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[read] Detailed Case Study: How I Made $419,752 In 7 Days By Modeling Starbucks…

Discussion in 'Making Money' started by mancar487, Jan 11, 2015.

  1. mancar487

    mancar487 Jr. VIP Jr. VIP

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    I've just came across this post by Mike Dillard and I think it's a must read for every business including IM. It might not be new to the veterans over here, but it hammers in how much "the money is in the list" really is true.

    Copied and pasted from: http://mikedillard.com/case-study-how-to-make-419752-in-7-days/

    Detailed Case Study: How I Made $419,752 In 7 Days By Modeling Starbucks?

    What I?m going to share with you in today?s post is one of the most powerful lessons I could ever pass on to you about building a successful business that makes a significant amount of money?


    And to prove it to you, I?m going to end this week?s training series with a case study? Specifically, I?m going to show you how I used this strategy to make $419,752 in profit in a single week, just by sending four emails.


    BUT? Please note?


    This post has almost nothing to do with affiliate marketing or selling digital products. Those are the tools. But today I?m going to give you something far more valuable? A completely new way to look at your business.


    So here we go?


    I was talking with my friend Christina this week. She?s a full-time mom with two kids, and has spent the past two years writing a few books on parenting tips for new mothers.christina


    Now that her books are done, her primary goal has been to sell those books, and bring in some revenue.


    I think most people, especially small business owners, would agree with that logic. You create a product or service, and then you focus on selling it.


    But there?s a reason that the average annual revenue for a small business in the US is only $44,000, and there?s a reason why mine have made over $50,000,000 in the past past 9 years.


    She thinks her business is selling books.


    It?s not.


    Her books are a product, but a product is never a business.


    Here?s what I mean?


    Starbucks has 23,187 locations in 63 different countries as of the time of this writing.


    Most People Think Starbucks Is In The Coffee Business.
    They?re Not.
    Coffee is their product, but they?re business is actually distribution and real estate.


    Those stores represent Starbucks distribution channel.


    Television is a distribution channel.


    YouTube is a distribution channel.


    Facebook is a distribution channel.


    These are the mediums in which marketing messages flow and goods are sold to a participating audience.


    So if Starbucks wants to sell more coffee, they must expand their channel by opening more stores.


    Without those stores, there is no business. Same with McDonald?s. Same with Wal-Mart.


    All of these companies have figured out that their real business is their distribution channel, through which goods and services are sold.


    We need to remember that as well, as it?s the key to building a business that makes $400,000 in a week, instead of one that only makes $400.


    The miracle of building a business in the Internet age, is that it allows a single person to build a massive, global, virtual distribution channel with nothing more than a laptop.


    Personally, my distribution channel is in the form of my email list.


    Right now, there?s around 500,000 people from around the world who subscribe to it. In addition to email, I also have the ability to reach out to 45,000 followers on Twitter, and 10,000 fans on Facebook.


    Imagine how many stores I?d have to open in any given industry to get access to 500,000 interested people?


    Well the average US Starbucks serves around 400 customers per day, and averages a gross annual profit of $108,000 per store. Most stores cost around $800,000 to open. In other words, it?s a very expensive distribution channel to create.


    Starbucks-Store
    Thanks to the Internet, you and I have the opportunity to create our virtual distribution channel that spans the entire globe for next to nothing.


    So let?s get back to Christina and her parenting books for new mothers so I can demonstrate the difference between building a business where the primary focus is on selling books, and building a business where the primary focus is on building a distribution channel.


    Christina could sell her book on Amazon.com in the Kindle store for $9.95. For every sale, she makes a 70% profit, or $7.00 per book.


    In order to make $7,000 per month, she would have to find a way to sell 1,000 books per month, or 33 books per day.


    Forever.


    She doesn?t get any of her customer?s information such as their name or email address, so her only way to make money is to constantly sell books every single day. She might be able to spend some of that $7.00 in profit on advertising, but that will decrease her profits down to $1 or $2 per book if she?s lucky.


    This is not a business, and yet it?s what tens-of-thousands of authors attempt to do each and every day.


    Now let?s take another approach? The one I suggested to her yesterday over the phone.


    Instead of focusing on books sales, let?s focus on building her distribution channel, which in the case, is a list of moms who subscribe to her free email newsletter.


    By sending her readers valuable information via email on a regular basis, Christina can build a solid relationship with them. She can become known, liked, and trusted for the value she provides.


    This is called, ?Good Will.?


    And Good Will is EVERYTHING when it comes to the value of your distribution channel. Why?


    Because if people know, like, and trust you, they will buy from you.


    On Average, An Email Subscriber To Christina?s List
    Will Be Worth $1.00 Per Month In Revenue
    If She Maintains A High-Level Of Good Will?.


    If she has a list of 5,000 readers, she should be able to make around $5,000 per month by promoting goods and services that would benefit her readers.


    20,000 readers = $20,000 per month, and so forth.


    Over the course of a year, that means each subscriber is worth $12.00.


