor product is the single most expensive thing you ever sell. It is the thing that when people look at it, they go, “Man, I wish I could buy that. I wish I had enough money to buy that particular offering.” It’s like when you go to buy a car. Sometimes they’ll show you the most expensive car just so that they can put your … Because they want to sell you …

Jessica Frick: Oh yeah, I watch that on the DIY shows all the time. They show you the house that has everything you want.

Sean Jackson: That’s right.

Jessica Frick: And then you find out it’s half a million more than your budget.

Sean Jackson: That’s right. Now let’s come through this, folks. You need to create what I call the anchor product. The anchor product is the single most expensive thing you would ever provide to anyone from the products and service of your business. This is the uber offering of everything. This is the consulting. This is the come and wash your house for you. It is everything and anything that you would want to sell, and you’re going to price that at a level that is extremely high.

Remember, we want to make an average of $400 in our example. So your anchor product is going to be way more than $400. Let’s call it $2,000, just to throw it out there. Here’s why the anchor product is so important: No one’s going to buy the thing.

Jessica Frick: It’d be nice if they did, right?

Sean Jackson: Yeah, a few people will, but the anchor product sets the expectation. For instance, if I had two houses that you can take a look at, and one is this uber million-dollar house that is gorgeous — it’s got all this finish-out, etc. — and then I show you a house that’s $200,000 that is kind of like the million-dollar house, you’re going to sit there and anchor in your mind the features of the million-dollar house and look at it in the $200,000 house, and say, “Oh, that fixture right there. That was in the million-dollar house. Well, this must be just like the million-dollar house.”

Jessica Frick: Yeah, and you start negotiating with yourself about the different things.

Sean Jackson: That’s right.

Jessica Frick: It makes that lower price one so affordable.

Sean Jackson: That’s right. You’re like, “Well, it has some of the same features of the big expensive one that I can’t afford, so it must be as good as that really super nice thing that I can’t afford that I really want.” That’s why anchor products are crucial. The beauty of an anchor product, folks, is you can make up the price. You know what your average is, and you’re going to sit there and jack that anchor product up way higher than your average. In this case, let’s go ahead and say it’s $1,500 to $2,000. It really doesn’t matter if anybody buys this product. By the way, folks, you should be super excited that they do. But no one’s going to do it. It sets expectation.

The next thing that we do is we set up our mid-tier product and our lowest-tier product. These are important in the digital goods space because, again, we want this average of $400. What should we price our mid-tier product and what should we price our lower-tier product? Very simple. We want to make $400 in our example. That’s the average. No one’s going to buy the anchor product. It’s solely there to set expectations. The average of the money that we make is going to be the difference between the lowest-tier and the mid-tier, so let me give you how that would work. If you know you need to make $400, then your mid-tier product should be about $600 and your lowest-tier should be about $200. Your average price is going to be the difference between them, which is $400. See how that goes, Jess?

Jessica Frick: I do.

Sean Jackson: Your anchor product is there to establish the value. Your mid-tier product, which you hope a lot of people will buy … It turns out people will tend to buy that mid-tier product. A lot more people will buy the low-tier product. Your average is going to be the difference between the two.

Folks, let’s stop for a second and run through your personal situation. You have a product or service that you want to sell. Number one, set a target price, the target revenue. How much is the revenue you want to collect? Number two, how much is it going to cost you to support that revenue? It’s generally about 25%. Then from that, figure out how many customers can you support with that cost, that gives you your average. Once you find your average, then you create up a really expensive product called the anchor product. Then you have your mid-tier and lower-tier, and your average revenue is the difference between those two. I know this is a lot, which is why we’re linking to a post on exactly how the math goes.

Jessica Frick: It actually sounds a lot less intimidating when you break it down that way.

Sean Jackson: It does, because it really gives you a formula that you can key off of. You can take any ebook that you’ve got, any learning management, any software, any service — anything that you’ve got — and break it into three buckets. “My really expensive anchor one, my mid-tier one, and my low-tier one, all of which are similar together. Knowing that the average amount of money I’m going to make is the difference between the mid-tier and the low-tier.”

That universally works out. You will always have costs, which will help you figure out what your average is. That’s why it is important to understand how much money you want to make in the year, how much it costs you in the year, and how many people you could support in the year. Then from that simple little math you can figure out all of the rest of what you should price the product at. Okay?

Jessica Frick: Hmm.

Sean Jackson: Don’t worry, folks. Look at the link to the post that we wrote about this. It will make it much clearer than the audio portion of this exercise. Now I want to go into Jessica’s question. I have figured out how much I’m going to charge now. How much I have to charge to meet my goals. Jess, you asked a question earlier. “What about discounts? Can I change my pricing? Can I move this up or down accordingly?”

Jessica Frick: Yeah.

Why You Should Always Start out at a High Price

Sean Jackson: Okay. The simple answer is yes, you can always change this. I would say that it is — to start with — better to price high than low. Now, why do you think I say that?

Jessica Frick: Because you can always discount, but you can’t really go up unless you add more to it.

Sean Jackson: Exactly. See, folks, when you’re coming up with this hypothetical for your personal situation, what I want you to realize is that it’s better to start out high and discount back than it is to start out low and try to increase up. You’re going to have to justify the price no matter what you do. At least if you start out high you can create up additional incentives that decrease the price to the person or add more value into it, versus starting out really cheap and saying, “What I was charging you $100 for is now $1,000.” To make that psychological leap from $100 to $1,000 requires a ton of effort, versus, “Hey, it was $1,000, but we have a special this week and we’re going to discount the price back.”

Again, I want you to feel that you’re in control. But realize that any time you are discounting or increasing your price, you’re going to have to give a lot of justification around it to make sure that your audience understands why you are doing what you are doing. If you’re starting out high, it’s a lot easier to come down low than it is to go back up and have to justify why you increased the price up. It’s definitely possible. Jess, I’ve given you $400,000. Congratulations.

Jessica Frick: Yay.

Sean Jackson: You have to spend $100,000 for it. You’re going to generate 1,000 customers. They’re going to pay you, on average, $400. You’re going to create up your anchor product, which is super expensive. You’re going to create up your mid-tier and your low-tier offering. The difference between them is going to be your average. That’s the basics of the pricing for whatever you are selling online. Okay?

Jessica Frick: I dig it.

Sean Jackson: That formula works from day one, and you can tweak it accordingly.

Jessica Frick: Now, I have one tricky question, and this one always catches me up too. When you’re working out your pricing, how do you know — based on what your business needs to stay afloat — whether you should offer monthly, quarterly, or annual pricing, or just the one-time, done-with-it thing?

Sean Jackson: Yeah, that’s a good question. When you come in and look at how you collect that $400 in our hypothetical, do you ask for it all at one time period or do you try to break it up? I’m going to let you folks in on a little secret. The world revolves around credit cards. What I mean by that is everyone is debt financing almost all the purchases they make in their life. It is amazing to me how much debt people are using to buy the goods and services they have. Credit cards are hugely important in that, because it helps people finance the purchase.

To your question, should you offer a payment plan of some sort — a monthly, quarterly type of subscription — or should you ask for all the money upfront? My feeling is that you should give people the option, but you absolutely want to help them finance the deal. What I mean by that is, if you can afford to do monthly, provide them a monthly. If you can afford to do quarterly, give them that.

It is so much nicer when you have someone’s credit card to charge that on regular intervals. It makes that easier for the person to buy it because they know they don’t have to give you $400 right now. They can give you, let’s say, $30 right now, and then they pay you every single month thereafter.

I always recommend, if you can finance a purchase, then absolutely finance it by offering payment plans — whether they be subscription, monthly, quarterly, etc. Or, if you’re going to charge them a big chunk of money upfront, let them pay it off over four months. You would find that in doing so, they would be more inclined to buy because the money perception going out is a lot less than if they have to give you that $400 right now.

Jessica Frick: I see a lot of people setting their prices higher when they charge monthly. Then they give you a discount if you pay it all at once.

Sean Jackson: Yeah, I think so. You should do that. That again goes to the point that … Remember when I talked about cost, there is a cost of the fact that if you want an average of $400 but you’re going to be giving discounts. Then your average goes down. Again, it goes to your cost. Can you afford to give people that discount? I think a lot of people can, because you can always increase your price up.

Jessica Frick: Yeah, that’s true. I feel like a huge weight has been lifted off of me. Thank you, Sean. I was dreading this call.

