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TRANSCRIPT

BRIAN CLARK

Lesson 2: 5 Key
Concepts for
Online Education
Entrepreneurs
Build Your Online Training
Business the Smarter Way
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LESSO N 2 : 5 K EY CO N C EP TS F OR ON L I N E EDUCAT I ON EN T R EPR EN EUR S

Lesson 2: 5 Key
Concepts for
Online Education
Entrepreneurs

Brian Clark
Brian: Welcome back to your digital commerce training on building your
own online training business the smarter way. I’m your instructor, Brian Clark,
founder and CEO of Rainmaker Digital. Today’s lesson is called 5 Key Concepts
for Online Education Entrepreneurs.

Objective

Now, these are the things related to the business, the mindset, and the driving
force behind the online education entrepreneur—ranging from business

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models, revenue models, content creation, and all of these aspects that are vital
to being successful in this business.

It’s important stuff. That’s why we’re leading off with these concepts. You’ll find
that they’ll wind themselves throughout the course in various ways.

The customer is the market

The first thing I want to talk to you about is the concept of the customer is the
market. Modern marketing is not so much about grabbing the largest market
share, but in maximizing the share of customer.

This is what I mean by that. Under the old way of thinking, you wanted to sell
product to as many people as possible. Under this approach, you try to sell to a
single customer over and over for as long a period of time as possible.

In corporate circles, they call this ‘lifetime value,’ or LTV, of a customer

relationship. Knowing your LTV doesn’t just give you more profit. It lets you get
really strategic about how much you can spend to get a new customer.

An obvious example was the mobile phone market before the iPhone. The
money was not in selling cellphones. The money was in the recurring service
contract that makes the phone work. To a large degree, that’s still the case. You
would find that, with these cheaper phones, you would give the phone away or
really market down severely and then make up the customer acquisition cost
down the road on the recurring revenue.

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If the marketing terms here are making you nervous, don’t worry. We don’t
want you to think that you have to have an MBA in marketing or something.
You don’t.

This is just a little background to show what makes ‘interactive learning

environments.’ That’s what we call the membership areas where our training
and education are delivered. These are such highly prized businesses, even
beyond the increased demand that’s coming from the need for ongoing
learning.

In fact, just by producing content according to the methods I’m going to

teach you in this course, you’ll be a brilliant relationship marketer that would
make any MBA envious. While it may not seem like it, great teaching is great
marketing.

You know by now that the Internet is a relationship medium. Teaching is one
of the most persuasive relationships you can have with another person. Put the
two together, and you’ve got the perfect access business model.

In other words, just by fulfilling your end of the bargain in an interactive

learning environment, you’re selling your students on sticking with you. You’re
naturally opening up new marketing opportunities with them as well. When you
teach people, you are literally altering their minds. Think about that.

By advancing their knowledge, you’re preparing them for more advanced

training that you, in turn, can provide. By setting them up to enjoy the benefits
of knowledge that you’re delivering to them, you’re in a trusted position to help
them get the most out of future experiences.

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Teaching is an exercise in persuasion that allows for hugely lucrative business

models. You expand the market within each of your customers just by doing
your job. The more you’re able to teach your learners, the more you can sell
them. The more they learn from you, the more they’ll want and need to learn.
They benefit. You benefit.

The Holy Grail of revenue models

Next, let’s talk about the Holy Grail of revenue models. In general, I just want
to talk about the cool aspects of selling information and the tried-and-true
business and revenue models behind information entrepreneurism: selling
information online. What could be better, right?

There’s really something alluring about taking something intangible, like

information and knowledge, packaging it up in a beautiful digital box, and
getting paid really well for it. It’s actually true. Selling information is one of the
best businesses there is. While a lot of industries are struggling, this one only
gets better.

Here’s the most important aspect of the information business that you need to
understand. This one element will help you make sense of all the techniques
and strategies that you’ll be learning here in order to make dynamic, engaging
content that truly teaches people what they’re looking to learn.

Now, the first principle that you have to really internalize is, generally the
money is not in the first sale. I will say, those of you who have followed our
model and built an audience first, you can make really good money selling

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an initial product or a more extensive training program. You’re not having,

necessarily, to invest in advertising or some other means of acquiring a
customer.

