Dear Brit: 'How Do I Find Customers Who Will Spend Lots of Money and Gush About Me to Their Friends?' In her column for 'Entrepreneur,' Brit Morin digs into her own experience to advise on finding your ideal customers and tailoring your business model to your company's needs.
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Brit Morin was 25 when she left Google to start Brit + Co, a lifestyle and education company aimed at helping women cultivate creative confidence. Now — 10 years, $50 million in funding and 1.2 billion pageviews later — Brit's passion is empowering more women to take the entrepreneurial leap. She's a managing partner at VC fund Offline Ventures, host of iHeartRadio podcast "Teach Me Something New," creator of Selfmade, a 10-week start your own business course for women founders, and, most recently — Entrepreneur advice columnist. Find her here twice a month on Thursdays, answering the most personal and pressing questions of women entrepreneurs.
Have a question for Brit? Email it to Dearbrit@brit.co and she could answer it in an upcoming column!
Looking for someone to love me and treat me right (or, spend lots of money on me and tell everyone they know that I'm amazing)
Dear Brit: How do I find my ideal customers?
Important question! Let's break this down. First, I want to hone in on the word "ideal."
What is an ideal customer? To me, the most ideal customer is someone who:
Will pay you what you're asking for.
Will buy from you repeatedly and ...
Will tell other like-minded people to do the same.
Now that you've defined your ideal customer, how do you find them? You must first consider the audience who needs the product or service you are offering, and then consider who actually has the money to buy it. For instance, rarely do you see Porsche marketing their cars to new 16-year old drivers. They have a need for a car, but cannot afford a Porsche. Instead, you see lower priced auto brands like Kia offering their entry level cars to young drivers. They need it and can (maybe) afford it.
Related: Dear Brit: 'I Want to Turn My Passion Into a Business, But I Don't Know My Passion!'
I run an online course called Selfmade that helps new female entrepreneurs start and grow their businesses. The price point is $2000, which is steep for many, but in comparison to an MBA program (which can run up to $250,000), it's a massive deal. Plus you can get an entrepreneurship "degree" in just 10 weeks. So naturally, some of our target audiences are those who might be A) ready for a big career change, or B) debating between getting a graduate degree and starting a company. We fill the need for them, the cost seems appetizing, and if we do a good job serving them, they will likely tell their friends. We're on our third "semester" of Selfmade right now and about 25% of the students in this cohort say they heard about it from a former student or a friend. Great products sell themselves. Remember that.
Shopping for a model of my own
Dear Brit: What are the different kinds of business models I should consider for my business?
I love this question because the right business model can make or break your business.
I have a good friend who runs a $1B+ company but struggled for years to grow her revenue in the early days. Why? It was simply an e-commerce business. She sold things directly to her audience and had to work extremely hard for every repeat purchase thereafter. However, her pivotal moment came several years into the business when she decided to launch a subscription/membership service. All of a sudden, money was pouring in from the sky! Why? Once she could convince someone to subscribe rather than simply do a one-time transaction, she was able to get 5-10x the total revenue per customer (or lifetime value, LTV) without doing more work. This meant that instead of buying one thing during the course of every month for $99, that same customer was buying it for $99 for 5-10 months before cancelling their subscription. So yes, subscription and membership models can be beautiful if they work. The caveat to that is they do take work to keep the customer engaged! Many membership services have a high churn rate, meaning that the value of the offering to stay engaged is not high enough to keep the user paying.
Another popular business model is referred to as an affiliate business, which has been popularized by many media companies. It's one of our revenue streams at Brit + Co, in fact. Essentially, if you are curating products and linking to them in your content (email, article, etc.), the retailers who own those products may offer you a cut of the purchase price. Amazon is one of the most popular affiliate partners on the internet. If you are part of their affiliate program, they will give you 5-10% of a purchase for any of the leads you send. It works quite well if you have a lot of eyeballs on your content, and your readers want to buy what you tell them to.
Other popular business models include advertising (pretty straightforward), licensing (getting royalties for your designs or content without having to be the one to manufacture or distribute it), or freemium (when a service has a lower quality tier that is free and a higher quality tier that is paid and more premium). And of course, you can always choose to have a non-profit business as well. In that scenario, you are "selling" to donors who help fund the work you're doing.
If you're starting a new business, I would urge you to consider 2-3 business models and run the numbers through each of them to determine which is best to try first. Otherwise, you may end up like my friend, never realizing the full potential of your business.
Related: Dear Brit: 'Self-Doubt Is Eating Me Up. What Tools Can I Use to Boost My Confidence?'