Sean Jackson: Well, I know a lot of people listening to this are rolling their eyes, going, “Gosh dang it, Sean. I’m a marketer, not an accountant. Why are you doing this to me?” But here’s the thing, folks — to really end this particular section, remember you’re in control of all of the pricing when it comes to your product or service. Start high to begin with. Do some very simple math. Set some targets. Figure out what it’s going to cost you. How many people can you support? Realize that the average is going to be a function of how your different offers are put together.

For God’s sake, please read the post that we have tied to this, which is The Smart and Simple Framework for Finding the Right Pricing Model for Your Site. By all means, please read this post. It makes it so much easier. I have seen, Jess, so many people underprice what they have. That are struggling to make a dime online because they think that they needed to be cheaper, not more expensive. That were not comfortable with the money side of this. Yet they’re doing it because they want to make money online. Get comfortable with the math, and then you’re going to find that the money is there. You just have to have the right pricing strategy, which we’ve given you a formula to do it. Does that help?

Jessica Frick: Makes sense to me.

Sean Jackson: Perfect. Folks, hopefully it’ll make sense to you. When we come back, we’re going to share some tips, tactics, tools, and ideas that you should be thinking about for the week ahead.

Hey, everyone. This is Sean Jackson, the host of The Digital Entrepreneur. I want to ask you a simple question. What is your business framework for selling digital goods online? Now, if the question perplexes you, don’t worry, you are not alone. Most people don’t realize that the most successful digital entrepreneurs have a framework or a general process for creating and selling their digital goods in the online space. One of the best free resources is Digital Commerce Academy. Digital Commerce Academy combines online learning with case studies and webinars created by people who make a living selling digital goods online.

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Welcome back from the break, everyone. Jess, now it’s time in the show to talk about recommendations. What do you have this week for our audience on something they should take a look at?

Jessica Frick: Well, my very favorite resource for all things data and analytics-related is Annielytics.com. That’s Annie — her name is Annie — lytics.com. Annie Cushing has created a number of guides that make analytics sexy. I know. It sounds completely insane, but once you read it you’ll see what I mean. She teaches you how to do an actual site audit or develop a marketing strategy or an analytics audit with real life data. Also, her blog takes complicated concepts and puts them in such a familiar voice that when you read it, there is no anxiety whatsoever. By the end of it, you are actually working on your data without hired help.

Sean Jackson: This is very important, because at the end of the day, when it comes to the work that we do on the online space, we are awash in data. Certainly Google Analytics plays a big part of that data — both aggregation and research. Having someone like Annie Cushing can really help you understand all of this data and how to put it into context so that you can make informed decisions. Would you say that’s the end benefit of going to Annielytics?

Jessica Frick: Absolutely, and she has a number of resources available for free. She does have some paid resources, but when you look at the pricing, you’ll find that she did a really great job at making it completely affordable with a huge payoff.

Sean Jackson: Ah, very good. I like that recommendation. My recommendation for the week is a book called Contagious. I am absolutely blown away with this book. Jonah Berger created this book up, and he really went through the science of why things go viral online. I was fascinated. It’s not a long read. It’s a fairly short read. It’s called Contagious by Jonah Berger. He really goes through the science of analyzing, “Why do certain videos go viral? Why do certain products just take off?” In doing that, he found a formula that they all use to make something go viral online. The read is absolutely fascinating. I highly recommend it. Backed up by some real science, some real data.

It’s funny, because he’s also in that same universe. Have you ever read the book Made to Stick by the Heath brothers? He’s in that same universe. These are guys all know each other, and they all talk about the psychology and behavioral dynamics of online marketing. I highly recommend taking a read of this book, Contagious. It’s not very long, and I think Jonah did a phenomenal job with it. That’s the recommendation for the book.

Of course, folks, we will put into the show notes on the webpage links to Annielytics as well as to Contagious so you can take a look at them. Jess, what is the question of the week we want people to ponder while we put together the next show?

Jessica Frick: We are talking about analytics and it also got me thinking — paid traffic. Sean, is pay-per-click for everyone? Should everyone be doing it?

Sean Jackson: Absolutely. Everyone should be doing pay-per-click.

Jessica Frick: Not everyone, Sean. Not everyone.

Sean Jackson: I’m sure Google thinks so.

Jessica Frick: Well yeah, Google, Microsoft. They’re all like, “absolutely.” But there are cases where you shouldn’t. We should talk about that next week.

Sean Jackson: Really?

Jessica Frick: Yeah, we should talk about this.

Sean Jackson: Let’s do this. What do you think, folks? Should you be doing PPC or advertising on Google, on Microsoft — on all the major search engines and all the other ad networks out there? Or is it not right for you? I think that’s a good question to ponder for the week. We will answer that and much more in our next episode of The Digital Entrepreneur. Take care, everyone.

Jessica Frick: Thanks for listening.

The Transcript

How to Use Amazon Publishing to Grow Your Online Audience

Sean Jackson: Rainmaker FM.

You’re listening to The Digital Entrepreneur. The show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information, go to Rainmaker.FM/DigitalCommerce. That’s Rainmaker.FM/DigitalCommerce.

Welcome to the Digital Entrepreneur, everyone. I’m your host, Sean Jackson. I’m joined, as always, by the witty Jessica Frick. Jessica, how the frick are you today?

Jessica Frick: I am fabulous. How the Jackson are you?

Sean Jackson: I am actually sick. If you’re listening to the show, I actually have a horrible ear infection and cold.

Jessica Frick: I’m so sorry, Sean.

Sean Jackson: Well thank you. But here’s the thing, Jess, I love our audience so much that I’m going to plow through this episode, because it’s too dang important. But the good news is, it’s going to be short, because I’m going to go back home and go to bed.

Jessica Frick: You’re pretty hardcore.

Sean Jackson: Well, I only do it for our audience. So, Jess, where did we leave the last episode?

Jessica Frick: Well, the last episode we were talking about Amazon. Is it your best friend or is it your frenemy?

Sean Jackson: Well, what do you say, Jess?

Jessica Frick: I say frenemy.

Sean Jackson: Oh, well let’s get that argument out there. I want to hear it.

Jessica Frick: Well, first off, I don’t think Amazon is a one-size-fits-all solution. Do I think that it should be considered as part of the marketing mix? Absolutely. Do I think Amazon is in business to help you? Hell no. I think they will shortchange you every chance they can because they’re in business to make money for themselves. They don’t care about your book. They don’t care about your brand. They care about money for themselves. So I think if you really want to succeed as a publisher, you really need to consider all of the options available to you, with Amazon playing a very small part.

Sean Jackson: Well, I am going to tell you how wrong you are. Here’s why I say that it is your friend — I’ll put it out there this way — first off, let’s just look at the big numbers. The amount of transactions that go through Amazon.com dwarf any other site on the planet. It’s over 40 percent. It’s huge. The audience is there. All of your audience is there.

I do think that if you’re looking at Amazon publishing as a way to write the classic book you’ve always wanted to, and thinking that you’ll retire as an author in some mountain hillside retreat, that’s probably the wrong way to look at it if you’re a digital entrepreneur. I think that it is probably one of the best vehicles to test ideas, to put thoughts down, and establish thought leadership. And doing so from a marketing perspective, not necessarily from an “Oh, I’m gonna make a ton of money doing this.”

I think that’s the trap. I think a lot of people get into publishing and they think, “Oh, I’m gonna make all this money doing it.” The problem is you have to look at it as part of the marketing mix. Can you create up content that inspires action to get them back to your site? Where I say it’s your best friend, is because it is a giant universe of potential people out there that you could communicate with through writing an ebook or actually doing self publishing on Kindle. But — and this is the big caveat — if you think that you’re going to write the classic book that’s going to help you retire, I would say no publishing platform’s going to do it, regardless of how big it is.

Jessica Frick: Unless you’re 50 Shades of something.

Sean Jackson: Well, those are the anomalies, right? That’s always the thing.

Jessica Frick: They totally are.

Sean Jackson: It’s the ones that come up and you’re like, “Oh, they did this on that.” And sure, yes, there are anomalies to it. But in the world that we happen to have it, which is “we gotta do things that make money today,” I think that you would be smarter to look at it slightly different. I don’t think that you are going to approach it with the right mindset unless you think of it as marketing versus making money from an ebook. That’s how I look at it.

Jessica Frick: Well I would agree with that. Let’s be real here, traditional publishing is slow.

Sean Jackson: Yeah.

Jessica Frick: Whereas somehow — my son and I were talking about this the other day — you go see a movie in the theater, and now it’s out like two months later. When we were kids, we had to wait like six months, sometimes longer, for the movie to come out on VHS.

