Episode 12: The Myth of Passive Income

The idea of having loads of people eagerly buying your online offers is exciting. But is there truth to “If you build it online, they will buy it?” Join Pamela as she unpacks what works to make money online, and what doesn’t.

In this episode, you’ll discover:

  • The 3 types of online offers, and which one to do when.
  • The #1 mistake that people make with online offers.
  • The easiest way to start with making money online – it’s not what you think!

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Timecode Guide:

02:43: Learn everything you need to know about the 3 types of online offers, Active, Leveraged, and Passive.
09:40: Discover the 2 easiest ways to make money online and how to use them for yourself!
10:50: What’s the difference between a High-Ticket Offer vs. Signature System? Pamela reveals her secrets and why you need both!

Resources Mentioned

Want to know more about how to attract your ideal clients online? We’d Love To Chat! Grab a Breakthrough Session with one of my coaches to learn how to create real impact and income online.

Podcast Transcription

Episode 12: The Myth of Passive Income

Why “Passive Income” is a Myth

Intro (00:00):
You’re listening to ‘A Profitable Impact.’

Pamela (00:02):
The idea of having lots of people eager to buy your online offering is really exciting, but passive income, especially for people starting out building a transformational business, is mostly a myth. Fortunately, there’s a way to make money online that’s a lot easier.

Gene (00:19):
Welcome to ‘A Profitable Impact,’ where every single week we help coaches and healers to expand their reach, to increase their impact in the world, and to be well-paid for their extraordinary skills and talents. My name is Gene Monterastelli, and I am the lead coach and Pamela Bruner’s Impact Accelerator coaching program. And now I’d like to welcome my friend, my colleague, and the CEO of Attract Clients Online, Pamela Bruner. How are you doing today, Pamela?

Pamela (00:43):
I’m doing well, Gene. One of the things I really like about today is we get to bust some myths. It’s one of my favorite things to do.

Gene (00:50):
Absolutely. As we have this conversation today, and you recognize the fact that you would like to have a stronger strategy of reaching out and connecting with your ideal clients so that you can actually be profitable while making an impact in the world, we really encourage you to reach out and have a conversation (absolutely free) with one of our coaches. All you need to do is go to BookMyBreakthroughCall.com, that is BookMyBreakthroughCall.com, and you can get on the calendar of one of our coaches to make sure that you’re investing your time and attention in the right way, you’re making the impact that you want, and you’re having the business be as successful as you would like it to be.

Pamela (01:29):
So, when we talk about passive income, I resisted putting the phrase in here, “make money while you sleep,” and it just makes me want to tear my hair out. I see so many people now saying, “I want passive income. I want to set something up that just brings me money and I don’t have to do anything,” and that’s just not the way I’ve seen it actually work successfully for people. But there is a way to make money online. So, in this episode, I want to talk about the three types of online offers and which ones to do when. At what point in your business should you be doing these different types of offers? The #1 mistake that I see people making with online offers. And the easiest way to start with making money online, which is probably not what you’re thinking it will be.

Gene (02:16):
One of the reasons why I really love having this conversation, Pamela, about the things we’re going to talk about today is because I think it’s really important for us to understand how it really works. Because if it really was as simple as doing something where we’re making money in our sleep, everybody would already be doing exactly that. And since that’s not the case, obviously there is an approach that is more useful that we need to be implementing in order to be successful in our business.

3 Types of Online Offers (and How to Use Them!)

Pamela (02:43):
So, let’s talk about the three types of online offers. When I talk to people about transformational services, usually I talk about them in terms of Active, Leveraged, and Passive. So, let me explain those to make sure we’re all on the same page. ‘Active’ means you are working usually one-on-one with someone, you are interacting with people one-on-one, and often one of the reasons people want to get online is either they want to impact more people, “I don’t just want to work one-on-one because I want to help more people,” great, that’s a wonderful thing to say, or “I feel like I’m going to burn out with one-on-one,” or “I don’t have that much time,” or something like that. But Active is any kind of offering. And towards the end of the show, we’ll talk about the kind of offering that I think is most useful with Active that brings you money in a one-on-one way.

