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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.

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 this 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.

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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.

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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.

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.

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.

The Transcript

Does Email Marketing Still Work?

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.

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

Jessica Frick: I’m great. How the Jackson are you?

Sean Jackson: Always well, always well. Jessica, where did we leave off from our last episode? What was the question of the week that we were wanting everyone to ponder?

Is Email Marketing Still Relevant in a Mobile-First World?

Jessica Frick: We were wondering why you were so snarky when it comes to email, Sean. Maybe that was just my question. Okay, the official question is whether email is still relevant.

Sean Jackson: Email marketing, you mean?

Jessica Frick: Yeah, email marketing.

Sean Jackson: Of course not, but I want to hear why you think you’re right. What say you?

Jessica Frick: It’s not what I think I’m right, Sean. It’s why I am right. Email marketing is still very relevant because by definition, marketing not only helps you increase your sales but enhance your relationships with prospects and existing customers, and email can accomplish that.

Sean Jackson: But don’t you think that with every martech product out there centered on email, that with so many people finally cluing in after decades that email marketing is the number one most effective tool online for marketing, that with so many people doing it, don’t you think it’s going to lose its pizzazz, just because there’s so much more going to be flooding in?

It used to be bad with spam, right? We used to have to worry about spam. Now, we don’t worry about spam. We just worry about every single thing that asks for our email address that sends us a weekly or daily email of something. Don’t you think it’s going to lose its relevance just because of the volume?

Jessica Frick: Oh yeah, I think that there are some tricks that are played out. You can’t turn around without trying to access something someone online promised you with a post without having to put your email in. Then you know you’re going to get like 25 emails after this. You just unsubscribe with the first one. There’s so much static right now in the marketplace, which is why I think it’s important that email marketing be done correctly.

I think that you need to be invited. I think that spam obviously is still done even with people who know better. We see it all the time in the space, especially with digital entrepreneurs. That doesn’t mean that it’s okay. When done correctly, I think that it has a tremendous amount of value for a digital business.

Sean Jackson: Yeah, I think it obviously has value. This is something that we’ve grown a whole business from, the strength of our email list. The way that we had people wanting to give us that information. The way that we interact. The way that we put it together. But certainly, everyone else is clued-in on it. Every martech solution out there now has some form of intelligent-based email sending.

I think as more and more people adopt it, then the inbox is going to be cluttered up with a lot of things that are going to pull your attention away to such an extent that you’ll be like, “Crap, whatever you’re sending me, I don’t want to read it because I’m just getting overloaded.” But we’ve always had that.

The Trends in Email Marketing You Need to Consider

Sean Jackson: Let me tell you why I push back on the relevancy. I will say this, I think you used to be able to send an email to an opt-in list — someone who opts-in — and in doing so, because there wasn’t a deluge of quality emails, then it was easier to stand out. I think now for your emails to be relevant, you really have to put a lot more time into them.

It used to be very easy, I think, but now to maintain the relevancy, you’re going to have to spend time. I think it’s going to also have to be a function not only of design because of how many people read email on their mobile device, but I also think you’re going to have to be looking to the future, specifically HTML5 video. Now iOS 10 supports HTML5 video in the email program. Now, maybe your email is a video embedded in the email that you send to somebody. Think about that for a second.

Jessica Frick: That’s definitely an interesting thought, Sean.

Sean Jackson: Yeah, because then they’re talking about carousel design, when you can swipe back and forth. I think with so many people reading email now in a mobile device that you’re going to start to see people trying to stand out. That means that you’re going to have to be even more on the forefront. Or you’re going to have to have a very deep personal relationship with the person that you are giving your email address to.

I’ll give a case in point. A lot of people know we are big fans of Dave Pell and his NextDraft daily email letter that comes out. If you don’t go to NextDraft and sign up right now, you’re missing out. He recaps the day stories. I always learn something new, interesting, thought-provoking — whether you agree with his politics or not. It’s not a political thing, but he is going to cause you to think.

Jessica Frick: And if you think Sean is snarky

Sean Jackson: Yeah, Dave is snarky. But at the end of the day, he has a very intimate personal connection with people because he is writing a curated email newsletter with a personal tone of things that really stand out.

Now, I will say this. There’s days I don’t read him, but I will never unsubscribe. I will always peruse it, whether I go in depth or not. I think it’s going to end up, to be relevant, you’re going to have to be a lot more clever, or you’re going to have to be a lot deeper in meaning. What say you?

