October 14th, 2009 | Published in churn
Okay, I struggled with getting this blog post out. It turns out that I’m far more interested in spouting on about the factors that effect churn rates when I’m in a pub somewhere. That said, I promised to talk about the factors that influence churn rates and here are my thoughts on the type of application and how rates differ between them. Read the rest of this entry »
October 7th, 2009 | Published in churn
Sign up 400 people each paying €25 a month and retire. That’s the name of my game. Well not really. As the ever so clever (and annoyingly correct) Caelen pointed out in his latest Bizcamp tour de force – it is not quite that simple. Churning milk makes you butter and churning customers make you penniless – eventually. Subscriptions have a lifetime and eventually people will ebb away little by little unless I maintain and enhance the services we offer them. So how do we avoid churn? Well, we don’t. We mitigate it. There are several approaches but for this blog post I’m just going cover payment methods and how they effect churn.
Not all methods of payment methods are created equal when it comes to reducing churn. Here is the top five as far as I am concerned in reverse order:
5. Paypal: Not everyone can get their head around Paypal but for the tech crowd pretty much everyone has an account. This is a plus and a minus. For those used to using Paypal it makes it easier for them to sign up. On the down side, it also means that they are that much more used to canceling subscriptions. Read the rest of this entry »
March 12th, 2009 | Published in Automated income
I’m talking tomorrow to a small group of people about building an online business. If I could write a recipe for success – this is what it might look like.
1. Establish how much monthly income would create financial independence
When ‘automated’ or so-called ‘passive’ income exceeds expenses – you no longer have to go to work to pay the mortgage. Your time is your own and you can chose to focus on anything you want to focus on (saving the world, spending time with the kids, creating the fourth reich). Figure out your ideal lifestyle costing here…
The four hour work week lifestyle costing.
2. Set a target number of customers you would like to sell to.
The smaller the number, the easier the sale, the higher the price, the harder the sell. Decide on a number of people bearing in mind that €9 a month for a consumer and €24 a month for a business offering is the psychological sweet spot. At these prices, peole are willing to pay a little bit of money for a little bit of value.
Use this map to pick your price point.
For example, you may decide that your ideal lifestyle might cost €125,000 a year. You could decide to break this down to 400 customers paying you €25 a month for ’some service’. A web business should run at 85 – 95% profit so most of that money will come straight to you.
This figure is now your goal. Not to build a business. Not to have a product. Not to hire staff. Your goal is to fine 400 people who will pay €25 a month for something.
So how do we find 400 people who will pay €25 a month for some service?
3. Audit your contacts. Look at your own contact lists. Start generating lists of people you know. Generate a few ideas here.
4. Brainstorm their problems
Write each group of people down on sticky post it notes and start to think about the problems that those groups experience. What challenges do the mothers in your contact sphere face? What challenges to the solicitors/football players/networkers/programmers/salespeople/residents come up against? What challenges do you you come up against?
Take another sticky (I prefer a different colour) and start to write the problems down against each. In the corner of the sticky, estimate how many people have that same problem, in your existing contact sphere (eg: for people you have phone numbers and email addresses for).
5. Learn about the styles of online business that are out there.
Start to find out exactly how people make money online. These people are making money by providing a solution to a problem. Don’t look at the product they offer, but the problem they solve. Ask yourself, “do any of the problems these guys solve look similar to the problems I am aware of in my contact sphere?”.
There are four basic ways in which people make money online:
Map the solutions you learn about to the problems in your contact sphere.
6. Evaluate
You now have the three components you need to build your online business.
Identify 10 possible products which inlude a combination of the three above. Your formula for success should now look like this.
(size of market) x ( marketing hit rate %) x price point = 400 customers x €25 / month
7. Bone up on your marketing
Learn about the various ways of marketing online (and offline) and their success rates. A ’success’ is a sale. Different marketing strategies yield different hit rates. For example
| Type | Hit Rate | Cost |
| Telesales | 10% | €30 / sale |
| SEO | 1% | €300 / month |
| Brochure | 2% | €4 / brochure |
| Radio | 0.5% | €5,0000 |
Check out
Read Brad Sugar’s Instant cashflow
for ideas on how to market.
8. For your top ideas, detail out the opportunity with extra information on the potential market size.
Estimate your marketing cost (the major component of a lot of online businesses) by understanding the cost of aquisition by marketing approach. Comparing one against another you can start to see where the best bang for your buck lies.
9. Go build it.
March 5th, 2009 | Published in Automated income, comment
Making money online is as much a creative process as it is anything else. Coming up with product ideas is excting but ever since reading the Four Hour Work Week, I have come to realise that I am more interested in building a lifestyle for me and mine than I am building products. With that in mind I first started thinking of customers that have problems – then seeking to come up with products for those problems. Often though, when I start the process germinating new product ideas I have to go one step further and think about the price I would like to charge irrespective of what the product OR the market is like. I like doing this because if I find coming up with a price point helps to crystalise what type of market I should be looking for. A key tool in determining a price point in my ‘money map’.
Staring at the map gives me food for thought. Thinking about potential markets I get an initial gut feel for the number of people in an initial niche along with the price they may be willing to bear. it is coloured according to what I consider to be the physchological pressure points. €9 and less is for the consumers, €25 for the business consumers and €190 for my ‘advoctes’. The idea here is to convert people up the chain until they become advocates, shelling out nearly €200 a month for the service. Of course there is a price point that isn’t mentioned on the map – FREE. Its ever more popular and and I haven’t come up with a way of visualising it in the same image yet.
December 10th, 2008 | Published in Automated income
A past speaker at the Goose Forum emailed me recently to promote his “Rory’s Story Cubes”. The cubes are part of Rory’s approach to productising his busines, allowing people to pay him while he is asleep.
The cubes are for “colleagues, clients, teachers, parents, grandparents, writers, artists, actors, trainers, even therapists, looking for a small but meaningful gift this year?”
You can watch an introduction here:http://www.thecreativityhub.com/blog/.