Pamela (03:32):
The next kind, the ‘Leveraged’ kind, is where you have a one-to-many relationship. This is most commonly seen in things like group coaching, or some group element, where instead of doing one-on-one, you’re putting people in a group so that you leverage your time, because you’re serving more people in the same amount of time that you would be serving one.

Pamela (03:52):
And the third type of online offer, the ‘Passive’ income – that’s the one that everybody gets really excited about. “Let me put up an online course.” “Let me sell a DIY program.” And then think people will just buy it. If you build it online, will they come? Will they buy it? My experience is no. There is a place for passive income, but it’s not at the beginning of your business.

Pamela (04:16):
Now, let’s talk about what to do when. You always, always start with Active income. Now, why is that? One of the reasons is that you have probably fewer people in your network at the beginning, you don’t have a lot of people to put in a Leveraged program or a lot of people to buy a Passive program.
So, you’re actually going to create something that is more financially sustainable if you start with a higher-end Active program. And I’m going to do a little math on the fly here, which is always a terribly dangerous thing for me to do. But if you think about, “Oh, well, why don’t I just create $97 Passive DIY program? It’ll be so much easier for people to say yes to a $97 program.” That may be true – I have not found that necessarily to be true.
But my question is, where are you going to get all those people? Because let’s say that you found, oh my goodness, 40 people to buy your $100 program. That would be $4,000. Now, that’s 40 people though. And you have to convince them to buy it. You have to show them how great it’s going to be. You have to show them it’s useful. And you have to hope that they get the transformation from a DIY program and they don’t come back to you for a refund. It’s a lot of work to put all that together for only $4,000.
Now let’s pretend instead that you had a $4,000 high-end coaching/healing program (what I call a High-Ticket Offer or a Signature System), you have to find one person. It’s much easier to find one person to say “Yes!” to $4,000 than it is to find 40 people who will say “Yes” to $100.

Gene (05:56):
Pamela, as you talk about that, I always like to think of the example that Dan Kennedy gives. He said, “It’s easier to find 10 people who will buy something for $100,000 than it is to find a million people to buy something for $1. That it’s really, really easy to get a single person to buy something that is low-ticket. But when we start to get into volume, and when we start to get into a place where we’re really talking about a real income in our lives, the higher the ticket is, the easier it is for us to be successful.

Pamela (06:27):
Right! So, let’s actually set this out as a schedule of how you would do Active to Leverage to Passive. So, you’re going to start with Active. And the goal of Active – your High-Ticket Offer, your Signature System – is so that you are what we call “flying the plane.” You are making a living with what you’re selling.
Now, maybe that’s one Signature System or High-Ticket Offer a month, maybe it’s two. If you sell your High-Ticket Offer for $2,500, maybe two a month is what you need in order to survive. Great. So, you’re selling to one or two people a month, but you’re probably talking to five or 10 or 15 or 20 people in order to find those two clients. Still, when you think about finding 10 or 20 people to talk to in a month (even online!), it’s not nearly as onerous as finding hundreds of people.

Pamela (07:14):
So, you get that Active income going, and then you move into the Leveraged phase. Now, at this point, let’s say you’ve been doing this for three or four months. You’ve booked two people every single month, but you’ve talked to 50 people, and you’ve only booked eight as clients.
That means there’s over 40 people there who have heard about what you do – some of them were probably interested but perhaps they weren’t financially prepared to step into your High-Ticket Offer, it wasn’t the right time, et cetera – but you’ve got 42 people now who already know you, many of whom probably liked you when they talked to you, who you can go back to and say, “Hey, you know what? I’ve got a more cost-effective way of delivering this transformation,” or “I’ve got a cheaper way for you to get the result in this Leveraged program/this group program.”

Pamela (08:05):
So, when you have a bunch of people who have said no to you, that’s when you institute the Leveraged program. I know it seems a little odd to say, “What? I start a new program when I’ve got a bunch of “No”s?” Yes. Because those people who said no, they’re fodder for your next level.

