One hundred true fans
The Growth Report - #4
Today's topics include
📈 Marketing - Personalisation according to Netflix
🧠 Personal Growth - Inversion: The crucial thinking skill
🔮 Trend - One hundred true fans
⛑️ Reflections the trenches - Lead measures vs. lag measures
In this section, I share some lessons learned from the trenches of building our marketing agency GrowthBay.
Personalisation according to Netflix
If you are a marketer, you have probably either worked with existing personas and "ideal customer profiles", or created them yourself. These personas are often based on psychographics like lifestyle choices, spending habits, values etc.
But Ana Andjelic, PhD and CMO at Mansur Gavriel argues:
Inferring about psychographics based on the products people buy is unreliable. People buy the same things for wildly different reasons: There’s a discount; they are struck by a certain mood at a specific time; they know other people who already have them.
Equally problematic is how often personas focus on the individual, because it ignores the fact that people are social creatures. Real people belong to communities and are part of influence networks that they use to decide what to watch, read, buy, and pay attention to.
So one must wonder, what are companies like Netflix and Spotify doing differently then, to offer us such sophisticated, deeply personal and customized experiences? Because we are all using the same product, but we still feel like its "ours":
"My Spotify weekly playlist is better than yours."
So surely there is more than meets the eye?
Netflix Taste Communities
So Ana argues that "...instead of focusing on individuals, we should focus on their relationships and look at the communities they belong to".
How does Netflix do that?
Netflix’s taste communities. The streaming platform’s 125 million global viewers are divided into 2,000 “taste clusters” that group people based on their movie and TV show preferences. At the same time, Netflix content is extensively tagged and, based on these tags and their connections, divided into micro-genres. Micro-communities and micro-genres are then matched up.
- Example of a book genres cluster visualization
This gives us a dynamic portrait of individual people, whom they are influenced by and what relationships and activities are important to them.
When we shift our focus from an individual to their network of relationships, we start asking different questions: How are the communities an individual belongs to structured? What are their dynamics? How does influence spread within them? Who are the most active and/or valuable members? This shift reveals not our inferred taste, but our actual taste.
And then she makes the most important point in the whole article:
Personas reveal the fact that consumers are receptive to persistent and repeated messaging, price deals, and social influence. But they also dangerously focus attention on the least valuable customer: the one who’s price sensitive and trend susceptible and least likely to be brand loyal.
How can you apply this?
Think about your brand in plural - Your Netflix is not my Netflix. When you apply tagging systems and shopping data, remind yourself that each product reflects differently in the individual user.
Grow through the niches - Think about taste clusters and niches in your industry. Your goal is to go away from generic, one-size-fits-all and into establishing micro-communities. Just like "Steamy Romantic Movies" (see header picture of this article) is probably one of the micro clusters Netflix identified, your product too appeals to a variety of micro-communities.
There are many doors in - Netflix doesn't only personalize your movie genres, but you also see different trailer-images than your friends and apparently even see categories at different times then your buddies. So how can you too not only customize your product, but also your packaging, email communication, or online ads according to the taste clusters your have identified?
Target communities, not individuals - We are all part of communities of people with similar interests. What existing communities do your best customers belong to? How could you appeal to that specific community specifically?
Read the full article on Medium
🧠 Learning - Inversion: The crucial thinking skill
"We are more often frightened than hurt. And we suffer more from imagination than from reality." - Seneca
I was first introduced to the powerful technique of inverse thinking by Ryan Holiday's book The Obstacle is the way. In his recent article, James Clear reinvigorated the topic for me.
The premeditatio malorum, or "premeditation of evils", is a thinking exercise that has been applied by ancient Stoic philosophers such as Marcus Aurelius, Seneca and Epictetus.
How does it work?
“Premeditation of evils” simply means taking a moment to think through everything that could go wrong with a particular plan.
The Stoics believed that by imagining the worst case scenario ahead of time, they could overcome their fears of negative experiences and make better plans to prevent them. While most people were focused on how they could achieve success, the Stoics also considered how they would manage failure. What would things look like if everything went wrong tomorrow? And what does this tell us about how we should prepare today?
Why you should define your fears instead of your goals
Inversion sheds a light on errors and roadblocks that could come up in the future. It trains you to imagine the worst, because if you have imagined it in vivid details, it is no longer an unknown and has less power over you.
On this topic I can also highly recommend Tim Ferriss' TED Talk on the topic, which goes into the details of how exactly he is using this technique.
