Monday, March 14, 2022
In the first part of this 2 episode event, you'll hear Dan Kennedy talk about:
And so much more. Enjoy!
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Russel Brunson: Welcome back to the Magnetic Marketing Podcast. In today's exciting episode, you have a chance to hear Dan Kennedy talking about the money aspects of the information marketing business. This is actually part of a two set series, where Dan's going to be going deep into the info product business, how it works, and really understanding the metrics behind it.
You're going to learn about what is the number one asset in your business, and how to reverse engineer things to make sure you get the most amount of money possible. I hope you enjoy this episode. With that said, we hear Dan Kennedy talking about the money aspects of the information marketing business part one.
Dan Kennedy: Good afternoon, everybody.
I assume everybody's having a good time? Everybody seems to be in good hands, building staff doing a great job.
I used to talk about it when I went on vacation, there's the entrepreneurial schizophrenia when you are on vacation and you call the office and everything's going well. You're delighted, but then you start to worry about your dispensability. I see everything going well, and now I'm concerned about my dispensability.
Information business. Are you here because you sincerely want to get rich from this business?
Okay. Because that's what we're going to talk about this afternoon, we're going to talk about money. Rather than a lot of mechanics, we're going to talk about the money aspects of this business.
As youthful and virile as I appear, especially by comparison to Bill, I know this'll be hard to believe, but I've been in this business a long time. I ran my first full page magazine ad for myself in 1974.
I had my first paid copywriting job in 1972, by the way. Their business was very close to my high school, at least one of their sorting centers. They employed a lot of kids from our school to come over and work after school opening envelopes and separating the checks from the orders.
They had space above a bank branch in the bank building so they could separate the money and take it right downstairs and deposit it. A whole bunch of kids I went to school with worked over there. I was very aware of the thing. Pretty much everybody who had was around Bath, Ohio was aware of this strange business that grew to be a very big thing.
John, am I correct, one of the 10 most mailed sales letters? Well okay, that makes it one of the 10, but mailed a lot. It really was the awareness of all that got me interested in direct mail at the time, and mail order marketing, and all of that. Although, I never met Garrett until many years later, but my first paid copywriting job was actually for Halberts. They did little cattle calls where they would invite people to come in and try and beat a control.
I got $500 to write this letter to sell beer mugs with your family crest on them. I thought, "This is the most incredible thing I've ever seen in my life, $500 to write a letter. Other than making money with a gun, this is the slickest thing I've ever seen." Then I ran my first ad and I got orders.
Most of you are probably past that stage. But if you can remember it, whenever you ran your first ad, or sent your first direct mail piece, or sent your first email, or put up your first website and somebody actually bought something, it's like, "Well, you're ruined for life." That's the deal. You're stuck.
I own race horses, and we always say the worst thing that can ever happen to somebody their first visit to the track is that they win. Because then they think that's what happens, and they keep coming back. I got orders and I was hooked.
I like to tell people that you can start in this thing at a pretty primitive level. I got real serious about the information business in 1975. It was immediately after the first of my two divorces. My ex left one fork, one spoon, one knife, one plate, one saucer, one cup, and her cat.
This cat had hated me for two years. Spit and snarled whenever I was within striking distance, absolutely detested me. In 48 hours, it was my best friend. It turns out that whoever feeds him ... By the way, there's a lesson there. It's an employee lesson, not a marketing lesson.
My asset in my mail order business was the cat who licked stamps. Because the cat apparently liked the taste of the glue on the stamps or something. My operation ... Now, I should stop because I know we got these internet geeky people in the audience. A stamp, it's on a roll, and it's got sticky stuff on the back. You put it on a thing called an envelope.
Yanik Silver in our platinum group and Cory Rudl who is in our platinum group, Corey this year found out what an envelope was by coming to platinum. It was a revelation to him.
Anyway, this cat, my operation was every night I would watch TV and stuff my mail pieces for the next day. I would sit on a couch, and the cat would sit on on the coffee table facing me. I had all my mail in front of me, and I would hold out my strip of stamps and the cat would go ... Then it would lick all my envelopes, we're great.