Pamela (08:22):
And then we get to Passive when you have enough of a platform built that there are always people that you can’t talk to that are on the outskirts. This is when you have an email list of a number of thousands of people. This is when you have social media followings in the thousands. Then you can look at the Passive income level. But you can make a very, very good living and have a very good business with just the Active and the Leveraged.

Gene (08:48):
As you say that, Pamela, in my own business, as I have started finally working into this Passive place, the time that I decided when it was the time that was right for me. (And this was just my metric – you might use a metric that’s slightly different). But I did a bunch of list hygiene on my mailing list, getting rid of the people that weren’t actually engaged with my list and that sort of stuff.
And for me, the internal metric was when I had 4,500 people on my list who are active and who were engaged with my list, I then said, “Okay, this is a large enough audience that it makes sense for me to be investing the time and attention to create these lower-ticket Passive offers to make it worth my time and attention and to be able to get the results that I want with that.

Pamela (09:28):
Great metric. Yeah. And for different people, it’s going to be a different number, but I love that you had a very solid metric and that you cleaned up your list before you measured that, not after. So, a super good idea.

Pamela (09:40):
Now that actually leads us, I think really well, into the easiest way to start making money online, which is with this High-Ticket Offer or Signature System. Because the truth is that the amount of work you need to do to create an Active offer is the same or less as the amount of work you need to do to create a Passive offer.
So, once you create a course or training or information that goes along with the results that you provide, you can pair that training with your private coaching or your private [healing] services. And now you’ve got a wonderful, wonderful combination of both information and transformation, and that to me, is what creates a great High-Ticket Offer or a great Signature System.

Gene (10:27):
If you love what you’re listening to and would like to learn more about how you can elevate your business and want to know how you can increase your impact in the world, I’d like to invite you to join a coach for a free breakthrough session.

Want to know more about how to attract your ideal clients online?

We’d Love To Chat! Grab a Breakthrough Session with one of my coaches to learn how to create real impact and income online.

High-Ticket Offer vs. Signature System

Pamela (10:50):
Now the difference between a High-Ticket Offer and a Signature System (and I tend to use the terms interchangeably), is I think of a Signature System as something that is delivered over time. It might be six weeks; it might be three months; it might be six months; it might even be a year (although usually you’ll go with somewhere between three months and six months for your first Signature System).
You can also have a High-Ticket Offer that is a very short offer, like a VIP-day or a one-day Intensive or something like that. And this particular episode is not about High-Ticket Offers, although we’ll certainly talk about the many, many times on ‘A Profitable Impact.’ But when you think about, “What can I create and put online in order for me to be well-paid, and in order for me to make money quickly?” I would suggest do a Signature System or do a High-Ticket Offer. You can set things up as an online course, but then when you add your private time to it, it automatically transcends it and takes it up to another level.

Gene (11:45):
The other thing I’ve found, Pamela, particularly when I’m creating new content is if I’m creating an online course or if I’m creating a digital offer, it’s very, very easy for me to think that I’m doing a really good job of explaining something. Thinking that I’m leading people through a process that is A, B, C, D with the information and with the transformation. And the reality is I’m really going A, D, F, L, Q, and I’m skipping lots and lots of steps.
But if I start, like you’re saying, in a place where I’m doing something that is Active, where I’m working with someone in real-time through the transformation and through the process, then I’m getting someone with real life experience who’s showing me the blind spots, and showing me the things that I might not be explaining as clearly as I think I am. And in that I get the opportunity to refine my process, where they ask a question and I’m like, “Yes, you’re absolutely right. That is the next step!”

Gene (12:41):
So then, as I am working with real life people in an Active offer, I’m getting the chance to not only provide transformation, not only to be paid well for doing that, but I’m also getting a chance to refine my work so that when it comes time to transition into a course or transition into a digital offer, I’m making sure I’m doing it in a way that is really useful. And I’m not going to have dissatisfied customers. And I’m not going to have people asking for refunds. And I’m going to want people who want to do the next step with me, because what I offered them in that course is something that was useful and comprehensive.

