The Whistle, The Workhorse and The Whale

Business Brain the Show for entrepreneurs episode 445 for Wednesday, May 3, 2023. Greetings, folks, and welcome to Business Brain, the Show by, for and about entrepreneurs. But really it's for all of us because we just like to take our business brains and run all kinds of things through them to get that objectivity, maybe a different perspective on stuff to make us. To make it more easy, to make it more easy, to make it easier to live and lead that charmed life. Sponsors for this episode include factormeals.com brain40, where you'll use code brain40 to get 40% off your first box of America's number one ready to eat meal kit. And also notion.com businessbrain where you can go and try notion AI for free. We'll talk more in depth about those in a little bit. For now, here in Durham, New Hampshire, I'm Dave Hamilton.

And here in. Well, it's not really sunny today. I promised I wasn't going to talk about the weather, but it's rainy again, so I figured, what the heck? In California, I'm Shannon Jean. I love hearing those two products as sponsors because they both will change your life in a really great way.

I agree. Yeah, I agree. I agree. Happy Happy Small Business Week. I don't know what that means, but the SBA says it's Small Business Week, so that's cool. We might as well celebrate it because that's. That might be all we get all year long.

Take all we can get. One of the other things I like, as you were talking about the, the shows, I like how. Well, I think what we try to do is change your filter on, on certain topics that maybe you wouldn't have thought of in a. In a specific way.

I'm gonna steal that. Not gonna steal that. I mean, it's. It's ours here. I'm gonna use that in the intro.

Yeah, yeah. It is the, the filter that you use on your. Your life as a whole and trying to use that business brain and the way you make decisions that can help you in other ways just besides your business.

Yeah, I like it. I went to see Amanda Palmer, the musician, singer, artist, on Saturday night down in Boston, and she did a show. She performed solo. It's typically how she does things these days, unless she's out playing with the Dresden Dolls, which I guess are going to reform and do some shows here in a little bit. But she is very. She did have a guest performer with her at different points during the set, but basically it's a solo show. She did two sets. And she said, okay, we're gonna, we're gonna, you know, take a break here after this next song. We'll take. Play one more song. We'll take a break. It's about 25 minutes. She's like, go, do what you gotta do. And then, you know, we'll come back and we'll, we'll do the second half of the show. It's like, okay. Yep, been there, done that. Understood. Thank you. Appreciate the heads up on how long this is all gonna work out. She's very respectful of her audience, and a big part of that is because her audience is her audience. She has really perfected or continues to perfect this idea of being a creator for her audience, not for a person who's going to market to an audience that they have defined as hers. And by that I mean, I don't think she's with a label right now. I don't think she's been with a label for a very long time. She runs and fuels her life based on Patreon. She has her fans and you can sign up for as little as a dollar a month and, and then she gives access to, like, new recordings and, you know, daily blog posts or whatever. Whatever content it is she chooses to create, you get to see as a, you know, as a Patreon subscriber.

Sounds like the thousand true fans.

Exactly. She's probably got it. She probably got close. I think I meant to ask Lisa, because my wife is one of her Patreon subscribers. I think it's somewhere between 10 and 30,000 Patreon subscribers. I think it's closer to 30, but. But I know that, that she makes about 30k a month, maybe 40k a month from her Patreon, or at least that's. That's what she has said, which is, you know, I mean, if you're doing the math at home, you know, that a bad little small business. And then she gets to go out on the road and tours. She, I'm. I'm assuming she makes money when she goes and plays gigs, but at the very least they pay for themselves, you know, and, and so she's got a, you know, that's how she gets to be Amanda Palmer. But she said something very interesting and he. So I'm sure there's like we could spend episodes unpacking that thousand true fans concept and, and we have before and we will again. But the part I wanted to highlight was the next thing that she said after she told us about the intermission and how long it was going to be. She said, and hey, you know, you can do this while you're intermission. You can do it on your phone or you can do it in the lobby on a form. She's like, please sign up for my mailing list. She's like, yes, it's awesome. It's great for. To follow me on all the socials and all that good stuff. And she's like, please do that too. But with the way all the algorithms are these days, there is no guarantee to you. And again, this was. I've always, you know, being a musician, I am always eager to get people to sign up to my mailing list so that I selfishly, so that I know I can reach you. But she turned it around. Now, part of this is because she's a master performer, but also it's very sincere. She's like, look, with the way the algorithms are, there is no way that you can guarantee you will find out when I am coming to your town next just by following me on social media. The algorithm may not show it to you. And she's like, neither one of us has any control over that. So what you need to do is sign up for my mailing list. That way there's a direct connection between us and no matter what happens with the algorithms, you know you're going to hear from me.