That’s why the audience first approach is just so spectacular and why we call
it an unfair advantage. Even in that case, if you don’t have an audience ... let’s
pretend like you don’t. The great thing about creating something that you have
to sell is that it opens up all of these avenues to create something even more
valuable than an audience or an email list. It’s a customer list.

Even if you’re not making a ton of money initially on acquiring that customer,
that customer is gold. You would take one customer over five or 10 prospects
any day of the week. They have actually bought something, not just in general,
but they bought something from you.

In this scenario, while there are exceptions, you won’t make the most profit at
the first sale to a customer. In a subscription model, for example, this would
translate to not making the most profit with the initial sign-up fee, the first
month, or the first quarter. It’s more about what’s the long-term lifetime value
of that customer to you.

Now, that’s not to say that you can’t make money with a single product. It’s just
that finding new customers is expensive. Even if you have your own email list or
audience, once you’ve saturated that to a certain degree, you’re going to have
to find another way to acquire customers. That’s when you start looking into
investing in advertising to build your list, yes, but also to soon afterwards make
an offer that converts as many people to customers as possible.

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The marketing cost for the first sale will cut into your margins when that
first sale’s all you’ve got. Once the first sale is made, you have a customer
relationship with that person. Assuming your product is quality, they’ll be more
inclined to buy from you again. Even better, they’re often inclined to make
more expensive purchases.

This is key. Some information publishers aim to just break even on the first sale,
or they even lose money. They know through their marketing funnel and their
system that we’ll be teaching about here as well, they will gain a new customer
that will be profitable in the long run.

Now, if they’re experienced and they have the right model, people can even
lose money. As I said, this might not sound ideal, but with the right model, it
can be extremely lucrative. You’re still selling after the sale. This isn’t about
doing whatever it takes to make a sale and just pray that not everyone asks for a
refund.

This is the secret no one really tells you. The whole purpose of many
information products you see on the market is actually to sell you something
else, or what’s called a ‘back-end sale.’

For example, most business books written by consultants are designed to

increase consulting business, not really make money from book sales. Along
the same lines, smart writers of nonfiction know that their book is just their
ticket to the high-paying speaking circuit, which is where the real money is.
These are examples of back-end revenue models.

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When you’re an information publisher, at least if you’re a successful one, you’re

aiming to sell more information to those who have already bought from you.
Usually, your later products that you sell are more sophisticated. They’ve got
a higher perceive value. They’ve got higher actual value, and they are more
expensive.

One of the most effective traditional information sales strategy can be summed
up with the funnel metaphor. It often starts by attracting customers into a
relationship with free information or advertising, usually a hybrid of both of
those. The customer is then sold a low-priced introductory product.

The publisher then uses that product to sell more expensive products to a
smaller slice of the overall customer base. Now, even though the number of
sales decreases the farther you progress down the funnel, the profits to the
publisher grow dramatically due to the increased price point.

This funnel idea is still valid, but the key difference in our approach is a shift
away from simple standalone products and towards an emphasis on access to
these learning spaces that create ongoing relationships.

Now that you realize that the secret to profitable information sales is a series of
product sales at ever-increasing price points, how could it get any better than
that? Well, let me put it this way. I know people who sell nothing but product
after product in a very strategic funnel fashion.

For example, I know a very profitable online education entrepreneur who sells a
$2,000 training course. He also has an annual live event, which also adds to his
revenue. He has a very, very expensive mastermind group. That’s it.

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There’s no recurring element in his business model, and I heard he’s done $5
million this year. Not bad, right? But, it can get better if you switch your focus
from selling products to creating what we call ‘communities of learning.’

In other words, shift away from selling products and towards selling access to
learning.

When you look at the traditional funnel model, you can see that it’s a
succession of transactions. In the example I gave you, that’s what it is. You buy
their course. You get sold on the live event. You get an opportunity to join the
mastermind.