Pamela (13:15):
That’s such a great example of why I believe you need information and transformation, especially at the beginning. Because, as you said, as you’re developing it, you know, one of the objections I hear from people who say, “Ooh, I don’t know that I can just develop something and then offer it as a high-ticket package or High-Ticket Offer.”
As you said, when you are delivering it, you give them content and then you have a meeting with them, and you give them content and you have a call with them, you are in a position where you can say, “You know what? It seems like there’s an additional training that would be really useful for you at this point. I’m just going to gift you another call and we’ll go over that.” Now, that’s not something that you want to do all the time, but as you’re developing your High-Ticket Offer or Signature System, it’s a very useful offer to be able to make.
And then you can take the time to record, not necessarily their call or their work, but you can record the content that you shared with them as a separate training and put that into your system at that time. So, working as a High-Ticket Offer is a great way to vet the system that then you’re going to scale, which is exactly what you said.

Gene (14:18):
And I love that, you know, “Hey, I’m going to give you this bonus because I want you to really have the transformation you’re having,” is like the easiest way to create raving fans. Where people have gone, and then we’re like, “Oh, this is the thing that we committed to, but because of what’s going on, I understand you need more. So, I’m going to give you a little more right now.” Of course your clients are gonna love and rave about that.

#1 Mistake in Creating Online Offers

Pamela (14:38):
So, let’s talk about the #1 mistake that people make with online offers. And, you know, I already said, when people say, “Oh, you know, I’m starting off, but I’m going to create this Passive income product.” Another thing that makes me get on a soap box and want to tear my hair out is when people say, “I’m going to create a membership site.” I say, “Great. How many people are on your email list?” “Well, I’m just starting my email list.” Bad time to start a membership site. Now I don’t have a problem with the model of membership sites, per se. However, they are built on volume and lowering churn. And if you don’t know what the word “churn” means, then you definitely shouldn’t start a membership site.
But when you have a whole bunch of content online, and you are wanting to put a number of people in access to your content at a low price, so you have a membership site that’s $27 or $49 or $97 a month, or something like that, getting people to sign up may or may not be easy. I think it’s actually harder than most people think it is. But getting people to stay is the hard part. So, they’re in there for one month, two months, maybe three months, and then they drop out. So you’ve made what, $50, $100? And then you have to go through and find another client again, which is a time-consuming and often expensive process, whether in time or money.
So, don’t look at membership sites until you have a significant platform to draw people from, and you have your client acquisition method worked out. So new people are coming on your list all the time and you don’t have to do anything extra for it, like you’ve really got that system chugging along. That’s the time to say, “Would I benefit from a membership site?” Not before.

Pamela (16:18):
And that being said, the mistake that people make with online offers is not necessarily doing the Passive first (although that is a mistake). But even if you understand the Active, Leveraged, Passive, the mistake that people make with online offers is picking the wrong sales method for that offer.
So, for example, when you’re selling something high-ticket, it’s not something that you want to write a quick email and say, “Do you want to do a $4,500 program with me?” Because unless you’re used to selling $10,000 or $20,000 and you’re making an offer to a friend for $4,500, so it’s a whole lot less, that offer and the way that you are delivering it are incongruent. It’s like writing someone an email and saying, “Will you marry me?” Bad idea.
For High-Ticket Offers and for Signature Systems, you want to do a call. Or, back in the days when we did live events, you can use a live event for a High-Ticket Offer as well.

Pamela (17:13):
If you’re going to make a Leveraged offer anywhere from $500 and up, for now, that’s probably a sales conversation as well. It is a call of some kind. And then for anything that’s Passive or lower-priced, you can use a sales page for it, but you’re often going to have to write a fairly long sales page.
Now, if it’s a $7 offer and you write a page that’s 15 pages long, that sales page is not congruent with a $7 offer. So, a $7 offer is going to have a short sales page (it might be three or four pages long). A $97 offer might have a 10-page, and a $1,000 offer might have a 20-page sales page.
So, as you get into Passive, you’re going to have to become more of an expert on writing sales pages. And usually doing calls (whether the phone calls or Zoom calls) is an easier skill to initially pick up than writing a really good sales page.