Sean Jackson: Yeah. It takes time.

Jessica Frick: Yeah, well things are moving faster. But traditional publishing? Not so much.

Sean Jackson: That’s right. You’re right.

Jessica Frick: So yes, I agree that you can take control. But using Amazon as a delivery mechanism for an audience you already have? Now you’re giving Amazon money when you could’ve just kept it for yourself.

Sean Jackson: Interesting point. And the good news about today’s show is we actually have an expert on who has not only written numerous books and has published, but is also one of the leading thought leaders in online marketing, Bryan Eisenberg. The best part of today’s show is the fact that he actually has a book that he is about to release — another book, I should say. Another book that he is about to release on Amazon. He is actually going to walk us through the process that he is using to write a book for Amazon to build his business through that vehicle. So stay tuned after the break. We’re going to interview Bryan Eisenberg and talk about what a true expert and author does to promote their work in the Amazon ecosystem, so stay tuned.

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Welcome back from the break, everyone. Jessica, please introduce our very special guest for the interview today.

Jessica Frick: Today, Sean, we have the devastatingly handsome and phenomenally intelligent Bryan Eisenberg. He’s co-founder of Buyer Legends and co-author of the Wall Street Journal and New York Times best-selling books, Call to Action, Waiting for Your Cat to Bark?, Always Be Testing, and Buyer Legends: The Executive Storyteller’s Guide. And the forthcoming, hopefully best-seller, Be Like Amazon: Even a Lemonade Stand Can Do It.

Sean Jackson: Bryan, welcome to the show.

Bryan Eisenberg: I’m excited to be here.

Sean Jackson: So, Bryan, I want to preface this for our audience. I want to tell you something that happened back in 2013 that you did that really inspired me. I want to set the stage. We were in Denver at our very first conference for the company, and you were the closing keynote that Friday. You remember that? You were there …

Bryan Eisenberg: Yeah, and I was shocked about coming onstage to talk about the topic I did.

Sean Jackson: Exactly. So you come up on stage and you start talking about Amazon. Now, I’ve been in marketing for a long time, and I’m like “Marketing? Amazon? What the heck is he talking about?” You went through for an hour on all of these amazing things. I remember walking out of that presentation and I said, “I have to buy stock in Amazon right now. I have to go buy it.” At the time it was trading at $270, today, that stock is worth $848.

Bryan Eisenberg: Jessica, he hasn’t even sent me a gift basket.

Jessica Frick: I was going to say.

Sean Jackson: Well I bought a share.

Bryan Eisenberg: It was only a gift basket, man.

Why Amazon Self-Publishing Should Be in Your Marketing Mix

Sean Jackson: That’s right. But even me, as a financial guy, I was sitting there going, “Holy cow!” Your insight into Amazon blew me away. So when Jessica and I were thinking about topics for the show, I was coming up and saying, “Okay, we need somebody about Amazon.” Your presentation stuck in my mind. So let’s get into it, Bryan. Other than invest in stock, why should a digital entrepreneur even think about Amazon in their mix?

Bryan Eisenberg: You know, it’s a great question. I have a few buddies in the space right now who have had their own ebooks for a long time, and they’re asking the question, “Should we be on Amazon?” So I’m hearing this a lot lately. The answer is: absolutely. That’s where buyers are. 43 percent of all e-commerce sales — all of them — happen on Amazon.

Jessica Frick: Wow.

Bryan Eisenberg: Amazon Prime members — who are their largest Kindle audience — are a great demographic. They spend three to five times as much as regular customers. I think when you start looking at that … To top it all off, they convert about 74 percent of the time once they’re on the website. So it’s definitely a place where you want to be, because it’s the mass audience that you can reach that you probably couldn’t have reached before. And there’s also a brand perception of you being an author on Amazon, versus being an author who has his own little ebook.

Sean Jackson: Right. But isn’t there competition though? Yes, you can get some authority by being on Amazon for your ebook, but isn’t there so much competition and pricing pressures are so much that … Are you going to make any money doing it, putting your ebook out there, knowing that there’s so much competition and pricing pressures are intense?

The Types of Strategies You Should Use

Bryan Eisenberg: It’s a great question. I’ve written now six books, and the lesson I’ve learned from basically all my author friends is you don’t necessarily make money from the book. You make money because of the book. So you need to think of your Amazon strategy slightly different than your ebook strategy. This is what’s happening with one of my buddies, Bobby Tewksbary. He’s one of the top-hitting baseball coaches in the country. He’s actually a Rainmaker client as well, he’s been hosting a membership site there and he has his ebook there.

What we’re doing is going to come out with a different book for a much broader audience. An intro book, so to speak, on Amazon, because that’s where the customers are. Go for the wide net that Amazon has, and then bring them down the funnel into his profitable membership site and his profitable ebook. That’s where he makes the money. Think about the Amazon thing as a lead generator.

Sean Jackson: Yeah, I think that is a very valid point, that it is a lead generator. It is a way to test ideas. See if something that you came up with is even resonating. If it is, then you can expand upon it and grow from it. As well as the fact that it can and should drive traffic to your site. But there is a difference though. You talk about ebooks, and I know a lot of our people who are listening know about ebooks, but what about Kindle books versus an ebook. Is there a difference? If so, what is it? And should we even be concerned with it?

The Difference Between Publishing for Kindle Versus an Ebook

Bryan Eisenberg: There’s a few differences, and I think there’s a couple of other key things that we have to consider on Amazon. Number one: those reviews are second-to-none. You can have as many testimonials on your website and everyone could think that they’re baloney, but the Amazon reviews and the verified reviews are amazing. The advantage to Kindles is there’s a whole ecosystem on there. We’ve used this to our advantage many times. Amazon will often do different kinds of promotions where they’ll take some of … Especially if you have a great product, they’ll go ahead and they’ll do their Kindle Unlimited and basically put your book out there. All of a sudden, you’re getting customers who you would have never imagined beforehand.

Being able to read on the Kindle — what I love about it, personally … Every book I get is on Kindle, and occasionally audiobooks. I love being able to highlight the books in the Kindle and then export all my notes into Evernote and have a place where I can come by and search for it and do all that, which I can’t do with any other book.

Sean Jackson: You mentioned audiobooks, let’s go into that for a second. Do you recommend people should try an audiobook? Do you have to have a book to have an audiobook? I think that’s the first question.

Bryan Eisenberg: You know, that’s a good question. I don’t think so. The key is, audiobooks are a little harder to produce than a regular book today. The only reason I’m saying that is the production value of an audiobook — you better have good recording. Of course, that’s not hard to do today, we see it in the quality of podcasts. But you really have to have an engaging voice. You have to have somebody who’s reading it well. It has to be a good production. If not, people are not going to jump into it and keep listening to the book. But I definitely think it’s another part of the audience that you can go after that you should be looking at, because there are millions of customers there who will absolutely want to potentially engage with your brand if they can find your book on Amazon.

Sean Jackson: You made that great point about the reviews. That’s another aspect of using the Amazon network. When you get those reviews, you can use those reviews on your site. You can say, “This is how it’s recommended on Amazon,” and reference back to it, so it gives further validity when people get to your site.

Bryan Eisenberg: Exactly. They have all kind of widgets that you can put on your website to put the book there. It can show the number of reviews and all that. It really gives it another air of, like I said, this credibility factor that being on Amazon has. And of course, there are a lot of people who also do the little Amazon Best Seller tactics, and that’s a whole other way that we could talk about it. Finding a niche category that they can go ahead and all of a sudden be the number one book in such-and-such. You start doing those kinds of things and they just add a boost to the credibility.

Sean Jackson: Let me ask you something. Back to my ebook. In the hypothetical, I create up an ebook. I’m using it to catch a wider audience. It’s going to be a simpler type of book with primarily the purpose being to drive people back to my site. Should I be selling that ebook on my site via Amazon, or should I put my own shopping cart on my site?

Bryan Eisenberg: Oh, I would definitely sell it through Amazon. Again, Amazon customers convert better than just about anyone else. It’s funny, I’ve been having this discussion about my current book — and I’ll get into that in a minute. People love being able to check out with Amazon. It’s just way easier for them. The credit card is in there, just a couple of clicks and they’re done. They don’t have to think about it.