I had a little dish of water there for him because every once in a while, he'd run out of spit. If you had one of the stamper machines, you got to put water in it every once in a while, so the cat needed water every once in a while. But he's happy for two, three hours to be doing the stamps, and earned his food.
My theory was I didn't have much money. You're going to eat, you got to work. Most people, in successful businesses by the way, they do that with their relatives. I did that later. Some of you have done that. If you got to feed them and support them anyway, you put them to work.
That's how I wound up with my entire family working for me. But the first step was the cat. Want cat food? Lick stamps. That was the program. That was my first mail order operation. Me, a coffee table, and my cat which was my gift cat. I didn't even actually have to buy him. He cost me a fair amount, but I didn't directly pay for the cat.
Point being, really for probably a few people in the room, but you come to something like this, particularly if you were here from day one, and you really see what can in many respects look like a very complex business. It's easy to feel a little overwhelmed.
I know more than I let on. You're going to need CRM software, and, "How are we going to keep track of our databases? We're going to need 46 websites." The list goes on and on. Well, you don't necessarily have to, to get started.
I was doing marketing before or there was broadcast facts. Now it's gone again of course, for all intents and purposes, but we didn't have broadcast facts. That thing didn't exist. The internet didn't exist.
In my seminar in publishing business with chiropractors and dentists we did all almost $8 million in a three-year period of time with no computer program. There were 38,000 people in the chiro niche at that time, and we ran that with 33 up Avery labels.
The way you did a three step mailing was you printed three sets of labels. If they ordered off the first mailing, you went and you took their label off of the other two labels, and then you were ready to go for the second mailing. By the way, this worked just fine. Red brick, blue brick, green brick, stacks of labels, worked great.
You don't necessarily need to be a genius to get started in this thing. It's more important I think, which is what I want to spend the time on this afternoon, understanding really what the business is all about.
Because we call it the information marketing business, a lot of people think it's about marketing information. That would be an erroneous conclusion. It really is all about money, as all businesses are.
People who think they're in the restaurant business, or they think they're in the publishing business, or they think they're in the speaking business, or they think they're in the dog grooming business, they're all wrong. They're in the money business. That little tweak of thinking is a big step up for a lot of people.
I want to start by talking to you about the money aspects of this business, and we'll start with the issue of assets. I want to, in the next few minutes, get you focused on what the assets of an information marketing business are all about.
You can see a brief list there, but here's the big question, and here's how people think differently about all this. At the end of the week, at the end of the month, at the end of the year, what most people look at is, how much did my income increase?
But another really good question is how much did the value of my business increase? Most people don't think about the information business in those terms. I figured it out early pretty much everybody I know is very, very good at spending what they make. Current income tends to disappear, and people are pretty good at escalating their lifestyle to match their current income. They're very good at that.
Inconsequentially, like in the speaking business where I spent a fair amount of my time for 20 years, there are people who are famous who have been working for 30 years who still need this week's gig to pay last week's bills because they totally focused on the first question their entire career, how much is my income increasing? They never focused on the second question, am I creating any value? Value is a very important issue.
What I want to talk to you this afternoon about is the five gold rings of wealth in this business, and here they are. We'll spend some time on all five of them.
The first I call the herd. The herd is the group of people who are going to support you, who will give you money not only once but give you money repetitively pretty much on request for as long as you choose to continue to provide information in any way, shape or form. The herd is one of the assets. Then the relationship with the herd is another asset, we'll talk about that.
Then your intellectual properties, that's your product content and your marketing content. By the way, most people focus all on the intellectual properties, that's another thing about this business. People think because we call it the information marketing business, they think it's about the information.
The intellectual property, which is why I didn't color it in with my little green pen, is the least important of the three big assets. It's the most readily duplicatable, and John [Carlton 00:14:07] and I had lunch and talked about the fact that there's a lot of talent laying around that never turns into money. Well, I got to tell you, there's a ton of product laying around that never turns into money.
When I was in the cassette program production business for clients and I owned a manufacturing company, at one time we produced product for hundreds and hundreds of speakers and authors and fledgling information marketers. Everybody would come into the office with their unique product, of which I had five on the shelf in my office. That was generally my first client education, is I would let them tell me all about their unique product.
