April 27, 2010 The 4 Reasons Fans Buy Your Products
I was on a recent panel in Memphis, TN, for The Recording Academy called “Grammy GPS: A Roadmap for Today’s Music Business.” The topic of my panel was Direct-to-Fan (DTF) commerce. In preparation, I pored over data (anecdotal and empirical) from the last 3+ years of working with Artists, Labels and Managers, including recent data from our online DTF product Reverb Store that launched in January of this year.
The first thing that dawned on me was how much DTF commerce is already taking place, offline, in the form of the ubiquitous merch table at virtually every concert on the planet. The Artist Revenue Survey we conducted in 2008 revealed that more than 50% of our Artists total revenue came from playing live shows and selling merch and music at those shows.
It seems logical that we should consider the principals behind the merch table (offline DTF) if we’re going to be properly equipped to maximize DTF online. Core to that is understanding why fans buy products.
The following illustration is an attempt to visualize four types of fans that buy for different reasons. Any given Artist may have fans in any or all of the buckets, depending on where they are at in their career. You’ll notice that I added a ‘value’ arrow that increases as you go up the illustration. This value arrow is based on a combination of the price each type of fan is willing to pay multiplied by the number of potential fans in each group. Your biggest supporters are willing to pay more than some of the other groups, but there will likely be fewer of them, especially as your tour farther from home:
Let’s unpack this illustration a bit more by looking at each type of fan in detail. First up is the Supporter: 
Supporters are people like your friends and family. These are the people who know you and who come to your show to support you - they want you to succeed, and will wear your shirt or don your bumper sticker to help you.
When Supporters buy your merch, they view it as a donation to your cause. If you have a lot of fans in this category, consider removing the prices from your merchandise and let them pay whatever they want for it. Displaying prices may actually limit the amount of the ‘tip’ that these fans will leave for you. Stock your merch table with a variety of simple, low cost items — the cheapest t-shirts, hats, CDs, stickers, and buttons that you can buy. Remember, these ‘patrons’ are likely going to give you a $20 bill no matter what you give them in exchange, so maximize your margins here. By providing a variety of items, they can buy different pieces at each sequential show ($20 over and over again). Print your band name in one color (saves cost), and print it big and bold. These are the folks that want to advertise your band to the world to help you. Let them.
While they are huge supporters, forcing them to an online store may lose a big portion of them. They came out to support you, so make it easy for them to donate to the cause by having the merch items on site. There are lots of folks who can supply you with merch to sell, from local shops to online wholesalers. ReverbNation can make your products for your merch table as well, but so can other companies.
Next up is the Local Entertainment Seeker 
Once you get past playing at coffee shops to your cousins and start playing out at larger venues, you’ll start getting this group of fans. These are people who just happen upon your show because of the date/time/place combination. Maybe they’re celebrating a birthday or spring break at the bar you just happen to be playing at, or they’re local music fans who to go that venue every Friday — no matter who’s playing — because it’s their favorite spot.
These fans are going to buy your merch because it’s a commemoration of a great night they had — a souvenir. At this level, merch should be event-specific (if possible) so that people will want to buy it so they can remember the experience — even if that experience, such as a birthday, has little to do with your band.
“Spring Break 2010 at Bubba’s with Scotty and the Reverbs”
This one takes a bit of planning ahead, because these fans most likely won’t go online to buy your merch either. They want something right at that moment, so you need to get them before they walk out of the building. Consider making a special t-shirt or sticker just for that event. The Reverb Store was designed with this use in mind. Use it to create event-specific merch and buy it in low quantities for each show (it costs nothing to create an event-specific item). Follow up with an e-mail to the fans that live in the area where you played (our FanReach email system lets you target emails to specific geographies). If that is not do-able, consider making special stickers or even having a ‘Spring Break Deal’ on your merch that makes it fee special to them.
General Public 
The next group is the General Public. These are people that go to your shows specifically because they saw you were playing locally and wanted to see you. They want to shop your entire catalog. Maximizing the DTF to these fans requires a real shopping experience at the merch table. Lots of product, packaged well, credit cards accepted. These folks may consider shopping online for your stuff, so make sure you give them your Reverb Store URL (or whoever your e-commerce provider is) printed on a sticker, receipt, or thank you note.
True Fans 
The final group is True Fans. These are the ones who mark their calendars when you come to town. They are already in the Supporters category, but instead of coming to see you to help bolster your identity as a band, they believe that affiliation with your band helps define their OWN identity. They will buy whatever you put out, and they are willing to pay to get it. This is where you release really special, super limited-edition merch, such as box sets or lifetime passes to shows, signed by members of the band.
This kind of merch is the kind of super-exclusive stuff that you only want to sell online, with maybe a couple of copies at the merch table. This stuff should be as special as possible — hand numbered, signed — and priced as high as you’re willing to go. The examples that you bring to the merch table are about making them aware that they can buy even more.
Once you have enough of this type of fan (the true fan) you are in a good position to make a viable career out of your music product.
In summary, selling directly to your fans is the oldest form of merchandising for Artists. Learn why your fans are buying from you, and make it easy for them to realize their goals. You will make a lot more money in the process.
This post was originally posted to the ReverbNation blog (with some modifications) on April 22, 2010 by Jed Carlson, Co-Founder and COO of ReverbNation.com. While this post contains some links that promote ReverbNation products, the concepts can be used with any DTF provider and may be useful to any Artist as a strategy.