Jessica Frick: I completely agree. I love theSkimm, which is daily news roundup, but the way that they market via email is also different. That actually makes me want to ask you a question, which kind of sidesteps our question, but it’s still relevant. You mentioned having video or a carousel design. Do you think that it would make email more irrelevant if your email was more interactive, or is the point still to send them back to your web property?

Sean Jackson: I think if your audience is mobile first — which almost all audiences are not every one of them, but a majority of them are — then I think the more interactive the email, the better. We’re coming to expect that in our mobile experience. I certainly think video, which is still the predominant media content outside of text, that on a mobile device the people consume, I would say that you’re going to have to really figure out a way to stay above and beyond and do it in a meaningful way.

But if your audience is still very old-fashioned, text-based, then I think a more rich email, something much more meaningful, not so long actually. That’s another big trend that’s come around because so much people, at least interacting with email on a mobile device, then they’re going to have to be a lot shorter.

I really think you have to look to your audience, realizing that they, in my opinion, are now not going to have to worry about traditional spam, Viagra and credit scores aside, but really thinking about, “Wow, I’m competing for attention, so maybe I have to really stand out to get their initial attention.” And video, in my opinion, would be one way to really stand out in someone’s inbox on their phone.

If you don’t think I’m right, that’s okay, but I will say this. All the trends that I’ve looked at are pointing to the fact that email is still and is predominantly used in online marketing. With everyone cluing in on it, your messaging is going to have to be strong, which means you’re going to have to work harder at it to stay relevant. How’s that?

Jessica Frick: I think you make some very strong points, and I disagree with you less this week than I have in previous weeks.

Sean Jackson: Ooh, well, then we’re going to have to work on a new topic where we could really battle it out. Because we start agreeing on things? Oh my word, that’s going to be a problem.

Jessica Frick: Yeah, I think that it’s important that the message be heard. So long as it’s done right, email marketing is still relevant, but that ability to do it right, that’s where the secret sauce comes in.

Sean Jackson: I think you’re right, and I think it’s just going to get a little harder to stay that relevant. It’s nice that we’re talking about this because, this week, we actually have Darrell Vesterfelt from ConvertKit as our special guest. They’ve really built their whole company on creating a product that helps with email marketing for bloggers. We’re going to talk a little bit about how they grew their company and the tactics and techniques they did as being an email marketing provider. We’ll have Darrell back after this short break.

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How ConvertKit Grew Its Recurring Revenue to More Than $6 Million in Just Two Years

Sean Jackson: Welcome back from the break, everyone. Jessica, please introduce our special guest for today’s show.

Jessica Frick: Today’s guest is someone I’m very excited to introduce and to hear more from. We have Darrell Vesterfelt, who’s head of sales, growth, and business development for ConvertKit. Darrell has worked to help bloggers and authors establish and grow their platforms for more than 10 years. He lives in Nashville with his golden doodle Cooper.

Darrell Vesterfelt: The important stuff.

Jessica Frick: Exactly. Well, I skipped over a whole bunch of other stuff because, if there’s a golden doodle involved, I feel like that’s important.

Darrell Vesterfelt: Very important. Very, very important.

Sean Jackson: Hey, Darrell, welcome to the show. I want to start off with you explaining what the heck ConvertKit is because you guys really came out of nowhere. In 2015, you got started. Then you got some little success, and then all of a sudden, you guys are everywhere. Give our audience a quick high-level view of what the hell ConvertKit is.

Darrell Vesterfelt: Yeah, ConvertKit is an email marketing software built specifically for professional bloggers. What we mean when we say ‘professional bloggers’ is anybody who’s trying to earn money from creating content online. This tool is built from the brain of our CEO, Nathan Barry, who was using other tools like MailChimp and AWeber to sell his ebooks, courses, and all he digital products online.

He wanted a tool that would just take his business to the next level, so he created ConvertKit for himself and then started inviting his friends to use it. It had a slow growth over the first couple of years, and then just in the last few years, we’ve just really exploded. We’re an email marketing tool specifically for content creators — so bloggers, authors, speakers, content creators, freelancers, coaches, consultants, shop owners. Anybody who’s creating online content trying to earn money, we’ve created the email marketing tool for those kind of folks.

