Thursday, 9 May 2013

Marketing - the difference between proactive and organic growth

There are two kinds of marketing growth.

1. Organic growth: This is word of mouth advertising.

2. Proactive growth: These are readers we reach via our own promotional efforts.
It's unbelievably important to differentiate between the two. Why? The long term effect of organic growth is much more effective (and sustainable) than proactive growth.

Organic growth is when a reader likes your work enough to share it with a friend, colleague or rabid following on their blog/ twitter/ facebook etc. We measure this the same way as viral vectors. If Every reader tells one other reader then you'll keep spreading if there is no repetition, and a 100% follow through.

 Organic Growth = (Average # People a reader shares you with - Readers who already know about you) x Conversion Rate. [x average number of books sold to each reader]

So let's look at that in real terms. Many readers never share. You'll find some readers who share extensively, and some who tell their friends once in a while. Reading is a social activity, even if we engage in it alone.

This is where things get complicated. Readers who tell lots of people invariably have a lower conversion rate, whereas the reluctant sharer often has more impact when they do share.
  • Reader A might have 10,000 followers and share with all of them on twitter. 500 or so of those 10,000 might see the tweet. Out of those 500, 1% might click through, and a smaller % might buy it. Net result 2 or 3 sales at most.
  • In contrast reader B might tell five people in person, be really passionate and sell four of them on your book. Net result, 4 sales.

As you can see the conversion rate is a massive swing between the types of word of mouth. After the initial rounds where no one know you, you'll hit the wall of 'Person A tells person B but B already knows'. You can't sell the same book to someone twice (short of convincing them to buy print after eBook or vice versa, which is relatively rare).

We have to take all this on an average - some readers will share more prolifically, but overall you've got a calculable rate (in theory - in practice, you won't know what kind of readers you have straight away).

So if OG = (3-1) * 50% then we get 1 new reader every time someone reads. This is continual growth.

If we get higher with OG being (10-7) * 100% = 3 Then 3 readers find you for each round of worth of mouth. That's exponential growth (for more worked numbers, see our previous post on exponential virality).

However if OG is less than 1, you're in decay. You'll sell more on the way down, but you will hit 0 eventually. This can be because your readers don't share, or they share with people who already know or your conversion sucks.

Getting readers to share is about cultivating rabid fans. This is hard - there is an element of luck here. But if you've got a quality product, some will emerge eventually.

Who they share with is, to some extent, beyond your control. Word of mouth moves inside social groups. That makes the spread fairly predictable. Some individuals are conduits i.e. they belong to multiple social groups. These convincers are key to keeping your OG rate above 0. Even a high OG rate can burn out if the target audience to be shared with already knows about you. This is known as market segment saturation.

The conversion percentage is where you have much more influence. High quality covers, an intriguing blurb, a great first chapter, a popular genre and convincing reviews all go into having a high conversion %.

My advice is work on conversion. It's the only bit directly in your control. Organic Growth is all about the slow burn, and you may not see if kick in with just one book. Having multiple books increases your OG factor as readers may be told about one book, but then go on to buy your backlist. This means a factor of 1 could be ten sales if you've got ten books in your backlist.

But how does this differ from Proactive Growth? Well, readers don't find you on their own. No one is going to Google randomly for "Daniel Campbell Dead on Demand". They need to hear of you somehow. Initially this is advertising. Once you've got the ball rolling, also boughts, bestseller lists etc help you along.

But those first few? They're all you.

So if you use Select, permafree, banner adverts, twitter, blog posts, goodreads giveaways, whatever. That reaches PG readership. Keep in mind that it takes a typical 7 impressions to convert to a sale. Repeat exposure is the name of the game when advertising online.
Proactive Growth = (# Impressions Generated - Existing customers) x Conversion Rate

This is the 'seed readership' for your organic growth. If you've got an OG of 1 or more, then a small seed readership is enough.

If your OG is <1 then you'll need to either accept your book is in decline, or plant more seeds. PG needs continual replenishment. PG is high maintenance, and once you stop advertising you'll go into decline until and unless you get above 1.

 Getting your OG above 0 is hard, but it is doable. For some suggestions on how, read this blog (or download Can't Sell, Won't Sell).

Remember if your readership isn't growing then it's shrinking.


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