These transactions gradually create a relationship with a customer. The whole

thing starts often—not always, often—with an inexpensive, low-risk product. It
could be a $7 ebook or something like that, that is designed to get the person
to become a customer, to trust you as an information source, and be ready to
take the next step.

As you progress through the funnel, there are fewer customers, but they’re
buying more expensive products. On the other hand, an access model tries to
start a relationship right away and to maintain it. Instead of that first low-risk
sale, there’s a low-risk relationship, which can be strengthened and built on.

Remember, we talked about how you’ll be increasing the perceived and actual
value of your training, of your education, of the learning experience itself. By
doing that, you put yourself in a position to do two things.

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One, you enter into a subscription or recurring fee arrangement with a new
customer right away. Two, you keep customers very comfortable in the
relationship because you’ve delivered the initial benefits of knowledge. I use
that term a couple times now, and we’re going to talk about it in more detail in
just a minute.

Now that they’re ready for advanced benefits, or more advanced training, to
go longer and deeper into the subject matter, the one element will help you
make sense of all the techniques and strategies that you’ll be learning to make
a dynamic, engaging training course that truly teaches people what they’re
looking to learn.

Yes, you can sell a succession of more expensive stuff. And you can do that
with a recurring model as well. It’s easier to keep a paying customer than it is to
continue reselling her on all kinds of new and more expensive products. Make
sense?

The idea is to retain, not necessarily resell. This is what I call the information
marketer’s Holy Grail—to start recurring relationships that can be strengthened
over time without going outside the context of that paid relationship. This
model isn’t new.

In the offline world, niche newsletters on everything from financial analysis

to arts and crafts—there used to be newsletters on everything. They’ve pretty
much been replaced by membership sites now. They give constantly updated
information to subscribers over time. You may want to think about this as the
Netflix model to a certain degree.

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It’s just that the things you do in an interactive learning environment can far
outweigh what you could do with paper, a PDF newsletter, or some kind of
static content like that. You can truly create a community.

As the knowledge economy accelerates, continually updated information is

becoming the norm, not the exception. Here’s what you need to concentrate
on: true teaching techniques, multiple media formats, and a community of
learning.

The benefits of knowledge

You’ve heard me use the term ‘benefits of knowledge’ a few times here. It’s an
important thing that I want to drill down a little bit with you in this section of
the lesson.

People don’t want information. Now, that might seem odd since I just got
through talking about how awesome the information business is. But it’s true.
People may go in search of information each and every day, but it’s not what
they want.

They may scour the search engines. They may surf social media. Pour
through magazines. If they get really desperate, they might even read a book.
Statistically, not that many people read books. Sorry. All in the name of finding
the right information, but it’s not what they want. What they want is knowledge.

Raw information has very little value without synthesis into contextual human
knowledge. Most information has very little chance of getting itself translated

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into knowledge. Guess what? We can take it further. Most people don’t even
want knowledge.

Some people love to learn just for the sake of it, but most of us have a very
distinct reason why we want to acquire knowledge—that’s the benefits that
come with knowledge. There’s an old sales and marketing saying that goes,
“People don’t want to buy a drill. They want to make a hole.”

People want to learn, so they can accomplish something, their goals. Just
like people who buy a drill want to make a hole, or really, what they want to
do is hang a picture or whatever the next thing is. Maybe it goes even deeper
emotionally than that. We’re going to talk about that.

Everyone talks about getting an education and the college experience, but is
that really the motivation? Why do people go to college? Why do their parents
pay for their children to go to college? If it’s really just the joy of learning ... I
would watch the scene go down between a flunked out senior, three credit
hours shy of a degree, and his heavily in-debted parents. That’s not pretty.

People don’t really go to and the parents really don’t pay for college in order to
get an education. Knowledge is what colleges are providing. But what people
are buying with all those tuition dollars are the benefits of knowledge.

People want an education, so they can get a degree, which means, hopefully,
they can get a job, so they can make a living and live a nice life. Right? Parents
want their kids to make a living because they love them and want them to have
a nice life.

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Parents also want their kids to support themselves and get out of the house.
They want the success of their children to reflect well on them. We’re really
getting into some intangible, emotional benefits that come with education and
training.

