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Monthly Archives: January 2011

Sales is a numbers game. Make the numbers large enough and you can reliably start to predict your sales. Once you move away from dealing with individuals, in terms of mass communication, and make the numbers large enough to be statistically significant – the actual number will depend on what it is you are selling and is not exact, but lets say for the music business where you are selling CDs, downloads and merchandise upwards of a few hundred, and a 1,000 is very respectable.

So let’s say you have a mail list of 1,000. In the sales world, a funnel is a classic prediction methodology. Say you have a sales letter that generates a 10% response, so sending out a 1000 will generate 100 responses; calling those 100 respondents generates a 50% sales meeting success; sales meetings generate a 30% conversion. So, 1000 letters has resulted in 15 sales stepped through several known control points. Voila, you have a funnel.

Now, the business must do the sums. First of all is the cost of sending out 1000 letters plus making a 100 phone calls plus attending 50 sales meetings a viable financial proposition? If it covers all the costs and provides a profit then you have a business. You just keep cranking the handle and out pop sales. In theory yes, in practice no because no matter how reliably predictable your model the number of targets is limited.

So, when you exhaust the targets you start with a new product or maybe a service that augments the product you are selling. e.g. a repair service. This is good because you have customers who have bought your product before and they like it. Get it right and it gets even better as the previous response numbers are likely to be much better with a satisfied customer. Package it correctly and you have built a brand. That’s all very simplistic as there are lots of other factors to think about, but in principle that is how it works.

Now, that is classic sales, however, a fan who has signed up for your email list is not quite the same kettle of fish because they are buying into YOU. As an avid Steely Dan fan, I have a copy of “You’ve Gotta Talk It Like You Walk It (Or You’ll Lose Your Beat)”. It is rough and not Steely Dan-like at all. As a music lover I wouldn’t have bought it, but as a fan I had to have it to complete my collection.

By releasing new music regularly you have new products for fans to buy but it is a bit limited and one dimensional. However, this is where looking at classic sales models can still be very useful. Expanding the product line to meet their (not your) needs allows you to be creative. There is the standard ringtones, t-shirt/sweatshirt, you could offer to play a concert in their home for their family and friends.

So, the more you look at it, the more you realise that being in the music industry is no different to other businesses. There are standard techniques and methodologies that you can apply. Fan = customer, and the more you have, the smoother and more predictable your income stream becomes. And predictable revenue leads to a sustainable business.