Then I would go get the dust covered five or six clones of it that had already come, died, and were laying around deceased piled up in their people's garages, and warehouses, and companies all across the country. Because it's not about the product. Before we finish today, I hope to drum that into your head.
Then there's income. What are the income streams that the assets make possible? Again, a lot of people focus on how do we make money? But you got to have assets with which to make.
Let's talk about the herd. I'll give you a number. It's admittedly a big thumb number, so inherently it's going to be wrong part of the time, but it's a pretty good number. I've helped over 200 people launch information businesses from scratch that now produce over $1 million dollars a year in earnings.
I've seen some numbers emerge that are reasonably reliable, and here's one of them. Every 2,00 to 3000 members of the herd, that's active members, they're still living, breathing members of the herd, is $1 million.
This business, from a money standpoint, boils down to the three steps on the screen. Decide how much money you want to year. That tells you the size of the herd you need. Go get it. Your business is all about rounding up the size herd that you need. It's not really about any thing else first or more importantly.
It's not about the product first. It's not about the mechanics of the business first. God knows it's not about the software program first. It's not about the technology first. It's about the herd. How much money do you want? How big does the herd have to be?
It's the same way the rancher decides how many cattle he's going to have. How much money do I want to make, divided by whatever a cow is worth ... Which I'm learning about. My wealth group, we became cattle ranchers. We bought one third of two cows, by the way. I'm serious. We did it half for fun and half because it actually turns out this is a pretty good money deal, so we are now in the black Angus cow business.
I haven't seen it, it's in my mail, but I understand we've been sent now the picture of the cow because we didn't actually go to the auction. Because this is how it's worked out with race horses, I'm reasonably certain that the third that we own is the front part that eats. That's my best guess.
But look, there's a formula in that business. Rancher wants to make X amount of money, he's got to have Y amount of cows. Same formula here, and this is a pretty reliable formula. You decided how many millions you want a year, that tells you how big a herd you need.
Then everything you do in business is about accumulating, rounding up, getting that herd together as quickly, and efficiently, and effectively, and affordably as you possibly can. Now, some companies go out to build a herd and they go broke creating the herd.
Their acquisition costs eat them alive, so you got to you got to have good math. But this is the business. This is the entire business. Here's another formula for you. Roughly 5% of the people you put into your herd will continue to support you forever. Five percent are permanent. Another 15% are nearly permanent.
To use myself as an example, I don't know about in the room ... There's certainly some with more than five years longevity. Who here's got more than 10 years with me since you first gave me money? Stand up. Anybody 10 years or more since you first gave me money.
Now everybody look around at them. Don't look at me because the instructional example is out there, not up here. Well, wait a minute. Stand for one more second so that they can do the math.
Yeah. Total audience size ... You know, there is an interesting demographic trend there, isn't there? Maybe we should be running lists of aging males who are 30 or more pounds overweight. Look, if you do the percentage against the population ... Okay, you can sit.
Here's what you have to understand. Each of these people you just saw standing up are very, very valuable assets, far more valuable than any product I might create.
Product comes and goes, we'll talk about product later, but they're very valuable assets. Ted, we'll use Ted since he mouthed off, more than 10 years. This year, what, 12 sales letter writing workshop? This one, what, probably $30,000?
Maybe closer to $40,000 after 10 years. Oil well is still pumping. See, that's the asset.
Somebody said last night at the gold plus reception about having bought something of mine for $1 at a garage sale or something. Somebody said in my ear, "Geez, at least he didn't say eBay." But his is not an isolated story.
We have at least one platinum member who found a book for $1 or two in an office supply store that was going out of business, and he's over 10 years, maybe 15 years, longevity and hundreds and hundreds of thousands of dollars.
This is the asset in the information business. It is the Ted. The Herb, the Mary, who finds value in what you do, and will continue to give you money pretty much on request as often has you make any sense in asking for it. I have them dating back more than 23 years. Still pumping, still pumping. That's the asset that you want to focus on.
I'm going to show you a criteria for the herd, because you don't want to round up any herd. You want to round up a particular type of herd. You want to wound up a herd that will be responsive, that will have the ability to give you money over and over and over again, preferably in escalating amounts.