As we all know, college tuition is getting more expensive each year, but as long
as the perceived benefits of a degree carry more weight than not having one,
people will keep paying it. You may see that dynamic change here.

That’s going to be an interesting thing to watch as we move forward. The

college example is so common that people accept it, really, without giving it
much thought. People with college degrees typically make more money than
those without.

The interesting thing is in the knowledge economy that’s only accelerating

right now, a high school diploma or college degree is not the end. It’s just the
beginning. That is something you need to be thinking about. That’s why the
online training opportunity is so huge and so wide open for people to take
advantage of if we follow the steps properly.

What corporation or business doesn’t require continuous training? Professionals

need continuing education just to maintain their licenses and certifications.
Of course, entrepreneurs and freelancers need to keep up with these rapidly
accelerating ideas and tactics that are exploding around innovation and
technology.

The trend suggests that all economically productive people are going to need
continual life-long learning in the 21st century.

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Not only that, there’s more to life than our jobs. We also want to be happy and
productive. We want to be good parents. We want to grow professionally and
personally. We may even want to grow a garden, make great tomatoes.

People don’t just want to learn about work. They want to learn about every
aspect that makes it able to live their best lives. People don’t want to just learn
about work. They want to learn about every aspect of making their lives better.

People will happily pay for ‘information’ when it’s couched in terms of the
benefits of knowledge. People will invest in the benefits of knowledge well
beyond a college education. In fact, the real learning is just beginning when
people get out of college these days.

Work and life have become pretty complicated. Technology is changing the
world very quickly, and we need to change with it. That means that learning is
now a constant both for personal and professional reasons. This is very good
news for you.

What is instructional design?

Now, I want to talk about instructional design. First of all, what in the world
is ‘instructional design’? Well, as someone who wants to become an online
education entrepreneur, you are in the business, one way or another, of
instructional design. What that means is it’s using media and content to
engineer a learning experience that effectively transfers, not only knowledge,
but the benefits of knowledge.

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In other words, it’s about how to create a course that actually teaches
something. Designing an effective course depends on what your learners
already know, what the goals of the training are, and what tools and media
formats you have at your disposal. Of course, you want your customers to learn
from the training you offer.

The more interesting question for you, as an entrepreneur, is how does

instructional design support your business plan when it comes to creating paid
interactive learning environments?

Good instructional design is just like good business planning. When you’re
designing a course, you focus on the benefits to the learner while making
sure you can sell the course profitably. In the same way, a smart business plan
focuses on how a product benefits customers and how the company can make
money from delivering those benefits.

When it comes to interactive learning environments, instructional design is

your business plan. In other words, well-thought-out instructional design will
show you not only how to teach your customers, but it also maps out how your
business model is going to work.

You’ll understand that a little bit better when you’ve tied together with the idea
of ongoing transactions or a recurring model that continues to deliver value at
greater and greater levels, therefore, retaining the customer either, again, with
a subscription model or into higher priced purchases as you move down the
traditional funnel.

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That’s kind of the higher level thinking about instructional design. I’m going to
break that down for you as we get deeper into the course.

Let me give you a really simple example of what on-the-ground, practical

instructional design is. I’m sure everyone listening to this, at one point, learned
how to do long division, probably at the end of elementary school. My son is
in fifth grade. He had brought home his homework, and he was learning long
division. He was struggling with it, so he asked me to help him.

The first thing that you come up against and that you have to fight against
is what’s called ‘the curse of knowledge.’ When you know something and
you’re trying to teach it to someone else, sometimes you do a really bad job.
You know how to do it, but you don’t know how to teach it. How to teach
something in the most effective way is what instructional design boils down to.

I’m sitting there working through the problems, and I’m like, “Well, you just
divide into that, and then you put the number up there. Then you bring it down.
Then you subtract, and you carry ...” Just reciting these rote instructions that
really didn’t help him that much. Instead of just giving up, I did what all smart
dads do—I Googled ‘how to teach long division.’

What I found was a classic example of what instructional design is and the way
you’re going to have to think. Whether you’re the actual teacher or just the
producer of the site, you always have to keep this in mind.