Gene (18:10):
Pamela, I want to highlight something that we bump into all the time with our clients and we see out in the world. People think that intellectually they say it’s easier for me to sell stuff online with these digital products because it makes it easier for me and I’m making this money while I sleep.
The reality is, people don’t like people saying no to them. And if I’m writing a sales page, I never have to hear someone say no to me. Someone just disengages and it doesn’t impact me directly. But if I’m having a sales conversation, I’m having to put myself out there, I’m having to make an offer out loud, and I’m giving myself the opportunity to say no.
And so oftentimes people resist the proper tactic for them to be successful for what they think is a good intellectual reason, like “It’s easier to sell stuff online.”
When in reality, it’s a mindset issue, where when I’m having a conversation with someone, if they have a question, I know how to read body language. If they have a concern, I know how to read body language. I know how to have back-and-forth. And we’re actually better at having a sales conversation (most of us) than we are at writing sales copy. And one of the reasons we’re avoiding it is that mindset issue of not wanting to have to be in that place of rejection.

Inquiry Questions to Keep You Moving Forward (Activity)

Pamela (19:22):
Mmm. Such a good observation.
So, I’m going to invite you to, as you listen to this – you know, all of these different things, the Active, the Leveraged, the Passive, High-Ticket Offer, Signature System – as you listen to this, think about, “Where am I in my business? Is this the right time for me to do anything other than Active? Or should I be focused on Active?” And if you’re not at $5k a month or more, I’d say, yes, focus on Active, create a High-Ticket Offer, create a Signature System, and make sure that you move through with that.
The great news is that everything you create for your High-Ticket Offer, you can repurpose for your Leveraged offer and your Passive offer down the line, when you get to that point, when you are ready for that point. And say, “Is there a reason that I might avoid a High-Ticket Offer because sales are uncomfortable for me?” And all of those questions are inquiry questions, but once you start looking at where you’re coming from, then you can make really good choices about moving forward.

Gene (20:14):
So, if you’re in a situation where you’re still trying to figure out, “Where are you at? Should I be doing Active, Leveraged, or Passive?” Or you’ve heard the conversation today and you recognize the fact, “Ooh, I’m using the wrong tactic. I need to be approaching this a different way,” and then you don’t know what the next step is, we would love to help you out with that. We would love for you to have a Free conversation with one of our coaches to get you on the right path, to make sure you’re making the right offer right now. Not only so you’re serving your audience really well, but you’re able to have the success in the business that you want. In order to set up one of those three conversations, all you need to do is go to BookMyBreakthroughCall.com, that’s BookMyBreakthroughCall.com. Get on the calendar of one of our coaches. Have a conversation to make sure that you’re spending your time and your energy on the right offer so that you can have the business that you want.

Gene (21:04):
If this particular conversation is something that you found really useful, and you have someone else in your life, a friend, a colleague, a coach that you know, a transformational entrepreneur, who you think would really benefit from this particular conversation, please be our ambassador. Pass it along! Don’t spam your inbox. But you might know one or two people who would really appreciate this particular piece of information. If you haven’t done so, we’d also encourage you to Subscribe to the podcast. Podcast subscriptions are always free – it’s not like Netflix or Disney+. Find us everywhere you get audio: Apple Podcasts, Google Podcasts, Spotify, Pandora, Amazon Music, Audible. All you need to do is search for ‘A Profitable Impact.’ Click Subscribe, click Follow, and turn on those notifications so every single week when a new episode comes out, you get the notification and you can dive into this valuable content right away.

Gene (21:55):
If you have a question, if you have a comment, if you have a topic that you’d like to hear Pamela and I talk about on a future episode, we would love to hear from you. It’s really easy to reach out to the show. All you need to do is go to AttractClientsOnline.com, click on the contact link to say, “Hey, I got a question for the podcast!” We would love to be able to answer that for you. My name is Gene Monterastelli for ‘A Profitable Impact,’ I hope you have an impactful week.

ABOUT THE PODCAST

Pamela Bruner - Attract Clients Online Blueprint

Building a business as a coach or expert is challenging, especially if you’re trying to find your clients online.

Join business coach and online marketing expert Pamela Bruner as she uncovers the secrets of successful transformational businesses. If you want to make a difference in people’s lives, expand your reach, and attract high-paying clients, you’ll love this show!