I'll show you criteria. It's not the only criteria, I'm only going to show you mine. You may come up with a different one. But the most important point to get is that you need a criteria. You need a basis, some set of parameters, that define the herd you are seeking to round up.
Understand this is totally contrary to the way most people think about this business. The way most people think about this business, because we call it the information marketing business, is they think about information first.
They think about what information do I want to write about, talk about, assemble, accumulate? Then, what vessel do I want to put it in? Now, who will buy it? Even if they're lucky enough with that truly backwards thinking to wind up with something somebody will buy, they may wind up with buyers who don't make up a really good herd, and you want a really good herd.
The word who is far more important than the word what. Everybody starts to think about the what. "What am I going to write about? What's going to be in my product? What's my coaching program going to be about?" No, no, no.
Think who first. Who do you want in your herd? Because information product, here's what it really is. At the point that you are acquiring a new customer, you are rounding up and putting someone in a herd for the first time. The information product is bait.
There was a ballot initiative passed in Alaska. We paid a lot of attention to the presidential election, so a lot of these other things may have slid past your attention. If you're in Alaska or you're going to Alaska, here's a useful piece of information for you.
They passed the ballot initiative that allows them to continue to trap bears with food, meaning they can attract the bear with food and then shoot them at close range, which is called sport. They're allowed to use peanut butter, and they're allowed to use honey, and they're allowed to use ground meat. This was a ballot initiative and they passed it.
Well, presumably if you put cucumbers and onions out, you don't get a bear. Because they were pretty specific peanut butter, honey, ground meat, that appears to be the right bait. If you want a bunch of deer in your backyard, you don't put a gigantic wedge of cheddar cheese out There. you'll get a backyard full of something, but it ain't going to be dear.
This is about the right bait to get the herd you want. This is not necessarily your criteria, but I'll point out a couple things about why it's mine. Here's my criteria. Now, understand it took me like a decade to figure this out.
Number one, their income has to increase as their capability increases. The converse of that makes for a far less valuable herd, let me tell you why. It should be obvious, but nevertheless.
Harry and Bertha who work for AT&T for a salary, if their effectiveness improves by 500% as a result of the information you sell to them over the next month, how much does their paycheck increase? Zip, that's correct. At best, when annual proof performance review rolls around maybe.
For Harry and Bertha to keep reaching in their pocket and giving you money, is a little difficult. Because they're improving, but their income isn't. Even if they value the improvement for reasons other than financial, there's still a limit on how much they got in the pocket.
However, if what I sell them increases their income as it increases their performance, then the pocket is never empty and they can keep giving me more money, preferably and escalating amounts.
That's the first thing I figured out, that I didn't want to spend a whole lot of time putting people in the herd who weren't going to be good herd members, who did not have the ability to continue to give me money because their income didn't increase as their skills increased.
Secondly, this took a lot longer to figure out, there's a secret of the transaction size if you are an information marketer in business. Now, if you're in hobby so you're selling to, I don't know, somebody that raises giant tomatoes in order to win prizes at the county fair, you don't have this to think about.
But if you're in a business environment, you do have this to think about. The person that we're selling the information to, one of the things we want to know is what is their average transaction size in their business? Because that has an impact on how much I can charge them for my information.
Let us assume I have a piece of information that doubles the sales in any type of business. Let's assume it teaches upselling, and therefore it's proven effective it will double the amount of the average sale in any business. If I go to sell it to a bunch of people who own Dairy Queens, their average sale is about $10. Therefore, if they double it, it's worth $10. If I go to a cosmetic dentist whose average case is $20,000, if I double it, it's worth 20,000.
Now let's say I'm selling it for $2,000. If I'm selling it to the cosmetic dentist, I get to make the case you only need one 10th of one patient you wouldn't get otherwise to justify the investment. If I'm selling it to the Dairy Queen owner for $2,000, how many customers does he have to get to march through the Dairy Queen that he wouldn't have otherwise to recoup the investment?
I'm no good at math, but it's a crap load, and that's exactly what goes through his mind because he's no good at math either. But he sees the $2,000 price tag and he says, "It's going to take a crap load of ice cream cones to get back $2,000." There's a secret the relationship to your herd member's transaction size in his business to your pricing. It's a very useful secret.