Jessica Frick: Now, I’ve seen you guys grow exponentially over the last couple of years. Specifically, you went from a $100,000 to $500,000 paying users in a year. How did you do it?

Darrell Vesterfelt: Yeah, when I joined up in January of 2016, we are at a $100,000 a month in revenue, which was awesome. Just a really great time to come in to the company. I think I was the eighth employee to join. The biggest change that happened when I’ve joined is that we just put a focus on growth.

When there’s a small company — I think you guys know this because you’ve been there before — everybody focuses on everything. Everybody’s doing customer support. Everybody’s focusing on growth and partnerships, and I was one of the first hires that had a single focus when I joined the company. My focus was, “Hey, let’s increase the number of customers we have. Let’s increase the revenue number.” Like you said, we went from $100,000 to $500,000 a month in revenue in just 12 months. I think it was because we took a very specific focus, so that was the first thing.

But I walked into a very lucky situation for a lot of reasons. The biggest one is that ConvertKit had a very, very specific niche focus. That was huge. I don’t even think that we realized how big of a deal that was at the beginning, but I would attribute all of our success and growth in marketing to that very, very specific niche. If you go to all of our competitors, they’re going to say, “We’re an email marketing tool for small businesses,” or, “We’re a tool for any kind of business,” or whatever it might be.

We’ve always had the phrase, “We are email marketing for professional bloggers.” We’ve gotten pushback after pushback after pushback on that because people will say, “Well, I’m not a professional blogger, so it’s not for me.” We’ve stood our ground in that a little bit because we know that the reason that we’re winning is because we’re creating a tool for very specific person. Because we’re creating a tool and a product for a very specific person, we might not have all the features that a competitor has — but we still win.

Jessica Frick: You’re not trying to be all things to all people.

Darrell Vesterfelt: We’re trying to be one thing for one person, and so we win. That, to me, was the thing that I walked into, that I had no part of creating whatsoever, that made my job really easy when I did join the first part. I would attribute that single thing as the bedrock, the foundation of all other growth activities that have happened, have happened from that place of being so focused on creating a tool for a person rather than a tool for all people — and that makes it.

Sean Jackson: I do want to go through the specific tactics and some of the things that you introduced in there. But I want to play devil’s advocate, which is pretty much my role on the show.

Darrell Vesterfelt: Love it.

Sean Jackson: I’m going to be Mr. Investor guy. You come to me with this pitch on December 31st. I’m going to be like, “Look, dude, first off, you got Drip out there, which is backed by Leadpages. You’ve got all these email marketing programs, from the SurveyMonkey over to AWeber to Constant Contact, you name it. Really, given how much competition is out there, is there really any hope for you whatsoever? Sure, you’re going to find this little niche as you call it, but how big could that really be?”

That would be my pushback to you on December 31st. What would you say?

Darrell Vesterfelt: You know what, Sean? On December 31st, I might have agreed with you — if I’m being completely honest. I was like, “Yeah, this seems like we’re really limited here. This seems like a really small niche,” and I think this is why people resist this approach. Because it’s like, “Oh my gosh, it’s so small.” The market for email marketing tools is billions of dollars a year. It is a massive industry.

For us to pick a very small sliver of that seemed crazy, and people thought we are crazy. Our customers even sometimes thought we were crazy. We thought we were crazy, but I think the reason that it won is because email marketing is a red ocean. It’s not a blue ocean anymore. There are more competitors out there than ever. How do we stand apart from a competitor?

Well, one of the ways that we can stand apart is playing this feature war battle where we’re always releasing the next new thing, the next cool feature, the next thing that will set us apart, as a feature, from our competitors. Well, the problem is, that’s really, really expensive to do. I’m going to have to pay all these developer hours to release these new features. Then what happens is you have a tool like Infusionsoft that has just added feature after feature after feature after feature, and it’s confusing. Like, “We have affiliate marketing, email marketing. We have e-commerce. We have check out pages.” It’s confusing.

Jessica Frick: I feel like there’s a nickname in there.

Darrell Vesterfelt: Confusionsoft, I think. Yeah. You just bloat the product, so we came into the market, Sean, saying, “What do people who are like us need?” Well, they need a powerful tool that’s easy to understand. We’re not going to release a ton of features for everybody. If we release features for everybody, then we run into the ONTRAPORT and the Infusionsoft problem where, sure, very, very powerful tool, but it’s confusing as hell for our users.