Yes, you can certainly sell it on your site. But again, you have to get that trust factor initially. It’s way easier for them to feel comfortable giving their credit card through Amazon than through you. Once they’ve bought that book, and now they’ve read it, and they’re like, “Oh yeah, I trust this guy.” They’ve become part of your tribe. Now, all of a sudden, it’s way easier to get their credit card again for a membership site, for a more in-depth ebook, webinar, or class — whatever digital product you’re actually selling.

Sean Jackson: Right. And you’re finding that the information that Amazon stores and provides to you as a publisher, that’s useful? You can use it? They’re giving you everything and anything you need to be successful with the ebook?

Bryan Eisenberg: Yeah, pretty much. They’re not very good yet for bulk purchases, which is definitely a sticking point. It’s one of the reasons why for our new book we’re actually going to print our own hardcovers of the book so that we can give them out at conferences. But, yeah, for the Kindle version, which we’re actually going to release before the hardcover, they give you everything you need.

The Tactics That Bryan Is Using Right Now to Build Awareness for His Book

Sean Jackson: Gotcha. Let’s talk about your new book in a second. You brought it up. Let’s talk about your tactics for it. Granted, the title should work well on Amazon, I would hope.

Bryan Eisenberg: Or not. I think in some ways it’s actually going to be a hard search. The funny part is, our first self-published book, which is a book that we did in 2002 called “Persuasive Online Copywriting” — worst title for a book ever. However, back then, Amazon search engine was so primitive that we wanted to rank for the word “online copywriting.” My friend Nick Usborne — I’m sure you know Nick as well — had wrote a book called Net Words. These were the first books on online copywriting on the web. I know Bryan’s — one of his favorite books, and he’s talked about it in the past as well.

Persuasive Online Copywriting ranked, and it helped us get a lot of sales that way. Today, it’s going to be a little bit tougher. There’s a lot of things that are branded Amazon, so I don’t know. That’s going to be a tough one. We’re going to have to hope that the book alone and the reviews that we’re getting so far really go about it. But I think what’s interesting is, like you said, if we go into the marketing tactics behind the book. I think a lot of people will benefit from understanding what we’re trying to do, and some of the strategies to make this book a best-seller book. I’m not worried about New York Times best-seller, the goal is to get it to 100,000+ readers over the next couple of months.

Sean Jackson: Well, let’s go through it then. You brought it up. I want to hear it. Reveal all. You came up with the book, primarily … Let’s say that the purpose — beyond informing and helping the person that’s reading it — it also is a way to increase the authority that you have in the space, and thereof is a lead generator to you for your services. Would you say that’s an accurate statement as the bigger goal?

Bryan Eisenberg: Yeah, and services, primarily, are speaking, some of the workshops we do, and a little bit of consulting. But it really is — for 20 years I’ve been trying to get people to understand all about continuous optimization. Building a better business. Always be testing — which was another one of my books. Creating better customer experiences. Obviously we’ve had some success doing this.

But at this point, people are becoming desperate at how big Amazon has become, they really are. 43 percent of e-commerce is ridiculous, I’m sorry. It’s just an obscene number when you think about it. And they just keep growing every single year. Every conference I’m going to, people are asking me — I’m going to home improvement conferences to speak and people are telling me, “This year we’ve been spending time trying to think of how we can be more like Amazon.” As you know, we’ve been talking about this topic for a couple of years now. It was time to get this book out. We’ve had a real interesting roll-out strategy, very different than any other book we’ve done in the past.

Sean Jackson: Well tell us all.

Bryan Eisenberg: So the first thing we’ve done is we’ve actually let out every single chapter of the book for free, one by one. As we’ve been publishing them, essentially, we have released the 12 chapters of the book. People can go to the Be Like Amazon website right now and they can have the book, free.

Sean Jackson: Wow.

Bryan Eisenberg: It’s a draft version, so there’s still a couple of commas missing, stuff like that. We actually now have the edited version back from the publisher. But what happens is there are three things you have to do when you’re selling a book, and I think a lot of people miss this. The first one is you need to build awareness for your title. So a lot of people do all kinds of blogging, guest blogging, guest posting, and all that kind of stuff. It’s a tremendous amount of work. You’ve got to get people talking about your title. By the way, we switched title names, so that backfired a little bit on us. We started as Brand Like Amazon and now we’re Be Like Amazon.

Sean Jackson: Gotcha.

Bryan Eisenberg: For the most part, these 12 weeks people have gotten used to it. “Well, this is kind of interesting.” The second thing you need to do, is you need to get people to a website or to a store to actually purchase the book. And 95 percent of the time you don’t control that experience. They want to buy it on a third-party website. You’ve got to convince them to spend the money for a book. That’s already another obstacle. Then the third one — and this is the hardest one to do — is you need to get them to invest their time to read your book.

Sean Jackson: Yeah, that is the hardest, absolutely.

Bryan Eisenberg: That is the hardest thing. So we’ve done two things. This is what we did in our last book, we kept the book super short. I think the days of 200+ books … This is one of the reasons why publishers are also struggling. I forgot the exact number, but it’s something like 70-something-percent of all books — especially non-fiction books — people never get past page 39.

Sean Jackson: Oh, wow. Holy cow.

Bryan Eisenberg: Even today, I was reading something from a friend of mine who says, “What do they do with most business books? They read the first chapter, last chapter, and they then skim the little bit about each chapter, the beginning and the end of each chapter. And then they’re done. The rest of it’s filler.”

Sean Jackson: I would also say this is where the audio portion comes in too. With the rise of podcasting, with people coming through, you can help augment a little bit of that. It’s not just reading the book, it can also be “Hey, you bought this book, here is a special to go and get the audio version of the book that you can download to your mobile device and listen to it as you’re driving.”

Bryan Eisenberg: Absolutely. It’s definitely one more piece to it. So we put that together. Now we’re finishing up publication of the book, but like I said, we’ve only had the Kindle version out for a while. We don’t care if people get the book for free or if they pay for it — it doesn’t matter to us. Now, we’re also going to be releasing it as an audiobook. We are going to do an Audible book. But — same thing — we’re going to release one chapter a week as a podcast. It’s the same thing. If I can get you hooked on any one chapter, you might be interested in all the rest of the chapters.

Sean Jackson: Gotcha. You know, it would be funny to have Samuel L. Jackson do it for you, just saying.

Bryan Eisenberg: Yeah, I think he might be a little out of our budget for this one.

Pricing That Drives Customers While Still Indicating Perceived Value

Sean Jackson: I agree. Let’s talk about pricing strategy though. This is also going to come up again, both in the ebook and the Kindle universe. Because I do think they are slightly different universes, there’s different goals, different ideas. I 100 percent agree that shorter is sometimes better, but does shorter mean I have to charge a lot less? I’m trying to throw a wide net. I don’t want price to be an inhibitor, especially in the Kindle universe where prices are fairly well set. How do you think of pricing around these things?

Bryan Eisenberg: There’s a few things that are really cool with the Kindle. Especially if you’re doing it as a KDP and you’re publishing yourself, then you can set the price and discount it pretty much as often as you want. You can’t always make it free, but you can discount it as often as you want, which is really cool. I think one of the key things is, I would focus on keeping … Again, this is part of understanding your global strategy. You don’t have to make money from your Kindle book. That is giving the girl a flower on the first date before you go out. Just make it really easy to advance the relationship. Don’t worry about the next steps.

Keep the book $2.99, $3.99, $4.99, depending on how big the book is, what the topic is, how niche. You can play around with that. The hardcover of the book is going to be priced at $19.95 even though it’s still a relatively short book. But again, it’s going to be a hardcover, it’s a perceived value that you’re still trying to do. So this is the challenge, do you price it low enough that you make it really accessible and avoid the obstacles? Or do you want to increase the perceived value of the book and charge a lot more?

You’ve got to balance that based on what your strategy is, so I don’t want to give a definitive answer. We’ve really enjoyed making it way more accessible — the last book and this book as well — by pricing it on Kindle very inexpensively. All the other formats we’ll charge way more for it. Remember, it’s bits and bytes. Yes, the information has value, but we’re hoping that as you read it … Because you didn’t pay a lot, you’re willing to keep giving more money because there’s more to the ecosystem. We actually have something that’s tied to the book, where they’ll be able to come to our website and evaluate themselves on the criteria that we talk about in the book.