Criteria number three, known responsiveness. Bad idea to put a bunch of people in a herd who don't know how to buy. Now you got this whole education process. I'd rather get them who already know how to buy. I know it's been talked about at various times already, That's why joint ventures are so good. Host parasite relationships are great. That's why rented mailing lists of responsive buyers are so good.
This is very important. I have a lot of clients in the weight loss business. Some years ago, and it's changed again now, but a lot of states changed their privacy laws and you could actually go rent lists from the DMV, so you could rent lists based on driver's license data.
Everybody in the weight loss business got real excited because what does that mean we can get? Literally by zip code, we can get height, weight and gender. No offense, but we can go get short fat dumpy women in Tupelo if that's what we want, so everybody got excited.
However, what that gives you is short fat dumpy women in Tupelo, but what you don't know is whether or not they care. Now, if they bought an AB roller from Body by Jake, we know they care, and we know they know how to respond. We know they're responsive, so they're worth a whole lot more to having a heard because they're responsive. You have to be careful to get responsive people in a herd. That is the third thing on my criteria list.
Fourth then was the ability to make predictions of the herd value after the initial purchase. I wanted to be able to know what they were worth, and we're going to come back and talk about that a little bit later. The herd message I have for you is choose wisely
Now, I got a bunch of my herd, especially early on, from manual labor. I went and spoke. To give you an example of what you don't want, in 1970 as a result of this book I have out, I get a speaking engagement. In 1978, I needed any gig I could get.
This is The Administrative Management Society in Wichita, Kansas, to which I get to go speak in the winter, and Wichita is no picnic in the winter. I'm getting it a little [inaudible 00:32:27], but I slept all the way to Wichita. It's freezing, it's miserable. I'm doing an after dinner talk, and then I'm selling my pitiful little ill-conceived product.
Well, The Administrative Management Society, let me tell you who's in this. These are people so dull they're not allowed to join anything else. These are middle management engineer guys. I swear to God they're at a cocktail party and a dinner, I'm not kidding you, they all got plastic pocket protectors. They got the shoes with the little pin holes in the toes. You know what I'm talking about? They look alike, and they react not at all. There's no air moving in or out of them during the presentation.
I do my thing, I of course don't sell anything. The lovely woman who hired me is accosting me with passionate enthusiasm because I'm the best thing ... It turns out there's 120 of these chapters across the country.
She says, "I'm going to get a letter out first thing Monday morning to everybody telling them how great you were. You'll be able to do 50 or 60 of those." I'm saying, "Harriet, thank you very much, but don't send the letter." Because the fee is irrelevant. Even if they all bought, that's irrelevant. Bad herd. Fundamentally bad herd. Maybe a good herd for somebody else I understand, but bad herd for me.
The first asset here to get a grip on is the herd. It's the most important asset, and therefore great care should go into selecting who you are going to put into your herd.
Second asset, relationship with the herd. Say something interesting. Not to pick on them, but you guys all know Nightingale-Conant. You probably do, Nightingale-Conant Corporation. They're a big dog in the audio cassette based, now CD based, information business. They have over a million customers.
Don't get too excited. You just said "Shh." Don't get too excited. They have a million customers. However, in annualized value, they need 20,000 customers to equal 1000 of mine. They got a big herd, it just has very low value. The reason it has very low value, is the second asset of the five rings, is the relationship with the herd.
The key way that you create value is through relationship. The first thing that you will notice about a company like theirs, or a company like Boardroom Reports that publishes a lot of newsletters that has a huge herd with a very low heard value, is that they speak to their customers in an institutional voice, not from a human personality.
There's a person attached to some of these companies, but there's no personality attached to the person. Well, if you're going to build a relationship, relationships are built person to person, not entity to person. No entity can say, "Everybody follow me to the back of the room," and everybody follows. Only a person can do that.
The way you increase the value of the herd is through relationship. As a matter of fact, they need to think, to feel, they are friends and family.
Here's what happens in my business. Pete Lowe has just experienced it really for the first time in years. We've been publishing the new information marketing newsletter in Look Over Your Shoulder for a year, so he's talking to customers. I see him almost every Saturday night. We have dinner every Saturday night at the racetrack.