Because we knew our users and because we were our users I was using ConvertKit before I ever started working at ConvertKit. Nathan built ConvertKit for his own info-product business. We knew exactly what we needed. We knew exactly what our friends needed, so we decided, instead of playing the feature war, we’re going to play the niche war. We’re going to put this stake in the ground, and we’re going to say, “We are for bloggers, period.”

Now people who aren’t bloggers use that. So now we’re creating the tool specific to a person, and we’re winning. We’re winning not because we have the most features, but we have the right features. We’re winning because we’re creating the tool for this person specifically rather than creating a tool that hopefully ‘everybody can use.’

The One ‘Secret’ Tactic That Darrell Uses to Exponentially Grow Their Customer Base

Sean Jackson: Let me jump in. I want to go through some actual tactics here because literally in front of me is a screen from Baremetrics that shows your actual growth rate. I’m comparing between 2015 and 2016, and the lines are so drastically different. 2015 looked flat with a little curving up in October, and then all of 2016 looks like a straight line going to the moon.

Talk to our audience about the tactics you did. You started January 1st. You guys had your niche identified. Everyone thought you were crazy, which is great. You get in there. Let’s talk about those months and what you started to do by focusing solely on growth because you’re the only guy there focusing on growth. What did you start to do? What were some of the challenges, and what were some of the things that worked for you?

Darrell Vesterfelt: Yeah, the biggest focus that I had right out the gate was doing partner webinars. The reason I did that is because, in the niche that we had picked, the blogging niche, webinars were a language that people could understand.

We came in, we honestly started trying doing webinars with a pitch for an annual plan, which I think was $300, so for $300, you get a year of ConvertKit. You get all these bonuses, which is kind of the general plan for webinars that people have had. “We’re going to come. We’ll teach you for 30 or 45 minutes. Then we’re going to pitch you a couple hundred dollar product, and then you buy.” We would convert, on those webinars, maybe five or 10 people into customers.

When I came in, I said, “Let’s rethink the game a little bit,” because yes, webinars are the language that people speak in this industry, but also, people kind of hate webinars. Why do people hate webinars? People hate webinars because they feel this pressure to buy. Or the thing that they are asked to spend money on isn’t relevant to them. Or the teaching is self-serving to the person presenting, and it’s not serving to the audience.

The first thing I did is said, “We’re going to do partner webinars because it’s a proven method. It works, but we’re going to change it up a little bit. We’re going to do it different than anybody else in our space whatsoever.” So we did what I call the ‘no-pitch webinar.’

We would get on, and I would teach the highest value content I could that was relevant to our product, which in this case was how to grow your email list. I spent a lot of time — I think there’s a 115 slides in my presentation — helping people with a proven method to grow their email list. Then, at the end of the webinar, instead of saying, “Hey, thank you so much for learning, spend $300,” I actually just gave away everything for free. I gave away the software for free. I gave away ebooks, courses, all these bonuses. I think it was $300 in value worth of stuff. We gave it away absolutely free.

Sean Jackson: So then you’re looking for a job on January 2nd with that approach?

Darrell Vesterfelt: Yeah.

Sean Jackson: Did you face any resistance to that? Did you face any resistance internally to giving away the product and all this information for free?

Darrell Vesterfelt: I did at first, but we have a culture at ConvertKit that I really love — that is always be testing. We tested this out with a few webinars, and what we found, Sean, is that people were so much more apt to try out our software when there was no money exchange at all.

So, “Hey, we’re going to give you 30 days of this product for free. We’re going to give you this $200 course for free. We’re going to give you this $50 ebook for free. We’re going to give all this stuff away, absolutely free. All you have to do is try it out.” Because we had built this goodwill with people, it was very easy for people to say, “Oh, I’ll try it out. I’m using MailChimp, AWeber, Mad Mimi, FeedBlitz, or anything else. I’ll just try it out. There’s no risk whatsoever for me, so I’m going to try it out.”

People would try it out, and they would either decide that it was a tool that was good for them or it wasn’t. So it was a lot easier for us to push. I think I taught something like 115 webinars with 60,000 registrants total in the last year. We went all in on this. The way that we did it, too, is we knew that we were brand new, so we didn’t have an audience yet. We would partner with people who had audience of our core users.