Sean Jackson: Right. But I do think the perceived value argument — I think there’s a lot to be said for increasing the price of something so that when you do give it away, the perceived value of the giveaway, it means a lot more. Especially if you’re using it as part of a strategy where, let’s say, you’re doing webinars. You’re saying, “Because you listened to this webinar, not only will I give you this, this, and this for free, but here’s my Kindle book, or here’s my book. It is normally $20 or $30 or $50, but because you’re here, I’m going to give it to you for free.” Or for $1, or whatever. Or, “Go to Kindle and you can get it on promotion right now if you do it in the next 30 minutes.” Because pricing discrimination is a motivator.

Bryan Eisenberg: Absolutely. Again, this all comes down to what their overall strategy is. In other words, if in a ideal world you had multiple books — one that you could price very low, one that you could price a little higher. They all cost essentially the same thing. But yes, if you could set that perceived value, absolutely go for it. I think that it’s as you said, it allows you to do different things with a high-value versus a low-value book.

Does a Digital Entrepreneur Need an Ebook or Kindle Book?

Sean Jackson: Now let me ask you — and we’re getting kind of towards the end — I do want to ask this question from a strategy perspective. If I am selling digital goods — specifically, I’m selling a membership system, I’m selling a training program, and I’m selling a paid online workshop, all in the digital goods space — is an ebook or Kindle book a central requirement of that universe to help draw people in? Or is it an add-on to the other things you were doing in the online marketing space?

Bryan Eisenberg: Let’s put it this way. My friend Mark Schaefer just finished the book Known. It’s interesting, he talks about how you can go ahead and become more well-known, and a big part of a lot of people doing this “known” thing is obviously producing their content and all of that. But there’s a value in having a book.

The other thing that being able to print it on Amazon, which is really cool, is that you can also go through CreateSpace and they can create the print-on-demand books. So you don’t have to go ahead and print a ton of physical copies like we’re doing, because we’re doing it for a whole different purpose and a whole different strategy. First of all, there’s some people who only want physical books. So you want to be able to have that option. The second thing is, if you do want to grow your speaking opportunities, there’s a big difference between having your own little self-published ebook on your site than having a published book that people can feel and touch.

Sean Jackson: About a $10,000 to $20,000 difference, I would think.

Bryan Eisenberg: Yeah, it depends on how good of a speaker you are, but yes. Absolutely, I think there’s some real value in using their platform, the CreateSpace, to create your Kindle and create the print-on-demand book. That’s what we did with our Buyer Legends book. Again, people have ordered them in bulk for their events. It’s cool. What bothered us is that it was so expensive for the people that bought it in bulk. The majority of what we want to do as a strategy is give away the books at conferences this coming year and plus, so we just said, “Okay, we’ll just print the books in advance as hardcovers so that people can give them away. Then we control the price of what the event organizer is paying for it.”

Sean Jackson: So Jessica, has Bryan convinced you that Amazon is an online entrepreneur’s best friend?

Jessica Frick: He has. But at the same time, I still say it’s not for everyone and every reason.

Bryan Eisenberg: I would agree with that.

Sean Jackson: Yeah, but that’s so benign, Jess, come on. You could say that about driving. “Driving’s not for everybody.”

Jessica Frick: Well, absolutely. But I think because Amazon is handling 40 percent of e-commerce, people are looking to that to be their white knight. And that cannot be what it is.

Bryan Eisenberg: Oh yeah, it’s not going to automatically sell books for you.

Jessica Frick: Agreed. Just as going junking, you can’t make a million because of eBay. It doesn’t work that way. So I think that yes, there is a lot to be said for Amazon as a power in the e-commerce and publishing space, but I think Bryan said it too. Sorry, Sean.

Sean Jackson: Well, like most things on this show, we’re just trying to put it out there for our audience to make their own decision. Hey, Bryan Eisenberg, thank you for being on our show. The title of the new book is Be Like Amazon. We’ll make sure to put a link to the website in our show notes. Really appreciate you being here, Bryan.

Bryan Eisenberg: Oh, it’s always a pleasure.

Sean Jackson: And we’ll be right back after this short break.

Hey, everyone. This is Sean Jackson, the host of The Digital Entrepreneur, and I want to ask you a simple question: what is your business framework for selling digital goods online? Now, if the question perplexes you, don’t worry. You are not alone. Most people don’t realize that the most successful digital entrepreneurs have a framework or a general process for creating and selling their digital goods in the online space. One of the best free resources is Digital Commerce Academy. Digital Commerce Academy combines online learning with case studies and webinars created by people who make a living selling digital goods online, and the best part is that this material is free when you register.

Are you interested in joining? Well I’ll make it easy for you. If you’re listening to the show on your phone and are in the continental United States, I want you to send a text message to 313131 with the keyword “digits.” When you send that text message, we will send you a link to the registration form right to your phone. Are you outside the United States? Don’t worry. Just send us an email to digits@Rainmaker.FM. Either way, we’ll send you a link to the registration form so that you can sign up for free for Digital Commerce Academy.

And as a special bonus, we will also subscribe you to our newsletter when you text or email us, so that you can stay informed with the latest insights from the show. And don’t worry, we respect your privacy and we will not share you email or phone number, and you can easily unsubscribe at any time. So if you want to start building or improve your framework for selling digital goods online, then please send a text to 313131 with the keyword “digits.” Or send us an email at digits@Rainmaker.FM. You won’t be disappointed.

Welcome back from the break, everyone. Jess, wasn’t that a great interview with Bryan Eisenberg?

Jessica Frick: I’m partial because I think he’s the bees knees.

Sean Jackson: He really is. And he’s so smart. He was able to put a lot of things that he’s doing, that’s why I liked that interview. Because he is actually sharing things that he personally is doing based on his experience in publishing books to the Amazon ecosystem.

Jessica Frick: As cool as it was, if you have a chance to see him live, you’ve got to go hear him as a speaker. He is enigmatic.

Sean Jackson: That’s true.

Jessica Frick: It is true.

Sean Jackson: So here’s the thing. Jess, what is our tip and tactic that we want to recommend for this week?

Jessica Frick: It’s easy to choose this week’s. It’s going to be Bryan’s new book that he has co-authored with his brother Jeffrey Eisenberg and Roy H. Williams. It is Be Like Amazon, and you can go grab it today at BeLikeAmazon.com. As Bryan mentioned in his interview, he’s actually giving this book away, which is crazy to me. Having read some of it already, it is fabulous and I don’t understand why he’s giving it away. Well, I do, but … You should go check it out. You’re going to love it. BeLikeAmazon.com.

Sean Jackson: Yeah, and the way that he writes … For those of you who have not read it yet, it’s written in a narrative style, so it’s a story. It’s an actual story about a protagonist and these two individuals, and the guide that is helping them literally be like Amazon. It reads much more like a story than an actual bland business book. So that’s going to be our recommendation for the week.

Jess, I want to end the show with our question for everyone to ponder, and here it is: Jessica, we’ve talked a lot about the things that we enjoy about the online space, but in running an online business, what is the least favorite thing that you’ve had to deal with?

Jessica Frick: I know exactly what you’re going to say when I say this, but, Sean, it’s pricing. It makes me crazy.

Sean Jackson: Pricing? Pricing an online product?

Jessica Frick: It’s pricing. I never know whether to go too high, give it away, or whether I’ve got the right price. I’m always afraid to test, because once you put the price out there what do you do? Pricing just makes me crazy. What say you?

Sean Jackson: I will say that being the CFO of the company and watching the pricing process first-hand, it’s one of the more interesting and fun aspects of running your business. And I’ll leave you with this thought: remember that in the online space, you as a digital entrepreneur are in total control of your pricing. That gives you both power and flexibility and allows you to control your destiny. We’re going to teach you how on the next episode of The Digital Entrepreneur. Have a great week, everyone.

Jessica Frick: Thanks for listening.

The Transcript

What Online Entrepreneurs Need to Know about Affiliate Marketing

Voiceover: Rainmaker FM.

You’re listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information go to Rainmaker.FM/DigitalCommerce, that’s Rainmaker.FM/DigitalCommerce.

Sean Jackson: Welcome to The Digital Entrepreneur, everyone. My name is Sean Jackson. I’m joined, as always, by the intelligent Jessica Frick. Jessica, how the frick are you?

Jessica Frick: I am great. How the jackson are you?

Sean Jackson: As always, I am well. And what was our question for the week that we left everyone hanging with from the last episode?

Jessica Frick: Last episode, we asked whether you think affiliate marketing is worth it for digital entrepreneurs. And you said it’s too hard for too little return. And I’ve been thinking all week about how wrong you are. But, before I detail all the reasons why it’s totally worth it, I really want to hear you expand on this.