Here's how the conversation has gone now for four or five months: "Do you know so and so?" "Nope."
"So and so from Decatur?" "Nope."
"He's in the hardware business?" "Nope."
"Well, he knows you. He acts like he's your long lost brother and your best friend." He said, "Yeah, he's supposed to think that, but I don't know him from Adam's house cat. But he thinks I do."
In the big business world. There's a thing when you get a celebrity to put into an infomercial or use in a print campaign. One of the things that is talked about in the advertising world as a thing called approachability, how the public feels.
Approachability is this. If they see the celebrity sitting in a restaurant, do they feel that they can easily and comfortably go over and ask them for an autograph or talk to them? Or do they feel like they're off limits? they might snap at them? There's a thing and called the approachability index.
The most valuable celebrities are the ones who are very high on the approachability index, that are people who everybody thinks ... Ed McMan right after The Carson Show, very valuable as a celebrity because he's very high on the approachability index. People feel they can easily go up and talk to Ed if they run into Ed.
There's a lot of talk about why this and why that, of course in politics, but this is one of the things that was discussed this year, is where would you put each of those candidates on an approachability index? Which one would rank higher on the approachability index?
This affects people. This affects, now when they see a celebrity in a commercial, how they respond to that celebrity. If you put the celebrity on QVC or HSN to sell something, do they feel they can call in and talk to Joan Rivers? Or do they feel like Joan Collins could care less about talking to them?
If you extend this to our businesses, the more personal the relationship feels to the member of the herd, the more valuable the member of the herd becomes. You do things, and everybody decides what they do, in order to facilitate this.
I put the word risk here because there is risk. The more you open yourself up and share your personal experiences, your life, your kids, your dog, your vacations with your herd members, the more risk there is.
However, I also put the word authenticity, which is a whole nother now topic of conversation about the just concluded political campaign as well. Authenticity is even harder to measure than approachability, but the public, the consumer, the customer, the member of your herd, responds to it.
If they feel like you're an authentic individual, if your public persona, your private persona is the same, if they are really getting to know you as a human being not just a vendor, then their value to you goes up.
Other things that affect value is involvement. Is the herd involved? Are they taught to respond continually? It's why the newsletter is such an important component part of an information business. Broadened content.
There's two things you should know. In my wealth attraction seminar, I say there's two big things to know about wealth. That is, be the wizard, beware of the wizard. If you're going to be in the be the wizard business, you probably will start in a fairly narrow category of wizardry, whatever your expertise is.
His expertise is investing in real estate successfully, and owning trailer parks, and hurricane zones. Well, you can't be right all the time. However, the public really wants wizards. A lot. We all do. We're all looking to somebody that's got the answers.
As soon as they discover that he's valid, that the information he provides about how to go buy a house and fix it up and sell it for a profit, as soon as they find out that's real, they want him also to be a wizard about all sorts of other things. They convey to him now the opportunity to broaden his content pretty much as far as he wishes.
You want to take advantage of that because it allows you to have a more valuable relationship with your herd. You don't just see me talking about how to do sequence mail and how to do direct mail. You see marketing, then you see entrepreneurship, then you see wealth. I've restrained myself from the relationships category.
However, I get asked a lot, "Why?" Because they want the wizard in this to be a wizard in that. That's how Dr. Phil gets to do weight loss. Huh? Take a look at him sideways. I mean, I got a little. He's got a bunch. Weight loss ... Phil, and his kid. Weight loss for teens.
Have you looked at the kid? This kid's never had a weight problem in his life. He's got a 24-inch waist. He's flat as a board. What does he know? But they want him to be a wizard in everything, so it allows you to broaden your content, and you do want to broaden your content because it increases the relationship. Frequency, very important.
Third asset of our five was the intellectual property. Here's what I want to tell you about the intellectual property. As I said, it is the least value part of the puzzle. Got to have it, but it is very dangerous to over inflate its importance or value.
The evidence of its lack of value is what happens to it when the author dies. Ray Crock died, there's still a bunch of McDonald's. Dave Thomas dropped dead, there's still a bunch of Wendy's. Sam Walton died, there's still a lot of Walmart. Value there.