    This is possible because people tend to stay in your distribution channel and consume your products and services for as long as you continue to create good will.


    I have subscribers who have been on my email list since 2005! And I still hear from them!


    So how can we use Christina?s book to build her email list?


    Simple.


    If each free email subscriber is worth at least $12.00 per year, and her book customers are only worth $7.00 total, then it makes a heck of a lot more sense to just give away the book for free, in exchange for their email address!


    With the addition of a second product that she can offer her new subscribers for $20-$50, she will be able to afford to actively market her free book on Facebook?s advertising platform, and rapidly increase the speed of her list growth to 100?s of new subscribers per day.


    Within the next 12 months, she should have a list of around 100,000 subscribers, which should produce around $100,000 per month in revenue.


    Anytime she creates a new product, or comes across someone-else? that she?d like to recommend, she can do so just by sending out a single email.


    But it get?s significantly more interesting when you start to focus on turning those free email subscribers into actual customers.


    Their value goes from $12.00 per year, to well over $100 to $1,000!


    For example, when I was advertising my ?LFP? mentoring program last year, I advertised a $1.00 trial for 7 days. If they wanted to remain a member, they were billed $37/Mo for as long as they wanted to keep learning.


    After one year, each of those $1.00 trial customers wasn?t worth $12.00. They were worth over $160.00.


    Huh? So you can sell a book on Amazon and make $7.00 one time because they keep the relationship with the customer.


    Or? You can give your book away for free in exchange for the person?s email address, and make $12.00 during the course of a year.


    Or? You can sell your book for $1.00. Offer those customers more of your products, and make $160 during the course of a year.


    This is how you build a business. And this is how that business can make millions of dollars.


    When I launched EVG in the fall of 2010, we acquired over 8,600 paying customers and produced $3.2 million in revenue within our first seven days of business, without spending a single dime on advertising.


    How was that possible?


    Simple . . .


    During the previous five years, I had built a distribution channel of about 200,000 email subscribers, along with a fantastic relationship with them.


    As a result, 8,600+ of those people joined EVG in the very first week once I made the announcement.


    By the end of the first year, we?d produced right at $10,000,000 in revenue.


    $10,000,000 divided by 200,000 readers = an average annual value of $50.00 per subscriber.


    THAT is the power of a distribution channel!


    So Let Me Walk You Through
    An Actual Real-World Case Study?
    The great thing about building a distribution channel that generates revenue, rather than a product that generates revenue, is that you can leverage the amazing products and services that others have spent the time to create.


    This is typically called ?Affiliate marketing?, which was pioneered by Amazon.com almost 20 years ago.


    Basically, you can promote someone?s product or service, and get paid a commission for every sale. If it?s a digital product like an E-Book or an online course, that commission is typically going to be 50%. So if the product costs $50, you?d make a $25 commission.


    When it comes to promoting a product to your list as an affiliate, there?s two important rules you need to keep in mind?


    1: Only promote products that you?ve personally bought and checked out for quality.


    2: Only promote products because you believe they will provide a real tangible benefit to the people on your list. Not for money, but because you know it will help them achieve their ultimate goal.


    Failure to follow these rules will result in the loss of good will, and could even destroy it completely.


    So obviously, I?m extremely selective about the products I promote.


    In a normal year, I may promote just 2 or 3 affiliate products or services beyond my own.


    These are always products I?ve purchased myself, and really enjoyed.


    A few years ago, Mark Ford launched a new financial newsletter called the Palm Beach Letter.


    Mark is an iconic entrepreneur and investor who has written many best-selling books under the pen name, Michael Masterson over the years.


    He is definitely someone I consider a mentor, and so when he launched this new publication, I was one of the first to buy it.


    After a few months went by and I got to see how great the content was, I reached out to PBL?s CEO, Tom Dyson, and asked him if I could promote their newsletter to my list.


    They said yes, and even offered to pay a 100% commission on every $99 annual membership.


    How can they afford to pay 100% back to me and still make money?


    Simple? They know that their average customer will end up buying over $1,000 of their other products during the next 12 months. So they?re more than happy to pay an affiliate like me $100 for as many customers as I can send them!


    So during the course of a single week, I sent out four emails promoting the Palm Beach Letter to my readers.


    I gave my whole-hearted endorsement and put my ass on the line by offering a double your money back guarantee.


    If someone wanted a refund for the $99 PBL publication, then PBL would process that refund, and I?d personally send them a check for an additional $99.


    But, this offer was limited to a five-day window.


    Finally, I included a photo within the email to provide proof that I personally used the product.


    This went a long way in reader?s minds to solidify the product?s value and credibility.


    Anytime you can show photos or a video of your personal use, do so. It will likely increase your sales by at least 100-200%.


    For brevity?s sake in this blog post, I?m just going to give you the first email?

    SOURCE: http://mikedillard.com/case-study-how-to-make-419752-in-7-days/
     
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  2. Cashington

    Cashington Regular Member

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    Due to the big number , plus mancar always posts interesting and useful things I'm bookmarking it to read later .
     