The Common Complaints about Affiliate Marketing

Sean Jackson: You know, I’m becoming a curmudgeon on the show. I’ve realized that now ’cause I’m always in the negative. I’m gonna have a positive affirmation at some point. Let me be the negative guy for a second, okay?

So, here is the dilemma, all right? I think there are three things that make affiliate marketing just hard as hell. Okay, number one: You’re going to get a lot of affiliates that don’t do anything. I think if there’s an absolute example of The Pareto Principle in practice, it is the fact that a tiny minority of affiliates will generate the majority of sales, and the rest won’t do anything. And yet, you’re going to spend all your time with this universe of people that aren’t doing anything. And so if you’ve got limited time, why futz with it?

That’s number one. Number two: Too expensive, okay? Let’s face it. To get on people’s radar, you’re going to have to give a pretty generous commission on top of any fees you’re paying to an affiliate network on top of that. That’s a lot of money going out the door. So why should I be spending all this much money if it’s just going to be less profitable than if I do something, let’s say, like a Facebook ad or Google ad?

And then the third reason: Scammers, right? You know, there’s so many people out there, living on the fringes of trying to get a piece here, trying to get a piece there. They sign up for every affiliate network. And so instead of trying to focus my time and attention on people that are performing, I’m going to have to spend all my time trying to get rid of the scammers out of my network, those discount coupon-esque things that, you know, just don’t really do anything.

Jessica Frick: Oh yeah.

Sean Jackson: So those are my top three reasons why it’s just not worth the effort. You’re better off doing something else than affiliate network. Tell me why I’m right.

Why the Costs of Affiliate Marketing May be Worth it

Jessica Frick: Okay. Well now I hear why you’re so misguided.

Sean Jackson: Oh, okay.

Jessica Frick: First, let’s go with the cost, okay? We’ll go for number two, and then we’ll go one, and then three. So for number two, you’re saying it’s too expensive, but it’s called performance marketing for a reason. You pay when they do something. So, when you’re paying out a commission, it’s because they made a sale. And, quite frankly, it’s probably worthwhile to give them money to market your product than to pay for it what other way you would be marketing your product. You can’t just throw a sign up on your window and have customers run through the door. You gotta do something to work for that business.

Basically, with an affiliate marketer, you are giving them the money to earn that business for you. But that would also bring you to the time thing. You’re saying that you’d spend all this time on people who don’t do anything, but my personal experience has been that people who don’t do anything don’t do anything. They don’t take up your time. And the people who do take up your time are probably trying. Very few people are gonna ask you a million questions if they don’t plan to do anything.

But, you know, you also have to make sure it’s a good fit. The way that we handle our affiliate programs here at Rainmaker Digital is we always offer the benefit of the doubt. Sometimes people will ask you questions, and you’re like, “Are they just wasting my time here?” That’s never how we think about it. We always think about it as an opportunity to educate somebody who just doesn’t know. And whether they use that for us, or whether they use that somewhere else, we know that we’ve established that relationship, and they now trust us. And, perhaps, even if they don’t promote our products, they’ll buy them and use them in the future because they like us.

Sean Jackson: Yeah, but hold on. Let’s go through that one for a second because we’ve seen this before, right? That a lot of people sign up for an affiliate program just so they can get the discount, right, because they buy your product, and-

Jessica Frick: Okay, that’s the scammer part.

Sean Jackson: Yeah. So why, again, open yourself to having to go dig through that and go back and cancel those sales or any of that stuff?

Jessica Frick: Well we have some programs that are big where we will welcome anybody who’s legit and has a legit above board way to promote us that they plan to use. But we also have some programs that are very small, they’re invitation only. You wouldn’t even know about them unless we invited you. The bigger programs, it’s because we have processes in place to watch for that. And, quite frankly, if somebody’s gonna jump through all the hoops to get a discount and pay you for your product, personally, for the most part, I say you let ’em.

Sean Jackson: Mmm. Wow.

Jessica Frick: They’re still givin’ ya money.

Sean Jackson: Wow. I guess I’m just cheap.

Jessica Frick: Well, you know what though? For the most part, people don’t do that. I think that people genuinely are good. And if you have it in your rules that you’re not allowed to do that, most people don’t do that. Some people might do it by accident. I can’t tell you how many people have written us and said, “Oh my gosh. I just noticed I got a commission on my own sale. It must have clicked my link and bought something. I’m sorry. Can you reverse it?”

Sean Jackson: Yeah.

Jessica Frick: Well, we probably saw it anyway, but you saying that kinda makes me wanna let you keep it. But, you know.

Sean Jackson: Well, folks, what do you think? Have you experimented with an affiliate program before? Have you tried it out for your products? Make sure you visit the comments section of the episode, and let us know what you’re doing with affiliate programs. What do you think? Are they worth the time and effort, like Jessica thinks they are? Or are they just too much for too little return? Let us know. And we’ll be right back after this short break.

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Sean Jackson: Welcome back from the break, everyone. And Jessica, let’s get into affiliate marketing with our very special guest.

Jessica Frick: Today we have Brian Littleton, who is president and CEO of ShareASale. Brian founded ShareASale in 2000, and since then his leadership and vision have helped shape the industry into what it is today. We are very excited to have Brian today, and not just because of his affiliate marketing skills and knowledge, but also because he is one of the best piano players I have ever heard after a show. So, Brian, we are super happy to have you.

Brian Littleton: Thank you very much. I’m happy to be here as well.

Sean Jackson: So, Brian, I would like you to kind of inform our audience a little about ShareASale. And, full disclaimer by the way, folks; at our company, we have used ShareASale since the founding of the company. So we’ve been obviously affiliate marketers, and we’ve used ShareASale, so wanted to fully disclose that. So, Brian, what is ShareASale for our audience so they know what you’re about?

Brian Littleton: So, ShareASale is an affiliate network, which means it’s a platform for both a online retailer and an online publisher, such as the blogger, to meet and interact and basically have publishers earning commissions from various retailers for referring traffic. So, we’re one of the largest here in the United States, and we were recently acquired by Affiliate Window out of the U.K. to become really what is the largest global affiliate network that there is.

Sean Jackson: Gotcha. And you have about how many active publishers and advertisers?

Brian Littleton: Active publishers, a little over 100,000. Advertisers is somewhere around 4,500 or so, depending on some of the decisions, whether you’re counting private programs or not, but it’s a very large network having been built over the last 17 years.

Sean Jackson: And basically if I have a product that I’m selling … it could be a digital good, right? I could sell a t-shirt or I could be selling an ebook, right? I would go to someone like ShareASale and say, “Here is my product. I’d like to pay a commission for people who refer traffic to me. And that could be for clicks, sales, et cetera.” Fairly flexible, right? But it’s essentially a transaction between someone who has something to sell and someone who’s referring traffic to you. Is that essentially correct?

Brian Littleton: Yes, I would say the important distinction there is that it’s based off performance. We very rarely get into a per-click model. I would call that more of a pure advertising model, but it’s really based on performance. So it’s the sale of products, whether that’s digital goods or retail goods like fashion or what not. It’s all about the performance, which makes it a kind of a win-win arrangement for the publisher and the retailer.

Sean Jackson: Got it.

Why Performance Marketing and Affiliate Marketing in Particular is a Growing Trend

Jessica Frick: Now, Brian, you are also heavily involved in The Performance Marketing Association. For those who are listening, that’s thepma.org. Brian, can you tell us a little bit about why you believe it’s important not only to run your business, but to be so heavily involved with this association in particular?

Brian Littleton: Sure. Yeah, the performance marketing industry in general is just so unique; we’re different than other advertising models, we have different concerns, and it really wasn’t being represented by some of the larger groups that were in existence, such as maybe even the IAB or what not. But, that’s not a critique on them. It just wasn’t represented to the way that we felt it needed to be. So, it’s the only way that we’re really represented.

So we formed it. As one of the founding members, this was several years ago, I’m not even sure how many years at this point, but I became more heavily involved several years after I became the president of that organization, on the board of directors, and really tried to drive that forward. I’m still a member. I’m not the president any longer, as Rachel Honoway, the CEO of FMTC, has taken over that role. But it’s a very important thing for the industry to have.

Sean Jackson: And let me go through that, because performance marketing, for clarification sake, is very different than traditional online advertising, which tends to be display networks, right? Would you consider the barometer of performance marketing is the fact that, if you’re doing this type of marketing, you should be seeing a revenue gain? Is that essentially … that there should be something that you can track back to that says, This is revenue that we’re generating, versus more of your traditional display or even content marketing for that matter?