And you know she's a customer, right?

It's. Yeah, it's exactly. That's right. Yeah, it's that relationship with the customer and, and that. And when she said it that way and sort of turned it around, she made me want to be on her mailing list. And of course, anytime somebody does something that makes me want to take an action, I think about that. I put my business brain hat on and I start thinking about, okay, wait a minute. Like, ah, look what she just did to me. And I don't, I don't mean to be, you know, suspect of this. In fact, it's fine. I, I understand it. It's like, wait, why am I not communicating things that way in my businesses? And so I share this lesson with you and I also ask that you go to Businessbrain show and sign up for our mailing list so that you get everything that we want to put out. Make sure you subscribe to the podcast, too. Don't just expect that you'll see every episode on whatever social you follow us on, because it might not happen. I guarantee you it won't happen some of the time. So that's.

Yeah, I agree. And, and I'll put my Using my business brain, too. Looking at that, I think it's a terrific business model. The only weakness I would mention is relying on one provider for all of your. Like, I imagine it's credit card or whatever. If something goes sideways with Patreon and she has, you know, 30,000 people registered, how do you. If you went to the bank and said, yeah, I have one customer, which is typically, which is, I guess, Patreon, right. That would be a huge weakness. So there'd be interesting if there was a backup or some different way of how you. If things went wrong, how you could convert those folks to a different, you know, donation platform, if you will. Um, and I know there's a few of them out there, but I've had. I've heard some stories about folks that all of a sudden didn't qualify for certain things or whatever on a platform and. And couldn't use them anymore. So that would be a good backup.

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Yeah, we've talked about this concept before. I call it the $10 ice cream cone. Although now maybe it's 20 bucks with.

Inflation I think most ice cream cones cost about 10 bucks now.

So yeah, yeah, ye, so let's say you 20 bucks. So you know it's, that's the concept of having you know, this high end product that is very profitable. Maybe don't sell a lot but you know Will Green on Twitter, who I follow and we'll put a link in the show notes at businessbrain show. He, he had put it in good context of these three different product types and let me read this first and then we'll, we'll chat about it and his, you know, he calls them marketing truths. One product is not enough. Ten product is too many. Every business needs three offers, only three. He says offer number one is the whistle. A whistle is loud, it goes out in the world and gets attention. It can be easily fulfilled and it's priced as low as possible to self liquidate on paid ads. If you're paying, you know, for marketing. Yeah its purpose is to, to bring on customers and, and just break even. So it's something you can move a lot of, get a lot of attention offer. Product number two is called the workhorse. This is a mid tier product, 70 to 80% of your revenue. If your whistle is a special soothing brush that calms anxious dogs, your workhorse could be doggy CBD at $47 a month. And then the third product calls the whale ultra high end offering. Very few customers will buy it, but the ones that do are money. And if your Workhorse is Doggy cbd, your whale is a custom dog food created to your pet's DNA profile and delivered fresh. 4,500 bucks up front and $177 a month. And you know, those are interesting, you know, examples but you know, and then, and then there was one follow up question that's, that's also worth mentioning. Someone asked, well what if we just gave away the whistle, you know, product and Will came back said, you know, paid customers obviously are better than freebie seekers. You know, if, if you can spend $4,000 selling a $40 product at break even, that's a hundred buyers a day you bring on every day. And then if you can get 10% of them to take the workhorse offer, you're scaling up. So that's a thousand dollars of profit a day reliably and consistently.

That's really. Yeah, like I think, no, I think that's the part that it's, that's hard to get over because there's this desire that we all have to just collect customers and we've learned to accept the concept of a loss leader. Right. And so that's where this, this question about the whistle comes in is, well, what if I just offered as a loss leader so that I can get these people in as customers? Because you are shipping them a thing they paid you, you're shipping them. Just because you've chosen to lose money on it does not mean they're not your customer in their mind. But.