  3. Aatrox

    Aatrox Supreme Member

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    That's actually a pretty good read. Thanks!
     
  4. Paper-Boy

    Paper-Boy Elite Member

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    The money is in the list. :) Always a good reminder to those who aren't in the list building business yet.
     
  5. bartosimpsonio

    bartosimpsonio Jr. VIP Jr. VIP Premium Member

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    I read a very similar text, about 20 years ago, about McDonalds. I don't recall who the author was. Exact same ideas - seems like the author adapted it to Starbucks.

    For those who don't know, McDonalds is in the real estate business....fast food is their means to an ends. They owned prime real estate in the Soviet Union when most other Western companies were blocked out....
     
  6. wisdomkid

    wisdomkid Jr. VIP Jr. VIP

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  7. jinsandy

    jinsandy Regular Member

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    sometimes i wonder how big other niches besides internet marketing might be.
     
  8. bogel

    bogel Newbie

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    Really good read. I enjoyed it.

    Now comes the million dollar question. How do you get your first subscribers?
    I have a book, I've written I'd be willing to give away to build a list. I have a product that I know sells, because I've already sold it.
    But I have no money to rent a list from others or to advertise through cpc or other means.
    So how do I get my free gift out?
     
  9. bartosimpsonio

    bartosimpsonio Jr. VIP Jr. VIP Premium Member

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    You mean other markets. It's a big world of business out there.... You think of anything, anything at all, and there's a market for it. Way back this was one of the good online money makers : www.dogdoo.com

    See? This guy sells dog shit for a living.
     
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  10. spasovski

    spasovski Regular Member

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    This really expands my ways of thinking.

    Does any of you guys know where I can find more reads like this?
     
  11. serpmover2014

    serpmover2014 Regular Member

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    Awesome and powerful share. Thanks.
     
  12. Dante12

    Dante12 Jr. VIP Jr. VIP

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    Nice share OP, thanks. Any recommendations on what tools to use to grab those emails? mailchimp? aweber? Thanks in advance
     
  13. MotivatedNewbie

    MotivatedNewbie BANNED BANNED

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    Thank you for sharing, it actually opened my eyes
     
  14. stevenvertigo

    stevenvertigo Newbie

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    My 2 cents answer: Try use FB adv to tell people about the free eBook. I am in the middle of testing FB ads and i am getting 500 visitors to my site with 0.03 cost per click within first 24 hours of my adv live. Thanks for the nice share, as i just start to build my list.
     
  15. shezboy

    shezboy Jr. VIP Jr. VIP Premium Member

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    I like the stuff that Mike puts out there and just spent an hour reading through his blog. He offers some excellent advice on there that's easy to absorb and can be replicated quite easily. Thanks to the OP for sharing this, it's much appreciated.

    Shez
     
  16. mancar487

    mancar487 Jr. VIP Jr. VIP

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    Two ideas:
    1. Fb ads are great for giving freebies in exchange for emails - usually you can get fairly cheap clicks (though it depends on the niche).

    2. Put your book on amazon kindle. Make it available for free on some other ebook-sharing sites. Because amazon will price-match your book, it will be set as free. Have a link in the book to your squeeze page. Viola = free method to build a list

    Personally I use aweber, but mailchimp is good too and it is free for up to 2,000 subs.

    Mancar
     
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  17. beingink

    beingink Senior Member

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    Great read... Gave me afew ideas for my own upcoming business.
     
  18. Avid Learner

    Avid Learner Regular Member

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    Anthony Dadlani in Seeking Alpha "McDonald's is a Real Estate Company" - sorry, I cannot provide the link. Only thing he missed was that McD also makes money from being an exclusive supplier to the restaurants. Not quite the same analogy though.

    It is not a breakthrough thought...the author is essentially referring to one of the "4Ps of Marketing", specifically "Place", which drives into a discussion about distribution channels (paths to put product in front of the customer). With an online business, the channels are arguably integrated with the "Promotion" channels. IMHO, it would be easier for IMers to google "4Ps" and they would get a lot of free and more straight forward info on this topic, and perhaps inspire several ideas.

    Still, it still brings home the idea that the valuable asset one is creating is the contact list, which gets lost in the technicalities of "how to" discussions in these forums and similar sites.

    Following this line of thinking, is it that the very big money in IM is in telling other IMers how to make money?

    Mike Dillard is a good read (compared to other gurus, and not really pompous as they can be), but it strikes me that his business is in this niche. Did read a couple other of his blog entries and, for 2015, it looks like he wants to start a hydroponics organic farm operation, but will start a new business in the MM niche to help fund his startup costs for the farm. Will be worth keeping tabs on how he makes out with both new ventures.
     
    Last edited: Jan 14, 2015
  19. LeftBlindEye

    LeftBlindEye Newbie

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    Thats nuts!! Gratz
     
  20. SirLoki

    SirLoki Registered Member

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    I read that, great content mate
    This is a very logical way of thinking