How long do you think it'll be after Zig Zigler dies before Zig Zigler's intellectual property is gone from the face of the earth? Not very cotton picking long. You find an exception every once in a while, an entrepreneur who can grow rich that hangs around forever, and ever, and ever, but they are few and far between.
From my speaking world, the author of one of the top 10 bestselling books of all time on sales died flat broke. The widow of another famous sales trainer, who actually appeared on the Johnny Carson Show, had to get a grant from the national speakers association to attend the conventions after her husband died because she couldn't afford to pay to come.
The widow of the author of a personal development book that you would all know if I named its title, it was on bookstore shelves for over 15 years, she sold all the rights to all his material for $15,000 and still lost the house. I could go on, and on, and on.
When I and my partners bought all of the Maxwell Maltz intellectual property for was like stealing. Stealing. Sixty million copies of the book sold, one of the most enduring brains in personal development. Value? No, because there's nobody selling it. There's no herd for it. The value isn't in the stuff. You got to get that.
Because if you spend too much time and energy and focus on the stuff, you don't spend time on the important aspects of the business. I'm going To show you a piece of intellectual property that does have value, an ad.
This ad happens to be one that launched Joe Polish's information business back in 1994, 1995, I wrote it, and it produced a big herd, produced some 3000 members into a herd. That's a valuable piece of intellectual property. The kit that it sold has less value. The product that took all the work had less value. In fact, without the ad, the kit has no value. That's where the value is.
Let's talk about a real important financial concept about this business. Next two slides are the keys to wealth in the information business. You should know I've gotten rich thanks to this business, but here's all the reasons I didn't get rich. Talent's up there, good.
Wasn't because of family advantages, they're all broke. Wasn't academic or professional qualifications, I got none. It wasn't talent, trust me. Work skill, but not talent. It aint exceptional intelligence, wasn't any apprenticeship. John had some benefit of some kind of a ... I figured it all out, and it sure wasn't stewardship of money, can't claim that.
It was one thing, and one thing only, understanding the value of the herd. There's a concept that relates to it called future banking. Here it is, here's the business environment you want to live in.
With what you are doing now for current income is creating future bank deposits greater in size than the current deposits. If you're playing any game other than that, you'll have income, but you won't create wealth. What you're doing now for current income is creating future bank deposits greater in size than the current deposits.
Let's take a business I just spent a couple days with, people. Let's say a mortgage broker makes $3000 on a loan. We have a couple of them in the room. The future bank value of that customer is only a fraction of the current income for a variety of reasons.
Except during extraordinary times, there are only going to move or refi every three to five years, so their repeat transaction potential is three years to five years away. Coach Jimmy Johnson told me, football wisdom is, "If the first down markers within range of a running play, you want to run, not pass, because more bad things can happen with a pass play than good things."
Well, three years between we transactions, more bad things can happen than good things. They can be wooed away by somebody else. They can drop dead. Lots of bad things can happen. The average in the industry, they get less than 10% of their customers again.
If they were worth $3,000 the first time, they're only worth $300 in future banking terms. Even if you could keep them every three years. In nine years, they're worth 300 times three, still a fraction of the original transaction.
Now, take my business, here was the number for many, many years. I go get a customer, I sell them some stuff, $300. We knew, like the sun rising and setting, that their future bank value, five years, $3,000, a multiple of the current bank deposit. Every time I put $300 in the bank, I put $3,000 in the future bank. The wealth comes from the money being deposited in the future bank.
The last two sentences about this, the vast majority of entrepreneurs who fail to become wealthy are engaged in businesses where the future bank value from the work is significantly less than the current bank deposit.
The majority entrepreneurs that have succeeded in becoming are engaged in businesses where the future bank value is significantly greater than the current bank deposit. The good news is you get to pick what kind of business you create, what kind of business you build. I suggest to you it should be one where the herd member has escalating predictable value.
Forbes 400 comes out every year. How many got this year's issue? It's educational. You should all look at each other, not at me. Raise your hands, how many got this year's issue? Okay. How many have studied it, I mean really studied it? Fewer.
Well, if you're serious about getting rich, here's the 400 richest people in America. Seemingly there might be some useful information in here. Ought to study them. Now, you couldn't last night because you were here. I didn't either. But it always amazes me when I talk to a business person who who's not watching The Apprentice. "Huh?" Free seminar. Lots of lessons.