Reader Comments (15)
Jed,
Thanks for sharing all this info, but I have to take issue with you on the merch bit to true fans. You recommend selling these people the cheapest junk at the highest price possible, which I think is bad advice. I see you're a COO, which surprises me, because your thinking is more that of a CFO. What I mean is, your seem to be focused solely on the margin of the moment, and I would argue that bands (companies too) need to think about margins over time. In my opinion, it would be better to sell true fans high quality stuff at decent prices, so that over time, whatever they bought from you doesn't remind them how you ripped them off. Honestly, the more I think about your post, the more I question the motivations behind Reverbnation's efforts.
Jeff
www.cerebellumblues.com
@Jeff - I didn't once see Jed mention anything about selling "cheap junk" to true fans. That's an editorial addition on your part. Jed said you should target "special" and "limited edition" merchandise. I don't believe box sets and lifetime concert passes are "cheap junk".
Of course there are a lot of links and mentions of Reverb Nation in this article, making it an un-ashamed advertisement for their services....but that doesn't discredit the information, which I think was presented well and captured opportunities to reach different types of fans.
Well Matt, perhaps "an un-ashamed advertisement for their services..." should be identified as such at the beginning of the post to help us readers approach it with a clearer perspective.
C'mon now, it's a soft sell at best. The emphasis on offline promotion is pretty strong coming from the COO of an online promotion site! Don't forget that the article was originally written for the ReverbNation blog to help their members make good use those services.
All in all, a great breakdown with some solid tips. It almost makes me want to play live again! Almost.
Good article, great points.
Jed the article was written by the COO of Reverbnation. Thats pretty evident in the signature.
I wasn't trying to make a big deal out of anything here. It's a good and useful article. My point was that it would be useful to have the disclosure at the beginning rather than the end of a long post. It really does affect how an article is interpreted. Thanks for the article.
I take responsibility for putting the disclosure at the end. Jed had it at the top. I thought the content / the message was more important than turning some people away due to the disclosure. Sorry about the confusion.
If we can move forward now - to adding value to the post, that would be great..
Cheers.
I like the idea of event specific merch. However, the inventory challenge makes that a risky proposition that I imagine many aren't willing to take. What if you could learn more about your audience before the show to do a better job of anticipating why people are attending?
For example... what if you learned that a group of 15 people were going to be in attendance for "Sarah's 21st birthday bash." Would you consider printing stickers or something that cleverly referenced this?
thanks for sharing this post. makes good use of the Maslows Hierachy of Needs marketing concept (inverted) and no doubt this post could be a useful resource for musicians new to the direct-to-fan business model.
there are some good solid points however I think segmenting the fans into four categories is too general and has always, in my mind, been a weakness in Maslows theory. while a useful guide for generally understanding why fans might react how they do and in determining how a band might service their 'needs', there is an element of vagueness in, for example, a “general public”; what is a general public for one band is not necessarily a general public for another.
but still a great post and has got me thinking!
Great article. The graphic really helps put it in perspective !
Okay, reread the post and the paragraph that got me riled was this one:
"When Supporters buy your merch, they view it as a donation to your cause. If you have a lot of fans in this category, consider removing the prices from your merchandise and let them pay whatever they want for it. Displaying prices may actually limit the amount of the ‘tip’ that these fans will leave for you. Stock your merch table with a variety of simple, low cost items — the cheapest t-shirts, hats, CDs, stickers, and buttons that you can buy. Remember, these ‘patrons’ are likely going to give you a $20 bill no matter what you give them in exchange, so maximize your margins here. By providing a variety of items, they can buy different pieces at each sequential show ($20 over and over again). Print your band name in one color (saves cost), and print it big and bold. These are the folks that want to advertise your band to the world to help you. Let them."
I have never appreciated paying top dollar for cheap stuff. That said, I over-reacted. There is a lot value in this post and I appreciate Jed taking the time to write it.
@Jeff Shattuck,
Don't worry about it. I think that my use of the word 'cheapest' would have been better stated as 'less costly'. The point I'm trying to make about this group is that they actually want to maximize the amount of money going into YOUR pocket versus the coffers at American Apparel. They are there to support you and want you to maximize your margins so that you can continue pursuing your craft. They are as much benefactors as customers.
That said, I do not condone selling total crap that falls apart after one washing. That's just taking advantage of your benefactors. But a Hanes Beefy T or Gildon brand T-shirt are not crap, just less costly than other brands.
Thanks for calling this out so that I could clarify.
Great post - thanks, Jed, and got me thinking...might be ways to promote tu the Local Concert Goers through business interest groups such as chambers of commerce, and publications directed those visiting the area, for both business and leisure (granted more opportunities in Hollywood but every city has some), in order to capture those looking to maximize good times while traveling...
if the idea was successfully developed, could lead to a steady stream of people wearing "souvenir" merch spreading out across the land promoting your band (somewhat inadvertently but who cares)...
To counter the time sensitive cost issue, perhaps a more general reference could be added to the design - "Peoria's Hot Summer Jams 2010" sorta thang...
This article is Entertainment marketing or as you call it DTF's marketing 101...But some ppl dont know how to put it into perspective...For those ppl I would like to say thank you for clearing it up...TO THE ARTIST OUT THERE I would like to add to this and say EVERYONE in your career that loves you and your gift should be your team and placed in positions that YOU feel they would strongly succeed in achieving the goals of helping you be the star. The more humble you are in being the celebrity that you want to be will determine how many more fans you'll gain and your longevity with your connecting to them.
And when do I get the time to get some sleep?