The value of cultivating a small number of hardcore fans.
|Originally published in "For Authors Newsletter (September 27, 2017)"
In 2008, Kevin Kelly wrote an essay that went a little viral among entrepreneurs of all stripes, from business owners to authors. In essence, his argument is that you don't need millions of followers or hundreds of thousands of sales to make a comfortable living; you just need to find 1,000 true fans, which are defined as those fans who will purchase anything you create and go out of their way to support you.
The essay itself is worth a read, but here's the short version: if you create enough product for 1,000 true fans to buy $100 worth of your product every year, that's a $100,000 per year income, which is enough to make ends meet pretty much anywhere if you maintain a financially responsible lifestyle.
For the purposes of this newsletter, let's talk in terms of self-published authors. And let's say a self-published author publishes two books per year at a price of $4. If you have 1,000 true fans, that's $4,000 from in book sales alone. But don't forget that a true fan is also someone who promotes you to their family and friends. So if each of those 1,000 true fans convinces just two other people to buy your book each year, that's another $8,000 ($12K total). If you decide to offer a special hardcover, autographed version of your book for $20, your true fans will buy that even if they already own the ebook originals. That's another $20,000 ($32K total). If you decide to offer a $40 webinar course of some kind on a related topic, your true fans are there for you too. Add another $40,000 ($72K total). If you decide that your true fans are excited enough about your stories to create an $18 coffee mug featuring your protagonist or a clever quote from the book, you just made another $18,000 and have now made your $100K for the year.
At least that's how the theory goes. And it can be harder with books because the profit margins are so low. 1,000 true fans of a band, for example, could put $100 in the artist's pocket by going to two shows and downloading the album. 1,000 true fans of an athlete will attend a game, buy a jersey, and that's probably all they need to do. 1,000 true fans of an app might could easily spend $100 on in-app add-on purchases throughout the year. Most authors, especially a self-published author selling $4 ebooks, don't write nearly enough books to make $100,000 a year from 1,000 fans. That would mean publishing twenty-five books a year!
That's where a lot of this criticism stems from; depending on the circumstances, 1,000 true fans might not cut it.
If you're an author who self-publishes one book a year at $4, you'd actually need 25,000 fans to make $100,000 a year. And don't forget, a true fan is someone who will literally buy anything you create. That doesn't include readers who are casual fans (the ones who actually read the synopsis of a book to decide whether the subject matter interests them, even if they generally like the author), or one-offs who try a book or two from you and decide that you're not at the top of their list of author faves. If you're an independent author and maintain a mailing list for connecting with your fans, let's assume you have a 5% conversion rate (i.e., that when you email your list and announce a new book, only 5% of the recipients actually open the email and follow all the way through to buying it). In order for 25,000 people to buy the book at a 5% conversion rate, you'd need to have a list over half a million strong!
And now you see why this hypothesis can be problematic. People might initially look at it and think, "Wow, I only need 1,000 people? That seems super easy!" The truth is that getting to 1,000 true fans (or whatever number you need to hit based on your products' frequency of release and price point) is actually quite difficult and will most likely require a long time. It probably won't happen within a week of publishing your first book.
All that said, I think there are two important positive takeaways from this hypothesis:
It's better to cultivate true fans than casual (or worse, unengaged) fans.
There are a lot of marketers out there that will tell you the goal should be to get as many people on your list as possible, and to just get that first sale. Authors will sometimes run crazy promotions (deep discounts on or free giveaways of their books, contests where they give away Kindles or other goodies to those who sign up, etc.), just to run up the numbers on their list, the rationale being that the cost of a Kindle, for example, would be more than earned back if even 1% of the 5,000 people who enter buy your book when you hit them with the sales pitch. Other authors will write a high volume of sloppy books, just to keep churning out material. And still other authors will purchase email lists from other sources, or pester their friends and family, or spend all of their social media time hocking their products, without giving any real thought to whether it's even a product those individuals would be interested in. Some people just don't like romance or sci-fi or horror, no matter who wrote it.
The trouble with this kind of strategy is that it's expensive and wasteful. Most mailing list services (AWeber, MailChimp, Active Campaign, etc.) have pricing tiers that require you to pay more money the more email addresses you have on your list. MailChimp for example, currently prices an unlimited plan for up to 1,000 email addresses at $15 per month, and an unlimited plan for up to 10,000 email addresses at $75 per month. So if you're indiscriminately adding any email address you can find, you may have a list that's ten times the size, but you're also paying an extra $60 per month ($720 per year!) for the privilege. And a 1% conversion rate on 10,000 addresses (100 people) is the exact same number of sales as a 10% conversion rate on 1,000 addresses.
There are also ancillary effects of having casual or unengaged fans. Those individuals are far more likely to review your work poorly, not promote (and maybe even criticize it) to other potential customers, and to ignore you or even remove themselves from your list if they don't see continued value in what you're providing.
True fans reward you with compound interest.
At the beginning, finding true fans is going to be difficult. Especially if you're just publishing your first book or haven't spent time cultivating a following before. But the great thing about being an author is that your backlist can create passive income that will have impact and value far above and beyond any one new release, and true fans can help you find new true fans. Here's an example:
If you have 1,000 true fans when you sell your first book at $4, you earn $4,000. When you release your next book at $4, that's another $4,000. Fast forward a couple years and you're on book #5. Your 1,000 true fans are still going to earn you $4,000 for book #5. But let's say you pick up a new true fan at this point, quite possibly because one of those 1,000 friends told a friend with similar taste in material, "Have you read so-and-so's book yet? Oh, you have to. It's so great!" So sale #1,001 is someone who's never read your work before and absolutely loves it. What's he or she going to do? Well, a true fan wants to read everything you've written, so he or she probably goes back and buys your old books too if they become a true fan. Therefore, book #5 made you $4,004 dollars plus another $16 (your four previous books at $4 each).
And this is how true fans can really make an author a lot of money. As you write and publish more material, you create more of a backlist for your fans to find. Some self-published authors out there like Mark Dawson have even done an impressive amount of math to calculate the value of each new reader. For example, he's figured that for readers who read the first book in his series, a certain percentage (call it 5%) go on to read the next book in the series. And a certain percentage (call it 10%) who read both of the first two books go on to read the third. And a significantly increased percentage (call it 25%) go on to read the whole series if they've read the first three books. If he were to sell each of his books at that $4 price point, and he has 10 books in the series, that's a lot of potential revenue. He knows that if he can buy a Facebook ad that, say, convinces 200 people to buy the book, he'll likely make somewhere in the neighborhood of $844 and $872 ($800 from 200 people buying Book #1 + $40 from 10 people who buy Book #2 + $4 from the 1 person who buys Book #3 + a 25% chance of that 1 person also spending another $28 for Books #4-10) ... which means that even if he spent $100 on the ad itself, that's a tidy profit plus he has a reasonable shot at gaining an additional true fan who will buy Book #11 when it comes out!
All this said, when you think about the idea of cultivating fans of your work, consider the 1,000 True Fans hypothesis. Not necessarily literally, but in terms of the value that hardcore, dedicated fans have over the less engaged, casual fans. They may take longer to find and more effort to cultivate, but if you can attract true fans to your writing and consistently meet or exceed their expectations with your work, it's entirely possible to make more money from true fans than you to from one-off promotions or wild shots at huge groups of people. And with the money that true fans are willing to spend on you, it's feasible to financially support yourself with your art. It won't be easy by any stretch of the imagination, but it's far from impossible.