Jessica Frick: Like StudioPress?

Darrell Vesterfelt: Like StudioPress. That was a great webinar, actually.

Jessica Frick: We got a lot of really good feedback.

Darrell Vesterfelt: Yeah, what we do is we say, “Hey, we’ll compensate you.” This is the traditional partner webinar style. The thing that we would do differently, Sean — because there was no pitch and no money being gathered on that webinar — is one, partners felt a lot more confident in promoting it. So we’d get higher registration totals than I think normally would happen because they could say to their audience, “Hey, they’re not going to ask you to spend any money. They’re not going to make a pitch for you to buy a product afterwards. There’s a bunch of free bonuses.”

So we’d get registration numbers at a higher level. Then we have an affiliate program that would pay 30 percent month over month for the accounts that decided to stick with ConvertKit, for the lifetime of those accounts. That was another win because now these people could build recurring revenue instead of maybe just this one-time payout from an affiliate webinar. They would then get the opportunity to build recurring revenue that every month they would get the same revenue by building up through our affiliate program.

Sean Jackson: How did that work, by the way? We here have experimented with both measures. We’ve experimented where they give you tons of money or give you a little piece every single month. I would say that, for some people in the affiliate space, the big check is what gets their attention. Getting a $30 check or $20 check month over month, even though it could be for years, they don’t see the same value.

How did you go through that? I think affiliate programs are hugely important in our space. Not everyone does it right. So how did you keep those people interested knowing that you’re not giving them a huge amount on every single check?

Darrell Vesterfelt: That was a key. To me, it was just a numbers game. Most people there’s a very sexy flashy thing when I can send somebody a check for $5,000 right out of the gate, but the reality is, if our average customer is around for 11 months, 13 months, 18 months, then that number gets really dwarfed the longer that this happens.

I would just lay out the numbers side by side, “Hey, we’re more than happy to pay you out at a one-time fee, but I think you’d rather have this building out month over month because, six months in, you’re going to dwarf what this one-time pay out would be.”

The other thing that happened is we went after a key promoter right out of the gate named Pat Flynn. Pat from Smart Passive Income, has awesome blog and podcast, he started using ConvertKit and then became a keystone affiliate. Anything that Pat would do it made it a lot easier for everybody else to follow suit.

Pat was really pumped about this idea. He felt like it really fit his brand to do the no-pitch webinar. He was okay getting the month-to-month referral. The fact that then Pat publishes his income report really helped us out as well. But having that keystone affiliate and partner, doing it first and being very excited about it, really made it easier for all these other partners to follow a suit. If somebody at the top of the industry does it, it just opens the door for everybody else to follow suit.

Sean Jackson: I want to go through that for a second. When I was reading about your story, I was like, “How did they get to all of these people to do these no-pitch webinars?” One of the things that I read, and correct me if I’m wrong, that because you did have people who were professional bloggers, back to your niche, you could look at those existing customers and go and say, “You have a pretty big site. Can I reach out to these people who are already using the product?”

So for you, correct me if I’m wrong, but I think part of your initial work was just going to your existing customer base, who were bloggers, and say, “We’d like to do this no-pitch webinar.” Is that correct?

Darrell Vesterfelt: Yeah, that’s one of the first things I did. The first two things I did is, I tapped my existing network because I’ve been in the space for more than 10 years. So I tapped my existing network, one. Two, I just looked at our customers, and it was really awesome.

At the point I joined, I think we had 1,800 or 2,000 customers, and I just would say, “Who are our top customers, and which one of them would be a good fit for our webinar? Oh, by the way, we have the most generous affiliate program for email marketing service out there. Would you be interested in joining? Oh, by the way, we’ll also do all the work. All you have to do is send an email.”

I think we built up a reputation over time of, “Hey, they teach really high-quality content,” number one. Number two, people are getting good-size monthly payouts from it. Number three, we had the relationship, either as a customer or as a network that had been built up over about a decade.

Sean Jackson: These were your primary tactics that you used in 2016. Am I correct?

Darrell Vesterfelt: Yeah, but the webinar is definitely the biggest one.

