December 28, 2016 | Emily Winsauer

Does the 1,000 True Fans Theory Work for Businesses?

Back in 2008, the great Kevin Kelly of Wired magazine wrote a blog post that has since become internet-famous. Simply titled "1,000 True Fans," it outlines the theory that thanks to the internet, individual creators don't actually need to reach millions of people to make a living. All they need, he says, is about 1,000 true fans.

Nearly a decade after that post was written, the concept feels more natural (and more in line with inbound marketing) than ever. Niche platforms and communities have grown by leaps and bounds on the internet, allowing people to connect with each other around any interest. New models for monetizing expertise are thriving, and digital entrepreneurs are common. All of this has led to a new class of people who support themselves through finding a small, robust audience online.

Yet it isn't only those individual creators (or solopreneurs, in modern parlance) who can benefit from this idea. The 1,000 True Fans principle also offers important lessons for small and medium-sized businesses—you just have to scale it up a bit. 

The 1,000 True Fans Principle

The basic idea behind the "1,000 True Fans" theory (and, incidentally, inbound marketing) is that success isn't simply a numbers game; it's about the nature of your relationship with your customers. 

As originally conceived, the idea went like this: you can make a living of $100,000 a year from just 1,000 people if each person will support you to the tune of $100 in profit each year. The less revenue per person, the more people you need, and vice versa. (You can read the original blog post here.)

Your "true fans" are people who are 110% on board with what you do—they're always eager to try the next product, upgrade to a new service, attend your live webinar, or drive hours to hear you speak. They read almost everything you write and share it with their friends. They go out of their way to consume what you produce.

This isn't because you're so amazing that you innately deserve all that attention, but because you are serving their needs so well and so consistently that you've earned their loyalty. It's as true in business as it is in life: a good leader is a good servant.

Because true fans trust your work and are ready to buy whatever you put out, they're your best bet for producing consistent, sustainable profit. If you compare 1,000 true fans who produce $100,000 in profit annually and 10,000 regular customers who produce the same amount, the true fans are by far the stronger source of income.

How This Idea Can Help Businesses

Kelly may have had solopreneurs in mind originally, but the 1,000 True Fans principle can be scaled up for SMBs. Making this model work for your business requires two things: 

  • Developing direct relationships with the customers who will provide consistent value 
  • Producing enough for them to consume each year to earn that value 


As I outlined above, the formula for both individuals and businesses looks like this: 

[number of true fans] x [average annual profit] = [amount needed to operate your business]

Of course, for each true fan, there are others who aren't quite as passionate. The biggest difference between an individual creator and a small business is that people find it easier to like and trust other people over companies. While individuals certainly have these less-avid fans, businesses are likely to have more, both proportionally and in number. 

Businesses also need to factor in more overhead than most individuals have, which cuts into the profit on each customer's annual value and necessitates more fans, both "true" and regular.

Customer Lifetime Value vs. Annual Value

The 1,000 True Fans model focuses on the annual value of each fan, a more cash-flow-driven approach to customer lifetime value. That perceptual shift (and tracking the associated metric) can make a big difference for SMBs that struggle with revenue consistency.

One of the most important takeaways is to keep producing things that these true fans can buy; if you don't, their devotion will wane. That may include new purchase models (e.g. subscriptions) as well as new products, services, or events, but if a true fan can't actually buy enough each year to meet the profit you need from them, you have a problem.

Direct Communication Is the Key

Since consumers are less likely to bond naturally with a brand than they are with a person, SMBs have to take direct communication even more seriouslyIf you want someone to buy from you not just more than once, but consistently and predictably, you need to invest in that relationship and understand the expectations involved.

However, once you do, you essentially have a guaranteed audience. With true fans, your return on nearly any new venture can be fairly certain and reasonably immediate. Moreover, those true fans will be more comfortable following you into new spaces. They'll be the ones who turn up for your first live event, and they'll actually be excited about it.

In the old days, you might have a marketing company pushing out information, and a customer service team fielding calls, but the creators had little contact with either of these elements. When you embrace the idea of your 1,000 True Fans, you understand that direct contact is necessary and desirable for customer relationships, product development, customer service, and pretty much every element of your business. 

Prioritizing the True Fan

Sure, these people may be a small-ish group compared to your less engaged customers, but it's still worth focusing on them for several reasons.

To quote Kevin Kelly,

Still, you want to focus on the super fans because the enthusiasm of true fans can increase the patronage of regular fans. True fans not only are the direct source of your income, but also your chief marketing force for the ordinary fans.

In the original version of his post, he also wrote:

As your True Fans connect with each other, they will more readily increase their average spending on your works. So while increasing the numbers of artists involved in creation increases the number of True Fans needed, the increase does not explode, but rises gently and in proportion.

Both your true fans and your regular fans will happily spend more when you cultivate that community. They reinforce your value to each other and attract new customers on your behalf. If this sounds familiar, it's because brand advocates are also the ultimate goal of inbound marketing. 

Wait...Is This Just About Buyer Personas?

Essentially, yes. But it's a perspective that can bring new insights for businesses that have only been thinking about their buyer personas from a classic inbound marketing perspective.

The process of identifying the "true fans" among your customer base and producing content and products for them relies on and refines your understanding of who your ideal customer is. Even so, some things you think will go over like gangbusters will flop, while unexpected things will catch on.

Your 1,000 true fans (regardless of their actual number) serve as a test audience for what resonates with people enough to earn the level of sustainable engagement that will support your business. Once you have identified that, you will have an easier time attracting and retaining more customers like them.

While aggregated data is fantastic, there's something to be said for looking at customers who meet the "true fan" criteria alongside those who don't. Why did one person meet the annual value you need and another didn't. What product or service could have closed that gap? What communication could have helped?

At the end of the day, the 1,000 True Fans principle is a tool to help you identify the most profitable and sustainable choices for your business by embracing the buyer persona that wants to be along for the ride. For businesses, sometimes a fresh perspective can make all the difference.

Crafting Effective Buyer Personas-Click Here to Download

 

Emily Winsauer

Emily Winsauer

As VIEO's content director, Emily Winsauer is responsible for content strategy for VIEO and our clients. She works with the content team to create a wide range of compelling content designed to help our clients better connect with their customers.

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