Broken Business Models: Selling To The Unlearned
Leading on from yesterday’s post on a broken business model, here’s another topic inspired by the weird folks at Reddit. (Bear in mind whenever you ask for help on an entrepreneur forum, these are the sorts of people who’ll drop advice on you.)
Essentially, you’ve got a guy who wants to charge a massive premium for creating a service that caters to people who don’t know what they are doing.
As a business-to-business service, it kind-of makes sense. After all, there are business owners who don’t want to learn web design. There are also business owners who don’t want to deal with customer support, invoicing or bookkeeping. Fair enough.
So maybe you create a solution based on that; Hey, we do web design for people that don’t have a clue… It’s $500 a month.
Uh-oh.
Can you guess what’s going to happen?
Eventually, that business will look at its books. It’ll say, “Hey… we’re paying $6k a year for a website when you can get one free!”
Stupid, yes. But then they’re going to look into it.
Why Building A Business For The Ignorant Is A Bad Idea
The problem with creating a business for people who don’t know what they’re doing is mainly two-fold:
- You’re going to deal with a ton of customer support. Seriously, an unreal amount.
- Your USP is going to kill you.
Obviously, the latter of those two points is the killer.
People are going to outgrow your service. That’d be fine if people just upped and left.
They don’t though.
They’re going to tell their friends. They’re going to post on forums. Holy Christ, you’re going to get the know-it-all’s on reddit who’ll pop up every time your company name is mentioned and say, “HEY THEY’RE A SCAM.” It doesn’t even matter if you’re honest and upfront about all this. It’ll come for you like a bear after honey.
That’s assuming you don’t get a sneaky marketer who literally uses the fact that you’re selling to the unaware as the basis for their sales letter.
….Speaking of which.
How To Build A Business Model From This
I’d feel bad if I just ranted at a guy from Reddit for a whole article. Instead, I’m going to let you all in on a little secret.
I’ve been working on a new business idea; competing with myself under a different brand. That’s a subject for another day, but here’s the thing: I don’t want to work with people who don’t know what they’re talking about. Mostly for the reasons I’ve written above, but also because there’s a self-worth component to taking on small-budget clients.
Anyway, here’s the real way this relates to the above: I’ve created a genius (well probably not, but it’s clever) little sales funnel.
In this sales funnel, I give away nearly all of the secrets. I tell the client “Here is exactly what you have to do… step-by-step.” I say, “I’m only taking on ten clients as a maximum.”
Those of you who’ve done the copywriting things on this site will recognise these tactics as things that build scarcity. That’s one part of it, and giving away secrets builds authority.
But it’s more than that. Here’s how I see it.
Would you rather have a client that’s engaged, happy and knows what they’re talking about?
Or, would you prefer that your client knows nothing about your service, your competitors and all the little things you put in to make your service special?
Furthermore, out of those two, who do you think is going to pay you more and treat you better?
When people get started with entrepreneurship, they often want the former. Big mistake.
Make It Easier On Yourself
Low-hanging fruit seems like the best fruit to grab when you start. You don’t have capital, you don’t have contacts and you don’t have experience.
Especially if you’re inclined towards lifestyle hacking and passive income, it seems like having a really basic solution for really basic customers is ideal. However, the business model isn’t great because of the aforementioned problems; you’re going to be swallowed up by customer support and your customers will move on to bigger and better things pretty quickly.
Also, when you target the least knowledgeable customer, you’re also targeting customers who can’t help themselves and often won’t help themselves.
Having a customer that can’t do anything for themselves is a pain in the backside.
It’s even more of a pain when after six months of you training them to do stuff, they finally say, “Hey… I’ve found a competitor that offers me more features. See ya!”
Final Thoughts
It’s easy enough to go for low-hanging fruit. When you start up in business, you’ll feel that it’s your only option. It might even be – I’ve worked with clients who moan about the value they’re getting on $3 articles before.
However, at some point you need to set higher standards and go after better customers. If you stay in the bargain basement for too long, that’s the value people will ascribe to you.
Give your customers knowledge. Give them the option to go elsewhere. Watch as they come to you over options because you’ve given them the ability to do so and the knowledge to choose.