Why Focusing On Just a Small Group of People Can Potentially Create a $100 Million Company

Sean Jackson: Let’s go through this. I was reading a great article this morning. Dennis Mortensen, who owns x.ai it’s the automated intelligence for planning, meeting with somebody via email. He made a very interesting observation. He said, “Once you get to a million in annual recurring revenue, you’ve proven that there’s a market for it. Once you get to $10 million in annual recurring revenue, you’ve proven that you can scale it.”

Right now, where you guys sit, and I think you’re at a very interesting point. Obviously, a lot of people listening to this are like, “Oh my gosh, they were at $5,000 a month, and now they are $500,000 a month or almost $600,000.” That, in and of itself, in my opinion, sounds like just blocking and tackling. Hiring somebody who’s focused on this, finding the right value proposition for the audience, and just showing up every day and focusing on growth.

But is it a challenge for you guys going forward to get to that $10 million mark? You’re at $6 million plus now. Where is the next big infliction point for you? What are some of the ideas that you guys are thinking about? Or is it just going to be blocking and tackling like you’ve been doing?

Darrell Vesterfelt: We’ll continue to do the blocking and tackling. I think where we’re at we just passed $7 million in annual revenue. What we’re doing is we’re getting smarter with the blocking and tackling. This is now we’re thinking how we can automate these processes, how we can do more with a small team.

The other thing, Sean, is now I’m not the only one focused on it, but we only have three people. We’ve gone from one to three. Most companies who have our kind of annual revenue have two or three times the amount of people focused on growth.

For us, it’s now automation. How can we continue the same baseline that we had last year, which I think on average was about $35,000 a month in net new revenue growth. How can we continue that with less time, with less energy, and then what strategies can we then layer on top of that?

Last year, we were very focused on webinars, so we’re going to have that same focus in 2017. But on top of that, we’re going to add in a new layer or promotions that we didn’t do last year. Then we’re going to do a new layer of inbound marketing that we didn’t do last year. Right now, our big focus is we’ve created two inbound lead-generating channels for direct sales of high-tier customers. That’s actually beginning to earn as much or more than our webinar channel last year.

It’s a matter of then creating this channel with webinars. I feel like we mastered it last year. So then how do we automate it, and then what’s the next layer that we stack on top of that? We’re not going to give up on this strategy. The strategy is going to continue to perform for us. What’s the next layer, what’s the layer after that, and what’s the layer after that to begin scaling it?

Sean Jackson: I think that it’s fairly true with most SaaS businesses. You kind of start out small, and then as you continue to find that growth and things that work, then you’re starting to look more up market. Because as you were saying, you’re looking at these channels, these inbound channels, for people who tend to spend more. That is now another layer you’re adding on top.

But I think this is the important part of what you said. “Okay, we did the webinar a bit. Okay, we’re done with that. Now let’s go over and do this thing, and let’s go do that thing.” In other words, everything, it sounds like, you guys are stacking one on top of the other as you become proficient in it to continue that systematic process of continuing the growth cycle based on expertise on these different stack layers. Would that be a good way to sum it up?

Darrell Vesterfelt: Yeah, absolutely, and the other thing I’m learning, Sean, too, is stacking is huge. The other thing I’ve learned is this niche is way bigger than we could’ve ever guessed to begin with. I just had a meeting last week with a guy who would be one of our biggest customers to date, and I realized after talking to him there are layers in our niche that we don’t even know exist yet.

Every day, the more that we explore, the deeper that we go into this niche, the more we realize that we’ve been very shallow. We’ve been very shallow in our understanding of who we can serve as a blogger because there are layers of bloggers that we didn’t even ever knew existed that doors are opening up to, and we’re like, “Oh gosh.” We thought this was like $10 million a year kind of space. We think it might be $100 million a year space now.

The more that we’re stacking, the more that we’re kind of diving into discovering the different layers. It’s like an onion — layer after layer after layer after layer of people who would consider themselves bloggers in some ways. It’s just a bigger market than we could’ve ever, ever guessed. The stacking has allowed us to dive into that.

People who are interested in doing affiliate marketing is just one layer, it’s just one layer of potential customers or potential leads that we could gather. As we start stacking these strategies up, we’re finding, “Oh my gosh, there’s 10,000 new people here that we could chase down who are doing different kinds of content creation online.”

Sean Jackson: Darrell, I can’t thank you enough for being on our show today with us and sharing this great insight. It is truly fascinating watching the growth of ConvertKit, to see the things that you guys have put together. I love the fact that you guys said, “We are going to be one thing, and we’re going to be really good at one thing for one group of people.”