And are you big enough, I mean, are you, are you big enough already to eat that?

Right. Yeah. You don't want to offer it for free or like his idea about freebie secrets is huge. But I think also just break even is maybe how we need to reframe and when we put our business brains on, redefine that idea of loss leader, let's eliminate loss leader as the default option. I don't want to eliminate it as our, from a, from the category entirely. I think there's still going to be places where it makes sense. However, when we're starting out and learning to attract customers, I think we need to look at let's break even on.

The product, not whistle.

Yeah, let's break even on the whistle. Right? Whatever that product is in your business, break even on it. You're still actually going to lose money if you break even because you're spending money to bring those people, those customers in. Like you still have customer acquisition cost. If you can bake that into your break even calculation, hey, do it even better.

Yeah. But I love the examples where he's like, you know, selling something weird as your whistle is great to get you attention. You know, like this soothing brush to calm anxious dogs. You know, I remember when we had Greg Mercer from Jungle Scout, they're experts at Amazon selling. He talked about if your friends think the product you're selling is cool, you might be selling the wrong product. You want to sell things that are different and not commoditized in that race to the bottom thing. And there's a bunch of examples that he talked about on that show and I think it's great. And the thought process is I had a non profit event this weekend and I really have to shift away from thinking about this high volume. I'm always, I gotta, we have to sell more tickets for this banquet and we didn't sell quite as many this year and we're down, you know, about 20%. And I think, well, it's the economy this, but we sold to the right group of customers because our, our revenue per Guest, which I've monitored for years, was the highest it's ever been, you know, over $500 per guest at this event that they spent. And we regenerated about $80,000 in revenue on Saturday. And in. So it's. It's resetting that concept of, okay, you know, I don't need 200, 225 people. I need 150 of the right people.

Just like that. That whole Amanda Palmer thing that we were talking about at the beginning of the episode, it's the same thing. Find the right people. And I don't want to say ignore the rest, but don't worry about the rest. Like, if. If one of them is the right person, they will show up.

Like, yeah, yeah, it builds up. It backs up or backstops. That thousand true fans concept that we mentioned earlier, too, is that you. It's the people that are really willing to pay you for you, Your service, your product, your performance, whatever it is, that's who you should be focusing on. Not the fact that I need 10 million Twitter followers or whatever. It's. You have the right followers.

That's it. That's it. Oh, I mean, that's. Man, talk about my career here. Like, I'm not. I have. I have built that thousand true followers in a few different places. And it's like, it's great, but. But it's not. You know, I say that I lead a charmed life for sure, and I'm very thankful for it, but it's not an accidentally charmed life. It's an intentionally charmed life. And I work really hard for all of you. If you are part of any of those circles of thousand true fans with this show, with any of the other shows I do, with the websites that I've run, like, all those things, it is my focus every day, my mission, to make sure that there is value for you out there. That, like, that's how I. That's my part of this is making sure you're getting what you want. It's not using you. It's a symbiotic relationship. Yeah.

It's a value of reciprocity.

That's it.

You're giving that out first in this concept of they're going to come back and give me something else. I can visit my website, sign up for this, listen to my podcast, and. And, you know, you're going to generate some revenue somehow. But check out our sponsors. Yeah, check out our sponsors. Exactly.

So I mean it, though. I don't mean that to be cheeky. Like, that's part of the reciprocity is like, I've asked you, will you go check out our sponsors? Whether you buy is between you, you and them. But our job here is to just get you to take a look.

Yeah, yeah. And thinking about, well, let's, let's get good sponsors that are relevant to our business and let's try this stuff out. Like we tried those factor, you know, meals, and they're awesome.

Yeah.

Use notion, all these things. Yeah, it's great. It's a good concept. But the whistle, the workhorse and the whale. If you want to learn more about it, we will link it in the show notes at businessprinting Show. And thanks for being with us here on Wednesday.

Absolutely. Thanks for hanging out with us, folks. And coming up on Casual Friday, we have a couple of emails to share and put through the Business Brain filter. Send in your emails to feedback at BusinessBrain show and if your email is featured in an episode, you're entered to win a MacBook Air in 2023 here. Keep living that charmed life and we'll see you next time.