I found this site that talks about how to teach long division. Let me read this to
you real quick, so you can see what I’m talking about here. “Many educators
now believe that algorithms, such as long division ... “ Technically, that’s

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what long division is. You can’t get any more, other than raw data, just pure
information than an algorithm. Right?

“Many educators now believe that algorithms, such as long division, are simply a
series of rote rules that do not involve any concepts, so students should invent
their own algorithms instead of learning the ones people have already devised.”
That’s a very key concept there.

If you can get someone to internalize information at their own conceptual level,
they will retain it and be able to act on it better. It continues: “I have developed
a way to teach long division that enables kids to discover the steps of the
algorithm and understand the underlying concepts while learning to perform
the algorithm proficiently. I connect it with a problem involving money.”

What do you get out of that right there? It’s taking a rote series of uninspiring
processes, an algorithm if you will, and instead of just teaching a kid, “Follow
step, step, step, step … ,” in a way that gives him no sense of why—maybe how,
but no why.

Instead, she’s teaching a process that allows children to attach their own
concepts in retaining and implementing the algorithm. She uses a story, a
metaphor if you will, involving the friends of children and money being divided
among them. Very interesting. It’s just one example. I’ve included a link to this
document beneath the video so that you can go check this out yourself.

This is what it boils down to. How do you present information, maybe the same
information that’s available elsewhere, but in a way that’s better for the learner?
One that actually gets through to them in a way that makes you the trusted

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teacher, the trusted educator, and the trusted business person, frankly, that is
there to take them to the next level because you did such a great job in the
beginning?

Do you see, in that context, how instructional design is tied to revenue in

business models? Happy, well-educated learners buy more.

Teaching as creative adaptation

The last thing I want to talk to you about today is called ‘creative adaptation.’
Now that more and more people are online, pretty much everyone, distance
learning is finally starting to make the most of the medium. Distance learning
is just basically the idea of non-classroom learning. That’s really what has
exploded into this $15 billion industry.

Advanced learning technologies are getting hooked up with research that

shows us how people actually learn. They are being used to create interactive
learning environments that can be accessed from anywhere in the world.

Now, at the beginning, you only had gigantic corporations that were into
e-learning programs and these mass training programs. It’s a huge industry. I’m
friends with the CEO of a company called Articulate that creates PowerPoint-
based e-learning software for corporations. I think he’s building his second
house in the Hamptons. It’s such a lucrative industry.

This is what I want to talk about here. Whether it be online training or

something else, when you’ve got an entrepreneur who’s looking to create
a product, many people are like, “What do I create? What hasn’t been made

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already? It seems like everything has been made. Every subject has been
covered backwards and forwards.”

The good news is that, even among established information entrepreneurs,

the most common strategy is to take something old or that already exists and
present it in a new way. Now, we just talked about instructional design and
how teaching in a different and better way has more value than just the basic
information itself.

That may remind you of another concept for marketing called ‘positioning,’
where the same product sells more than a similar product just because of
the way that it is positioned from a message standpoint in the minds of the
consumer. It kind of doesn’t make sense, but that’s exactly how it works.

Now, if it can work with toothpaste, it most certainly works with information
because how information is delivered to a learner makes all the difference.
Think about the best teacher you ever had versus the worst. That will resonate
with you.

Many times, you’ve got information entrepreneurs, they’re making a better

product because they are communicating in a better fashion. But in a lot
of ways, they’re just changing the way people perceive the information by
packaging it differently. That’s more pure positioning than I would say is
instructional design. That’s mostly an exercise in marketing.

However, you have a unique opportunity. You can take existing information and
transform it into an enhanced experience that has both higher perceived value
and higher actual value. Let me explain that.

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Value’s a tricky thing. It only really exists in the mind of a person. Is there any
real difference between perceived value and actual value? Often no. The only
thing that matters is what the person who bought it thinks.

Now, think about perceived value this way. Take two identical information
products or education courses. One is marketed with a dry, boring laundry list
of features. The other is expertly packaged and formatted and sold for a higher
price using a great story that creates a desired association in the prospect’s
mind. That’s enhancement of perceived value.