Brian Littleton: Well, it’s in it s most simple form, one of the ways I describe it is … so a traditional advertising campaign would have a budget. You’d say, “Okay. I want to spend $10,000 here. That’s my budget on display advertising. That’s it.” And then the publisher would kind of decide what the rates are, and you’d figure out how many impressions or clicks or whatever that added up to, and as soon as you got to 10,000, then it would end.

In a performance marketing relationship, you really don’t have a budget. The idea is that every time you are paying out a commission, you’re also receiving revenue from the sale of a product. So, if you’re selling a digital good and it costs $100 and your commission is $10 out to a publisher, you don’t really have a budget to spend because every time this happens, you’re actually winning. So it becomes a very different relationship for both of those parties and, quite frankly, can be much more lucrative in the right situation when the publisher matches the retailer.

Jessica Frick: And I think that that’s a really awesome point to bring us to the next question that I have for you, Brian. We are seeing performance marketing grow in a lot of areas that it previously didn’t apply to. I think people previously considered affiliate marketing kind of a dirty word, but now more merchants and digital entrepreneurs are using performance marketing to help grow their business. Who would you say would be ideal for an affiliate program, and who would not be ideal?

Brian Littleton: Well I’ve definitely been surprised over the years that the number of people who have come in and made this work when I would have said, “Ooh, I don’t know if that’s going to work here.” But, quite honestly, it’s anybody that’s selling a product, from a retailer perspective, anybody that’s selling a product or really even has any kind of measurable action, such as a lead generation or a form fill out, or whatever.

Anything can work with affiliate marketing. We’re talking about kind of the oldest tactic in the book, from a sales perspective, is to pay someone else a commission to refer business to you. Now that’s been going on since the Stone Age, so it’s just automated with the Internet and computers nowadays, but it’s a very old method. So anybody selling a product definitely can get involved.

From a publisher perspective, anyone with an audience of any kind. And that can be a small audience or a large audience. With both, you can be successful. One of the benefits of the performance model is an advertiser retailer can still work with very small publishers because everything is on that win-win basis that I was talking about earlier. So, even if a publisher is only sending five customers per month, that’s still another five that they get to add to their bucket for the affiliate channel, and it adds up in that manner.

It takes them no more resources to manage that group of people because they have platforms to work on, such as ShareASale, that allows them to manage 100 or 1,000 publishers all referring these five customers, and that adds up to a pretty good result at the end of the day. So we have seen a lot of media companies getting into that that have an audience, whether it’s a social media, Instagrammer, whether it’s an old-media publication, anybody that has that kind of audience can really get involved.

How to Structure an Affiliate Program Correctly

Sean Jackson: All right. So, Brian, I’m going to play the devil’s advocate, which is what I always do on the show. All right. So, I have a product. Let’s say it is again a real product that people are buying, and I decide to run an affiliate program with ShareASale, okay? And, I go out there … well, first off, I want to be very cautious about this. So the first thing I want to do is try to set a really low commission.

And, afterwards, I’m probably going to be really, really frustrated with the lack of results that I’m getting, and so I’m just going to abandon the damn thing. So, help me, the idiot guy who’s doing that, figure out a better way to do it. Talk to me as someone who owns a product. What are some of the best tactics that I can be using with something like ShareASale to really start driving that performance mark.

Brian Littleton: Well, you really have to consider the commission, quite frankly, and where you started. You were cautious in your approach, and you decided you wanted to set a low commission. And your cautious approach there probably cost you the ability to even get the thing started and going in that hypothetical example.

If you look at it from your own perspective, you are a publisher of media, and if someone approached you with your own offer, is that something where you could see an income stream that would make it worthwhile of your time spent? And, when you don’t, it’s obviously going to be very difficult to grow that program.

I always argue that a retailer or anybody selling a product is much better off to offer a very, very high commission. Don’t think of this as a cost-control/budget-control channel. It’s more of a new customer growth and acquisition channel, which typically gets a little more funding or interest. When you think of it that way, when you offer someone a very high commission, but do so for a very short period of time, say if I were to tell you, “Okay, I’ll give you a very high commission for the first 30 days of this program being launched,” there’s only a couple things that can happen.

One: I could blow it completely out of the water, and you’d end up spending a little bit more money than you wanted to. Or, the other option is I would not do that. I would not generate the results. It wouldn’t make any difference. It would be a zero. In both cases, you’ve actually earned way more than you thought you did because you now have the information you need to set the appropriate commission going forward. You know that this person either can send you a whole bunch of traffic and a whole bunch of sales, or they can’t. And that information is far more valuable than the difference in commission that you would have paid during that time period. So, in your example, you’ve basically shorted yourself and not allowed yourself to figure out even whether or not the channel was going to work for you, because you were too cautious at the start.

Sean Jackson: All right. So I want to go on this one more time because I know Jessica has a ton of questions, but I have the next part. Okay, so I follow your advice. I get crazy with my commission structure. I’m starting to see some results from it, but I’m also starting to see everybody and their brother-in-law signing up for my affiliate program. And I know some of these are doing it just so they can get a discount, if you will, off the purchase for my product.

Talk to me about the fact that there are so many people that may sign up for a program, but yet so few are actually performing. How does a product guy like me manage that, because that’s going to drive me crazy; I’ve got a thousand affiliates but only 10 are doing anything? Talk to me about that.

Brian Littleton: Yeah, it’s fairly common. I think that even in your own situation, if you think about the affiliate programs that you’ve joined over the years, you’ve probably joined a whole bunch of them that you’ve never actually done anything with. So, that’s not necessarily a bad thing. Sometimes it just takes us time to get around to things we all wish we could do everyday.

But, from a management perspective, it’s not near as difficult as I think as what you’ve laid out there. The platforms that are out there, such as mine in terms of ShareASale, allow you to manage large groups of people with small amounts of time. You can sort them, you can tag them, organize them, communicate with them differently depending on whether or not they’re sending traffic to you or not sending traffic to you. It becomes … that’s what companies like I do. So it’s not as big of a problem as maybe has been laid out.

Activating those people is the same type of strategy that I’d just laid out with your earlier question, which is to say, Hey, if it’s not working with this 10% commission or this 20% commission, and I find somebody in my program that I really, really want to activate, then you have to make them an offer. You have to get them moving in some way, shape, or form. And it might not be an offer that lasts forever, but it is something that you can try to get them off of the mat with, so to speak. And once you do that, it becomes … again, the information you learn from that becomes the most important piece.

Sean Jackson: Yeah. And I’m going to close this particular section because I will tell you from our own experience, not only working with your team but just in general, there is, I think, a fallacy that when you think of an affiliate program, you’re thinking that all of your sales are going to be coming from that. And the reality … it doesn’t.

And, even in our own business, I see the mix, right? And there are cases where we will spend a lot for certain affiliates, but the overall mix of revenue that comes both from performance marketing as well as organic marketing as well as display marketing, it’s the mix that you look at. And so I think, when you are thinking about those commission rates, realize that not every sale is going to have that extremely high commission rate tied to it. So, it’s something to consider that when you say yes or no to an affiliate program as a product producer, realize that it is just one facet of the revenue stream, but not 100% of it. Jess, what do you have?

Do You Really Need an Affiliate Manager?

Jessica Frick: One of my big questions for you, Brian, and you know that I already know the answer, but this is more to hear you tell the answer to everybody else, do you really need an affiliate manager or can you do it yourself?

Brian Littleton: Well, that really depends on the company and the situation. I think that for most entrepreneurs, and especially those in small companies, you can do it yourself. You can use the tools that are available to your on the platforms. There’s so much information out there to read about, blogs, and conferences to attend to get the information that you need to do it yourself.

Once it gets to a certain point, you gotta think it’s probably a better case that you have someone who has experience in those areas to grow it to the next level, whether that’s an internal resource, such as an affiliate manager or an external resource such as an agency, those are things that are definitely possibilities down the road. But, it’s not a super scary place to be. Like I was saying earlier, it’s the oldest trick in the book. You’re paying someone commission to send you traffic and send you sales. So as long as you just keep thinking about it that way, it’s not too terribly complicated.

The other really important tool to have, and I guess this makes the decision for you, if you have this or don’t have it, but you need a lot of common sense in the affiliate channel. You need to be able to look at an affiliate and say, “All right. The things that they’re doing, the traffic that they’re sending to me, I’m looking at their site, I’m looking at who they are, and this doesn’t make any sense to me.” If it doesn’t make any sense to you, it’s probably a case where you need to look at it a little bit deeper. So if you have that, I think you can definitely manage that on your own.