Read the full article by James Clear
🔮 Trend - 100 True Fans
The original concept of "1000 True Fans" was initially conceived in 2008 by the brilliant futurist and founder of Wired Magazine, Kevin Kelly.
His premise goes as follows:
Rather than pursuing widespread celebrity, creators and entrepreneurs only needed to engage a modest base of “true fans”—those who will “buy anything you produce”—to the tune of $100 per fan, per year (for a total annual income of $100,000). By embracing online networks, creators could bypass traditional gatekeepers and middlemen, get paid directly by a smaller base of fans, and live comfortably off the spoils.
But since 2008 a lot has happened, and now Li Jin from the VC fund Andreessen Horowitz takes it a step further and suggests that today even 100reds of fans might be enough to sustain you and your business.
How it works
Through your blog, YouTube channel or newsletter you can cultivate a large free audience. They consume what you put out, but its all free. Then you start converting some of those into donors or "patrons", through platforms like Patreon or Substack.
You can then offer those fans additional content, courses, exclusive event access or direct interactions for a premium price.
"If you can convince a small number of super-engaged people to pay more, you can also have a general audience that pays less."
And the trend is clear:
People are willing to pay more for exclusive, ROI-positive services that are constructive in their lives, whether it’s related to health, finances, education, or work. In the offline world, people are accustomed to hiring experts across verticals (think interior designers, organizational consultants, public speaking coaches, executive coaches, and tutors) and are willing to pay premium prices for the promise of measurable improvement and results. Now that mindset is filtering into our digital lives, as well.
The recipe for earning $1,000 per fan
So what do you need to get right to profit from this trend?
Easy perks like offering users ad-free content and access to back-catalogs can help creators monetize at a lower dollar amount. But to gain fans who are willing to pay $1,000 a year—no small sum—creators need to offer a step-function increase in value. The recipe, then, is to go niche and to tap into users’ desire for results. Practically, what does that look like?
It means providing differentiated content, community, accountability, and access:
Premium content and community that has no close substitutes
Delivering tangible value and results
Access, recognition and status
In her article, Li unpacks these four points in detail and leaves us with a quote:
“The internet enables niche in a massively powerful way.” For creators who earn the trust of a niche audience and who deliver what those users crave—whether self-improvement, connection, recognition, or belonging—100 True Fans provides an updated monetization model for the fast-growing Passion Economy
⛑️ Reflections from the trenches:
In this section, I share lessons learned this week from building our company GrowthBay.
Lag Measures vs. Lead Measures
Lag Measures are stressful
I realized that I often get most stressed about goals that are measured by something I will achieve in the future:
Increase sales by 20%
Make an additional $2M in profit
Have a blog with 1000 readers
Gaining 5kg of muscle mass in 3 months etc.
The issue is, that by the time you see them come to fruition (or not), the performance that drove them has already passed. So right now in this moment, those high level goals are pretty useless to predict future success and even worse at telling us how we get there. That's why they are stressing us out!
Focus onLead Measures
But there are critical daily activities that drive, or lead to the lag measures described above and are under our direct control:
Send five highly targeted outbound emails to potential clients per week
Work four hours per week on the new partnership program
Write one blog post per week
Go to the gym for one hour on Monday, Wednesday and Friday
Example: Calculate your success probability
Obviously, its a whole other topic to define THE RIGHT lead measure for your goals. But you can gauge or even calculate your probability of success.
Lag Measure: Increase revenue by 20% this year from $1M to $1.2M ($200'000).
Lead measure: Send five highly targeted emails to potential clients per week.
Average emails sent per month: 20
Average discovery calls resulting from those emails: 10
Average meetings resulting from those calls: 5
Proposals you can send: 3
Contracts won: 1
Average contract value: $50'000
So in this fictional example it would take you 80 emails over 4 months in order to gain four new clients that bring in the additional $200'000 in revenue.
Even if you are off, and you realize that you don't actually get one client from 20 emails you send out, you are still in control and can adapt your strategy on the go. The crucial thing is: You know you have done something every day, every week, or every month that brings you closer to where you want to be. Action not motion.
To wrap up my thoughts:
It's stressful to evaluate your performance solely by a lag measure like revenue.
Its much more empowering and satisfying to define the concrete activities we can do (and measure) on a regular basis, and which over time are likely to lead to our lofty goals.
That's it for this week.
Enjoy the weekend and don't forget to wash your hands 👏🏼
See you next week,