Any one of us would have been proud to create the retail giant Best Buy. It’s a powerhouse.
At its peak, Best Buy controlled about 19 percent of the electronics market. They’ve sold lots and lots of stuff. And they still do. Any kind of television or MP3 player or computer you want, Best Buy probably has it.
If you could collect all of the profit from just one Best Buy store, that would be extremely cool, right? You’d have every customer in the neighborhood, and you could sell each one exactly what they wanted.
Now compare that to a store that sells just one brand of computer. Just one brand of MP3 player. Just one brand of smartphone or tablet.
That doesn’t seem like it would do as well, right?
But the profit per square foot from an Apple Retail Store is six times the profit of a Best Buy.
Apple Stores were supposed to be a huge failure
According to the book Inside Steve’s Brain, retail expert David A. Goldstein told Business Week that:
I give them two years before they’re turning out the lights on a very painful and expensive mistake.
And Goldstein wasn’t some clueless lone voice. That was the overwhelming consensus. In fact, you couldn’t find anyone in 2000 who thought the Apple Store was a good idea.
Anyone, that is, except Steve Jobs.
Their costs are higher
You may have noticed that you don’t find Apple Stores in strip malls or shoppettes.
You find them, in fact, in the most expensive, exclusive retail areas.
Apple Stores are also expensively decorated, with lots of glass, wood, and stainless steel. Instead of inventory being stacked floor-to-ceiling in boxes, there’s lots of space. Space that Apple is paying top dollar for.
And then there’s more space given over to free workshops and classes, and in-store events.
And unlike Best Buy, most customers don’t walk in knowing exactly what they want, trying to minimize the amount of time they spend in the store.
The Apple Store buyer may not be entirely convinced she wants a MacBook or an iPad at all. She’d just like to fool with one for a little while. For one, two, three, or ten visits, while she makes up her mind.
No one in his right mind goes to a Best Buy just to hang out. But customers do it with the Apple Store all the time.
So where does all this profit come from?
Ask what element of business success that Apple has mastered, and you’ll probably hear either marketing or design.
Or possibly something having to do with innovation, smart supply-chain management, or creating a belief-based
All very important. But all of these are in service to what Apple is the true master of:
They turn a profit.
A big, fat profit.
Seek the most profitable market, not the largest one
Apple’s first secret was that they refused to chase companies like Dell and Gateway to the lowest possible price point. They also don’t offer an endless (and profit-destroying) array of variable setups. They’ve never tried to be the machine on every desk in America.
Instead, they serve a juicy and highly profitable slice of their market.
Again, from Inside Steve’s Brain:
In the summer of 2007, Dell was the biggest PC manufacturer in the world, with a whopping 30 percent share of the U.S. market. Apple trailed third, with a much smaller 6.3 market share. Yet in the third quarter of 2007, Apple reported a record profit of $818 million, while Dell, which sells more than five times as many machines, earned only $2.8 million in profit.
Keep more of the money
And the other secret, of course, to those insanely profitable Apple Stores is that they keep a lot more of the money.
Best Buy is carving out a razor-thin profit on every computer, smartphone, and MP3 player — products made by other manufacturers.
Apple, on the other hand, doesn’t worry about anything other than its retail overhead. Which is high, sure.
But the difference is six times the profit.
Can we really be more like Apple?
We may not have the ferocious drive and vision of a Steve Jobs, or Apple’s incredible manufacturing capability, or their genius product designers and marketing teams.
But we can do two things.
#1: We can focus on a profitable sliver of the market
A juicy niche where we can build incredible loyalty by serving a select group of buyers in a remarkable way.
That’s why the very first thing we work on in the Teaching Sells course is to understand what sliver of which market you can effectively reach.
The answer to this is, as you might imagine, different for every business. My relationship with my audience won’t be the same as yours … even if we’re talking to the exact same people.
Each business needs to find their own unique combination of message, audience, and product or service offering.
That’s why our new version of Teaching Sells kicks off with a workshop that will help you find the answers for your individual combination of strengths and weaknesses.
We don’t believe in cookie cutters. Except for cookies, because those are awesome.
#2: We can build something of our own
While there’s nothing wrong with the “Best Buy” model of selling someone else’s products, when you make the move to creating and selling something of your own — something perfectly designed for your own individual market — you’ll find that unbelievable things can happen in your business.
But creating your own product is also intimidating.
Lot of steps. Lots of places where you can get bogged down in the details.
The core of the brand-new “Quick Start” edition of Teaching Sells is a series of focused workshops designed to get you up and running with a “Minimum Viable Product” — from designing the product through to launching it and beyond.
We’ll help you tackle:
- Getting through the analysis paralysis of figuring out what your product will be (Workshop 1)
- The two questions to answer for a marketable product (Workshop 2)
- How to grow your audience, and what to do if you don’t have an audience yet (Workshop 3)
- The nuts and bolts of putting together your first simple launch (Workshop 5)
- The quick way to create a great user experience for your new customers (Workshop 6)
You can start simple, and work your way up to as much (or little) complexity as you want.
And it’s yours.
Nothing compares with building something yourself
I can tell you from having done it myself. (Before I was a Teaching Sells partner, I was one of the very first students for the beta version of the course.)
No feeling compares with the pride of building a site, attracting an amazing group of customers, and helping them to reach their goals.
It’s truly one of the most satisfying experiences a business owner can have.
And if you don’t have teachable expertise yourself, you can still get that experience for yourself. Because Teaching Sells will teach you how to develop, create, and market a profitable product in partnership with a subject matter expert.
Your expert provides the teachable knowledge — their “10,000 hours” of becoming incredibly good at what they do. You provide the business and marketing know-how — within a proven framework that’s designed to get you up and running quickly.
We have more for you …
Next week, I’m going to talk about the biggest hurdle of them all — getting yourself to do all of the stuff that you know you should do to move a business forward.
Most of us stay stuck and never build even a small “side hustle” business, because we don’t use the right tools to keep ourselves moving.
Having wrestled a lot with that myself, I have some concrete thoughts for you on how to get and keep your momentum.
I’d also like you to join me and Chris Garrett for a free session on the mistakes people make when they’re putting together a product to sell online.
Chris and I have taught a lot of folks how to reach their business goals, and we’ve seen certain patterns of failure show up again and again. We’ll show you how to avoid them — and be one of the ones who succeeds.
We’ll be talking about:
- The approach most online entrepreneurs take — that almost always leads to failure
- The best way to get out of analysis paralysis and start doing
- How the “kitchen table in your underwear” business model can hurt your success
- How to handle sales and marketing if you aren’t a “born salesperson”
- What to do when the technology is holding you back
Both the live webinar and the article on moving forward are part of the material we’re offering during our Teaching Sells launch.
Just drop your email address in the box below and we’ll get you all of the registration details — as well as the link to that article next week.
Free Webinar: The 3 Reasons People Fail When Creating Products
Tuesday, June 16, 12:00 Noon Eastern U.S. Time
If you’d like to join Chris and me for the free webinar, or if you’d like to know more about the Teaching Sells course, just drop your email into the form below.
We’ll let you know when the course is opening and also share exclusive education around what it takes to build a healthy, sustainable business online — without gimmicks or nonsense.
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