If you study the biographies, there's a little write up of each person. In case you're not familiar with this, they do it every year. There's a little write up of each person of the 400 richest people in America. It describes to some degree the sources of their wealth and there's commonalities.
One is real estate, by the way. for everybody in here who's selling information related to investing in real estate, which I know there's a slew of you based on what I heard last night, this is a good part of your sales story but that's not why I brought it up.
There's another commonality that's not quite as obvious unless you understand what we just talked about, but the commonality is there. The commonality is herds. If you go analyze and you carefully read it ... You don't have to go do any more analysis than what's done for you in a magazine. You don't have to go Google everybody. All you need is this. You can get this in a bookstore. Book, store.
You'll find well over 40% of the 400, the wealth is in part or all based on herds. Let's take Warren Buffet. Everybody knows who Warren Buffet is, right? Although not so recently, but arguably America's most successful investor. Here's what I spot. This is all there is about Warren.
Here's what leaps out at me. Hathaway profits, his investment company's profits, doubled in 2003. Doubled thanks to good years, and then it lists the companies he's heavily invested in. Let me name some and see if you get the commonality. Geico Insurance, American Express, Comcast. They're all herds. They all have continuity income because they're herds. They're all herds. Membership has its privileges. Membership concept marketing.
The wealth is based on the herd. I got a whole bunch of other pages folded down I won't bore you with. You can do your own reading, but these guys get it. They don't maybe get it in the way we just talked about, but it applies broader than our business obviously. But it really applies to our business.
There's three kinds of numbers everybody deals with in business. They are rear view mirror, magnifying glass, binoculars. Rear view mirror, that's what your CPA gives you. No disrespect to the CPAs in the room. I like the one I had better before he died than the one I have now. Because the one I had before asked me what number I wanted it to be. But these are the numbers your CPA gives you. "This is what happened, and this is what you owe." We need them.
Magnifying glass numbers, that's how most everybody operates in business. What's happening right now? What's the current income? How many boxes did we sell this week? How many subscriptions did we sell this week? That the magnifying glass number. It's important, but it's not the wealth number.
All the wealth numbers are binoculars numbers. They're numbers that predict the amount of money in the future bank. I'll give you a non information business analogy from an information marketer.
One of my clients, and a platinum member Rory Fat, owns a company called Restaurant Marketing Systems and he markets information to restaurant owners. One of the greatest things Rory has done for them that is in his information product is he has taught them to effectively use birthdays, which by the way is not limited to the restaurant business, but for the sake of this example.
Very simple thing, most people go out to celebrate their birthdays. A lot of people go out to eat, most people don't go alone. If you can get them to come celebrate your birthday at your place, they're bringing another one, or in many cases three, and in some cases more, with them.
You literally can fill a restaurant up by giving away free birthday dinners because hardly anybody's going to come in and scarf down the free dinner without bringing at least one paying customer with them.
He's taught them to collect birthdays and then use them. Every month you've got ... Because 12 months, people got born in all the months, nobody skipped a month ... There's some from every month turns out, so there's nice consistency to all this.
"Here's a list on the first day of every month of people to give birthday dinners to, who will then come into the restaurant and bring paying customers with them." Now the restaurant owner, his magnifying glass number ... If you ask most restaurant owners what number they're concerned with, they're going to tell you they're concerned with how many meals did they serve tonight? They talk table turn, how many tables did they turn?
The binocular number that Rory has created for them is ... Restaurant owner at the end of the shift gathers everybody together and says, "How many new birthdays did we get?" Because that's a future bank number. If he's been doing it for any length of time, he knows what every birthday's worth. He knows this one is in June, so that's four months from now, this one's in August, and he puts him all in his future bank, and he can tell what his revenues are going to look like 12 months, 24 months, 48 months from today. It's a very powerful future bank number.
Russel Brunson: Thank you for listening to the Magnetic Marketing podcast with Dan Kennedy. If you love hearing in on these lost Dan Kennedy talks and speeches and calls, then please let someone else know about this podcast. That's how you can help it to grow. The more it grows, the more free Dan Kennedy we can bring to you.
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