Sean Jackson: When you say an affiliate network, though, manage an affiliate network, it’s really like managing an independent sales force, right? I mean, I’m old, Brian, so I remember independent sales reps, and oftentimes there would be specific promotions for them, there would be people that you’d kick off for lack of performance or other reasons. But you are managing an independent sales group that really didn’t get a paycheck from you, but they did get a financial benefit from you. So would you say that mentality helps us think of them as, what would you need to inspire an outside sales force, knowing they’re not employed by the company? Is that the right mentality to have in looking at affiliate management overall?

Brian Littleton: Yes, and I think that you need to add in the fact that they’re also not only involved in this relationship with you, but that they have another 10 or 20 or 50 companies that they’re working with on this arrangement. So you need to be able to get their attention in that way as well. They’re very independent, they don’t work for you, they’re not just going to just do what you tell them to do. But you need to make your product and your offer look attractive.

The Future of Affiliate Marketing

Jessica Frick: Now, for the last question, because I know that we’re nearing the end of our time with you, where do you see the industry going? I know that there was a lot of concern about Nexus laws and Internet sale tax reform. What do you see the next five years looking like for those who employee affiliate marketing to grow their business?

Brian Littleton: It’s a very bright future, I can tell you that. It’s so exciting everyday, to be honest. To be in this space is to take advantage of every single innovation in terms of publishing, in terms of apps, retailer innovations, all those kinds of things. You get to take advantage of it because of where you sit in the affiliate marketing industry.

There’s never going to be a time when telling somebody that you’ll pay them a commission to refer you a customer is not going to be a popular option in the retailer world, right? It’s always going to be a very popular option. And so, in that case you’re sitting in the best possible seat you can when you’re in the middle of this channel. So, the exciting times for me are to watch publishers, both new and old, realize that they can make quite a significant sum of money in this industry, and for retailers to realize that, Hey, all this money that I’m spending on display ads …” or “All this money I’m spending on all this stuff … I could probably focus on my partners in the affiliate channel and get a much better return for that.” As we continue to see that grow every single year, it’s really exciting, and a great place to be.

I think the future there is extremely bright. The issues that revolve around Nexus and some of the tax issues that you touched on are things that are definitely going to happen and things that we have to work through as an industry, which is why we have things like The PMA. But they’re nowhere near things that are going to be causing a really big problem for us.

Sean Jackson: And I think there’s a trend, to kind of finalize on your point. One of the trends that I’m seeing is how more mainstream publishers, Business Insider, which is owned the parent company that acquired your company, Business Insider is doing a lot more with affiliate marketing on their site, specifically around digital goods. I mean, I’ve seen you-to-me affiliate programs that they’re pushing to their audience, et cetera. So wouldn’t you say, to kinda conclude on this idea of trends, that it’s not just the independent bloggers that are part of affiliates, you’re starting to see that mainstream media traffic moving there. What do you think?

Brian Littleton: Absolutely. Mainstream media is starting to figure out this channel a little bit. I mean, you’ve seen them experiment with all kinds of different things over the years to try to monetize large volumes of traffic, and they’re looking at this as well. New media is looking at this. There’s a trend in media in general, where you no longer have to be a mass-media producer to have a large audience. That’s kind of the social media phenomenon or whatnot.

All kinds of media companies are looking at this, and it’s because of all the benefits that we’ve laid out over the last 20 minutes or so: the entry to a single program, the barrier is very, very low. You no longer have to call up a PR department and say, “Hey, I’m interested in doing this. Can you provide the rate sheet?” All that kind of stuff is irrelevant. A publisher simply goes to the affiliate program and says, “Okay, great. They’re paying a 20% commission. I can work with that. I want to see if I can send some traffic over here and how much money I can make from it.” The low barrier to entry is what’s made this really popular for all kinds of media companies.

Sean Jackson: Brian Littleton, founder and CEO of ShareASale. Thank you so much for being on the show, and sharing the insight with our audience. Truly appreciate it.

Brian Littleton: Thanks for having me. I really loved it.

Sean Jackson: And we’ll be right back after this short break.

Hey, everyone. This is Sean Jackson, the host of The Digital Entrepreneur, and I want to ask you a simple question. What is your business framework for selling digital goods online? Now, if the question perplexes you, don t worry you re not alone. Most people don t realize that the most successful digital entrepreneurs have a framework or general process for creating and selling their digital goods in the online space. One of the best free resources is Digital Commerce Academy. Digital Commerce Academy combines online learning with case studies and webinars created by people who make a living selling digital goods online. The best part is that this material is free when you register.

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Some Helpful Resources for the Audience

Sean Jackson: Welcome back from the break, everyone. And, Jessica, it’s now that time of the show where we throw out some resources that our audience may find helpful. Do you have any?

Jessica Frick: Well, can I just say real quick to the audience who doesn’t know you on a personal level, one of the things that I love about being friends with you and not just working with you is that you always find the coolest stuff. You do! And you love to talk about it, which makes me super happy. So, you know what, Sean, normally you’ll do one and I’ll do one, but I know that you’ve got a huge pile, so let’s hear two of yours this week.

Sean Jackson: Oh, okay.

Jessica Frick: Can we do that?

Sean Jackson: Yes, yes. We’ll make it easy. All right, so my first site to recommend, and this one is a fee-based site. It’s a membership site, but I will tell you, I have been with them since 2007/2006. It’s called SearchEngineNews.com. Now, let me tell you, as an SEO type, it was the primary resource that I went to to understand what’s happening in the search and social marketing world, primarily search. Over the years it has morphed; they’ve gotten more features, more tools, et cetera.

But, as someone who also has a life and is very busy running a business, I don’t always have time to kind of peruse through the numerous free sources. I sometimes need a digestible content of what’s happening in search marketing. And as our interview with Eric Inge showed, there’s a lot going on. I go to Search Engine News. Yes, it’s expensive, but it gives me a quick digest, and if I need to get something quick, I can go into their archives and find in-depth analysis. So, if you’re wanting to stay on search-engine information, absolutely recommend Search Engine News.

The second tool, though, that I want to recommend is a tool we actually use on the show, Jess. It’s EZTexting.com. So, I gave a presentation recently about the importance of mobile, how mobile is really defining the landscape and how we need to have a mobile-first approach. And to that, I have been a huge advocate for text messaging, because I know people will read it, I know that it works, I know it has it’s own rules, but the best way to start out is just putting it on your site. And EZTexting.com is something that, again, we use, we don’t get paid for this. I use it, one, because it’s free.

So I started using it for my cub scout troop that I happen to lead. And then I expanded to use it on the show, primarily because it’s free, allows me to move up in the pricing structure based on my needs, and is very simple to use. So, if you want to try text messaging as a functional part of your site or your online marketing, go ahead and take a look at EZTexting.com, that’s my first recommendation. And, of course, if you want to stay with search engine information and really want a quality digest of what’s happening, check out Search Engine News. Those are my two recommendations for the week, Jess.

Jessica Frick: Quick question for you, Sean: Are both of those appropriate for beginners?

Sean Jackson: Oh, good question. I think EZTexting, if you want to play around with text messaging, absolutely. EZTexting is very simple, very good, and it can allow you to grow and start free. Search Engine News, though, it really is … that’s for people that are serious about search engine optimization, hence you’re going to pay for it. If you just want the free stuff out there, you’ll see it. But, the reason I like Search Engine News is because it’s a lot of curated content, a lot of writers out there that are known for their expertise and have been vetted by the staff over there. So, one, Search Engine News, not necessarily for beginners but certainly for people who care about it. And EZTexting, absolutely for beginners.

Jessica Frick: Very cool. Thanks, Sean!

Sean Jackson: Of course, of course. So, Jess, we’re at the end of the show. What is the question for the week we want to leave our audience hanging with?

Jessica Frick: Oh this one’s gonna get controversial, Sean.

Sean Jackson: Mmmm. Yum yum.

Jessica Frick: Which I know you like! Amazon: Digital business best friend or worst enemy?

Sean Jackson: Best friend!

Jessica Frick: Really? You’re going pro on this one?

Sean Jackson: I know. And you will not say it is their best friend?

Jessica Frick: No, Amazon is not a digital business’ best friend.

Sean Jackson: Well, we’ll explore this topic in more depth in the next episode of The Digital Entrepreneur. Have a great week everyone!

Jessica Frick: Thanks for listening.