As you just ended our conversation, you will be surprised that, that one of group of people is much bigger than you ever thought. Darrell Vesterfelt with ConvertKit, thank you so much for being on our show.

Darrell Vesterfelt: Thanks, guys.

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.

Two Sites You Should Be Looking At This Week

Sean Jackson: Welcome back from the break, everyone, and as usual, Jessica and I, we’re going to share sites and tools that we think you should be looking at. Jessica, what is a site or tool you think our audience should be taking a looking at this week?

Jessica Frick: The one that I want to recommend as a case study is theSkimm — theSkimm.com is a daily email that I mentioned earlier in the show that basically summarizes the days and news. They offer cool tips and things of that nature.

The interesting thing that I love about this is, number one, they write it like a friend. Every day I get the email — and it’s just the highlights with links to more information — and it’s written in that familiar, casual tone. But it’s about important stuff.

Number two, I love that they have experienced most of their growth through referrals. As a matter of fact, in the show notes, I’m going to be including my referral link. I don’t get paid for it, but they make it fun. They gamify it, and I totally want to get more points.

Number three, I love that they have a freemium and a premium model. I actually do pay the $3 a month to have app access, so I don’t always have to stick to just my email. And I get their cool calendar.

Sean Jackson: Really? Wait, wait, wait — they charge you extra for the app?

Jessica Frick: They do.

Sean Jackson: Wow, that’s cool.

Jessica Frick: They do. It’s just a few bucks, but what’s interesting is they don’t just make their money off of the monthly iTunes subscription. They do have advertisers, and the way that they handle the advertisers does not detract from the content, which I think a lot of people don’t do as masterfully as they do.

Sean Jackson: Very cool. That sounds something good to look at both as a case study, as well as something to entertain you for the day.

My recommendation is a site I just ran into, and I am totally blown away. If you are someone who writes online and you’re getting writer’s block or you are someone who really cares about the SEO copywriting space, there is a site called AnswerThePublic.com. It’s done by a company in the UK, I believe. It’s called AnswerThePublic.com.

What you do is, you put in your idea — let’s say you want to write about jewelry — and what it does in a very graphical and intense way is give you meaningful queries from the search engines people are using based on that term. But it’s different in so far as they upend information to it — like who, what, when, and where. What kind of questions are people asking? What type of prepositions are people using? I highly recommend it.

If you are really wanting to write SEO content or maybe a headline or a subject line for an email newsletter, then looking at how people are asking search engines questions may be something that you could use in your subject line or in the beginning of your email copy and then answer it therein. AnswerThePublic.com, we’ll definitely put a link in the show notes. Again, I don’t have a fancy referral link like Jessica does. I just like it.

Jessica Frick: I love the idea because, finally, there’s a way to do this without the spammy side of Quora.

Sean Jackson: Yeah, yeah, exactly. Now, there’s a guy on their site, he’s a scary looking guy, so don’t be freaked out by the video they have. Just put in a term, pick your country — default’s the UK, you can do US — hit “GET QUESTIONS,” and you will see a beautiful graph as well as the raw data. It’s upended by questions and prepositions so that you can really zero in on some headlines.

All right, that’s our two sites — theSkimm.com and AnswerThePublic.com. Take a look at them this week.

Question for the Week: Is Affiliate Marketing Worth Your Time?

Sean Jackson: Jessica, to end the show, what is the question of the week we’d like people to ponder until our next episode?

Jessica Frick: Well, talking about my Skimm’bassador link — again, I don’t get paid for it, I just get cool points — it made me think about affiliate marketing. Sean, you and I have talked about this, but I would like to know your current position. Do you think affiliate marketing is worth it for digital entrepreneurs?

Sean Jackson: Too hard, too hard. Forget about it. It’s too hard. Can’t do it.

Jessica Frick: You think that affiliate marketing is too hard?

Sean Jackson: Yep. Too hard, too little return. What do you say?

Jessica Frick: Oh my gosh, of course I disagree with you, big time. You wanted a controversial one. This one, I will die on this hill, Sean.

Sean Jackson: I will say this that this is a question that will take more than the few seconds we have left, and we will absolutely cover it in the next episode of The Digital Entrepreneur. Everyone, have a great week.

Jessica Frick: Thanks for listening.