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3 Clever Ways to Identify the Customers Who'll Generate Your Passive Income

The following excerpt is from Nightingale-Conant’s book The Power of Passive Income: Make Money Work For You. Buy it now from Amazon | Barnes & Noble | Apple Books | IndieBound

If you’ve got a business idea, it’s time to start identifying exactly who your customers are. We’re going to identify them using three different categories -- an objective measure, a subjective measure, and a third classification that we’ll call “ECB,” or expected customer behavior. Let’s look at these three categories in order.

Objective measure

Basically, the objective measure refers to anything you can say about your customers through numbers. For example, are you able to determine what age groups are most interested in what you have to offer? Let’s use “old-time baseball” as an example. For this topic, think about what demographic might form most of your website’s viewership. You can find out how many people have visited websites devoted to your interest. You can also find out how many people have done web searches for phrases like “early baseball” or “history of sports.” But that kind of research is usually not effective in terms of cost and time.

Chances are, you yourself are probably your best source of objective information about a specific interest. Most of the people who share your interest are probably much like you. That’s especially true if you’ve found a specific interest. There may be millions of people who follow NFL football, but a lot fewer are interested in what baseball was like a hundred years ago. And remember that can work to your advantage. Even if there are only a thousand people in the whole country who share your interest, if you can get them all to send you $10 a month to subscribe to a newsletter about your topic, then you’ve got a significant amount of passive income.

Subjective measure

Subjective measures of your potential customers are those that aren’t expressed simply in numbers. They’re generally understood anecdotally or in combination with a numerical analysis. For example, during presidential election debates, almost every candidate for the past 30 years has worn a red tie. It’s just something that voters want to see, and it goes beyond objective categories of age, income, or geographical location. Focus groups show that both men and women respond more positively to someone in a red tie rather than a blue one. It’s just a gut feeling that people have. It’s totally subjective. But it’s a fact, so why fight it? That’s why you’ll see so many red ties on the debate stage.

It’s important to be aware of the subjective issues of your potential customers. For instance, in every field of interest there are certain phrases, names, and ideas by which people recognize each other. We can call it jargon, although that word may have a negative connotation. It’s really just a set of beliefs that a group of people shares, and that provides the starting point for a possible relationship. If you want to bond with someone who likes motorcycles, for example, you might want to mention the classic Indian motorcycle brand that was popular in the 1940s. As soon as you bring that up, a motorcycle enthusiast will know that you have a certain level of interest. But if he or she mentions the Indian motorcycle and you have no idea what it is, it’s clear that your interest is less deep. So, think about what those subjective touchstones might be for your potential customers, and make sure you put them to use.

Expected customer behavior

The final element in your customer profile concerns the beliefs that a customer has of you, your website, and any product or service you’ll provide. This final element also includes the beliefs you have about your customers. All of this can be referred to as expected customer behavior (ECB). And regardless of what kind of an online passive income business you intend to create, you can likely count on at least one of three things to ring true.

First, if you expect anyone to pay you $100 or more through your website for something that’s not a tangible product, that expectation is very misplaced. Online customers just aren’t going to do it. But there’s another side to this coin: Online customers also expect that you will, in fact, ask them to spend $100 or more -- so if you refute that expectation by asking for less, you have a good chance of making a sale.

Second, if you labor over your website or blog in the expectation that visitors will explore every corner of it, you’ll be disappointed. Even if web visitors are passionate about a particular topic, the vast majority of people stay on a site for less than five minutes, and often less than one minute. That’s another reason why a simple, well-organized website is better than a more elaborate one. So, put your best information up front, show the visitor what you have to offer, and make responding to that offer as quick and easy as possible. That’s definitely the most efficient route for building a passive income stream.

Finally, although it’s true that elaborate websites are a mistake, there is one aspect of a website that you need to take very seriously: You must update your website as often as possible. Ideally this should be done every day, or every two days at the outset. This is probably the single most important fact you need to know about a website business of any kind. Visitors quickly learn how often a site is updated, and they’ll return accordingly. That’s another reason why blogs are so much better than more complicated sites. It’s easy to update a blog on a daily basis. The few minutes you spend updating your site are the absolutely essential foundation for building passive income on the web.