As far as the buyer’s concerned, the actual value is exactly what they perceive
it to be. Minds might change once the buyer finds out that an identical lower-
priced version is available, but probably not. Why do people buy brand name
goods when generic versions contain the same exact ingredients? It’s just the
way we’re wired.

Now, increasing the perceived value of the training that you offer is huge. If
you don’t, the purchase doesn’t get made in the first place, and no customer
relationship is created. When it comes to the business of selling the benefits
of knowledge, there’s another angle to keep in mind. That’s because there are
ways to deliver information that are truly more valuable to the learner than
others.

It’s not just perception. It’s reality. My long division example that I gave you is a
great way to think about that. If someone learns how to do the thing one way
over another way, then that way is actually more valuable. It’s the difference
between the customer getting it and not getting it.

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In other words, you’re creating actual higher value. Your training can work
better than other attempts at the same education that are already out there.
This is critical to your profitability as an information entrepreneur.

Let’s look at it this way. You can find most, if not all, of the world’s knowledge in
books. For many, many reasons that I won’t go into here, most people do not
read. Psychological research into learning styles shows that even those who do
read, don’t really retain things very well.

Compared to a book, a well-designed course with certain interactive elements,

people benefit more from an audio/visual approach to learning. In other words,
most people get ideas better when they’re presented and repeated in different
formats.

Maybe the most valuable element for increasing the actual value of information
is interactivity. That’s why we call these interactive learning environments. The
Internet is a lean-forward medium. It’s not passive like television or even, to a
certain degree, a book, but still, you see that most content producers are still
kind of stuck in this passive mode.

What’s ‘lean-forward content’? One example is an interactive learning

environment that delivers audio, video, and text together. That combination
translates to higher actual value for the buyer because it’s just a better way to
teach. The student is more likely to get what’s being taught.

At the same time, it boosts the perceived value of the product when you’re
marketing it. Most consumers believe that audio and video are worth more

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money than text. To them, it’s true. What this means is that there’s an
entire world of information out there in books that can be transformed into
multimedia.

By changing the format and context of the information, you’re creating a

unique selling proposition. You’re participating in instructional design elements,
and this is what’s critical to success. If perceived value is the only thing that
matters to your customer before she buys, why even bother improving the
actual value of the information? Why not just put it in a better looking package?

The answer to that comes with you sell more than once. You either do that on
a recurring subscription basis that is going to be canceled if the actual value
does not match the perceived value, or they’re certainly not going to buy your
higher priced offering if they were disappointed with the entry level or lower
cost thing.

The term ‘creative adaptation’ simply means it’s an exercise in teaching. It’s
an exercise in instructional design. If most people don’t read books and those
that do don’t retain what they’ve read all that well, then you need to adapt that
information into an instructionally designed format that works better.

I always like to use this example because, when people feel like they don’t
have the subject matter expertise themselves or they’re not inclined to go
work with other subject matter experts to put together a course, they feel like
they’re stuck. But when you do your own research, when you dive into material
in order to learn it, to retain it, to internalize it, and then teach it, that’s what
teachers do.

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Teachers don’t write the text books. Teachers don’t invent long division. What
they do is design better ways to teach it.

Think about Malcolm Gladwell or my friend Dan Pink. They write these
incredibly engaging and informative books that are based on really dry
academic research studies.

Dan Pink has been writing about the psychology of motivation in the context of
work for 15 years now. Dan didn’t perform those studies. What Dan did was take
hard-to-digest information and make it engaging. That’s an act of instructional
design.

Malcolm Gladwell does the same thing. He reads and synthesizes all these
incredibly complex and boring research papers and then writes hugely
entertaining books like Blink. Again, he becomes the subject matter expert by
learning first himself and then teaching.

That’s what creative adaptation means. You do not have to reinvent the wheel.
What you have to do is learn how to sell radials.

All right. That is it for this lesson. Thanks for sticking with me. Coming up next,
we’re going to really dive into how to find the right topic, the right market of
hungry learners out there so that you can build and sell a profitable online
course and then take it from there. Talk to you soon.

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