BiggerPockets Business Podcast

BiggerPockets Business Podcast 38: Converting Customers Into Fans Who Grow Your Business for You with David Meerman Scott

Expertise:
43 Articles Written

Do you hate marketing?  Do you hate sales? Do you wish there was an easy way to grow your customer base and your profits without relying on all the old bread-and-butter sales and marketing techniques that everyone else is using? 

Today’s guest provides us a path to business growth that doesn’t hinge on being a professional marketer or salesperson.

David Meerman Scott—bestselling author of 11 books, including the just released Fanocracy—explains to us why the most powerful marketing force on the planet isn’t social media, television commercials, or any other traditional marketing technique. Instead, it is the ability to convert our customers into loyal fans. And he tells us how we can convert customers in our businesses into super-fans, helping us to scale and grow our business in ways that we’ve never considered.

David uses everything from neuroscience research to the band Grateful Dead to show us how we can convert our customers into brand ambassadors for our businesses. Whether your business is a product or a service, whether you have a recurring relationship with your customers or you only engage with them once in a lifetime, David’s techniques will provide you the tools you need to get your customers to grow your business for you.

And make sure to listen for David’s suggestion on using selfies to grow your business! It’s brilliant.

Check him out, and subscribe to the BiggerPockets Business Podcast so you won’t miss our next show!

Click here to listen on iTunes.

Listen to the Podcast Here

Watch the Podcast Here

Read the Transcript Here

J: Let’s welcome David Meerman Scott to the show. How are you doing today, David?

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

David: I’m great. Thanks, you guys, for having me on. It’s so exciting.

Carol: Thanks for being on the show. We’ve been digging into your new book and love, love, love everything about it. And we’re so excited to chat with you more about it today.

David: Thank you. So exciting.

J: Absolutely. We’re going to talk a whole bunch about the new book. But I want to start a little bit earlier, because you have I think 11 books or 10 books before this one. I imagine with 10 books, there is a great story leading up to this book.
So, we’d like to hear a little bit more about how you became a marketing expert, what you’ve done in your life, maybe a little bit about your other books, just catch us up to where we are today with your newest book.

David: Yeah, sure, of course, and having 11 books is like having 11 children. They’re all different. We love them all the same.
I started out on a bond trading desk, which I hated and I was terrible at, and I had to escape and I actually escaped to Asia. I lived in Tokyo for seven years. I lived in Hong Kong for two years. I was working for financial information companies like Thomson Reuters and Dow Jones.
Then, came back to the US with Thomson Reuters most recently, and they fired me in 2002. I had to figure out what the heck I was going to do now in a really tough job market. It was just after 9/11. I went out on my own, and I initially started doing consulting.
But then I recognized that because of my background in the financial information world, over nearly 15 years, I had a really big headstart on the internet and what became social media. Because I understood how information worked in a really deep level, and started to write and speak about how you can use the tools of social media, the tools of online communications, in order to reach customers and grow business. And it was really super cool to have these ideas come out when they did.
I’m best known for a book called The New Rules of Marketing and PR. And that book originally came out in 2007. It’s now in the sixth edition. It’s in 29 languages, something like 400,000 copies sold in English.
And so five years ago, I was thinking to myself, I’ve helped to create a monster. The whole online world is now becoming so disruptive and people are pushing out so much nonsense information. And the political dialogue is so polarizing and companies are deploying robots to communicate with us. I felt like business needs to get back to true human connection.
And that was the impetus to begin researching and writing this book that ultimately became what I call Fanocracy. But really coming back to a genuine human connection with people that you do business with.

J: That’s awesome. Okay, Carol.

Carol: I was going to say we’re talking about really taking that concept of coming back to a true human connection in business. I think I read somewhere or heard somewhere that you have had many major passions, but one big passion throughout your life that is a great example of fandom, and I think it adds just such an even deeper understanding of your understanding of this concept.
So can you tell us more about what that passion is and how it really illustrates the power of Fanocracy?

David: I have a massive live music passion. I’ve been to 790 live music concerts in my life. I actually am such a geek about it, that I keep a spreadsheet. I’ve been to 75 Grateful Dead concerts and those of you who are in listen only mode on a podcast won’t see this, but I’m going to show you my Grateful Dead road case, original Grateful Dead road case, that was used in over 850 concerts from 1985 to 1995.
And then over here, I’m going to show you one more thing. That’s my personal rock and roll hall of fame. But yeah, I’m a massive, massive live music fan. I went to my first concert, which was Aerosmith when I was 15 years old. My second concert was The Ramones, they played my high school when I was 15 years old, before they even had any albums out. I was the only person shooting photographs at Bob Marley’s last concert. I’ve seen some epic, epic, epic shows. And it’s hugely important to me.
But what I realized about my live music fandom is that, yes, I’m a huge fan of the music itself. Yes, I’m a huge fan of going to the shows and hearing the music. But what it really was about and is about to this day, 40 years after I started to go to shows is being with my friends. It’s the connection I have with people who do the same thing.
A couple of weeks ago, I went to a yet another Grateful Dead concert with my friends who I go to all the time. Now, it’s now Dead & Company is the name since Jerry Garcia died, they don’t use the name Grateful Dead. And John Mayer is playing the Jerry Garcia role now.
But I was there with my friends who I’ve seen multiple Dead & Company shows with. In fact, we’ve seen seven together this year. Three in Mexico, two in New York City, two in Boston. And these are my best friends, because we share this crazy fandom and what we can all do, every one of us can do is learn from this in two things.
Number one is celebrate the thing that you’re passionate about. Do it. Life is short, be with your friends, do the thing you love, whatever it is. If it’s surfing or going to see your favorite sports team play or birdwatching or knitting or whatever it is, just go out and do it.
And then the second thing that I think is really important is that there are fandoms everywhere around everything. And if you can tap those fandoms, you can grow business, because you can find the people who are like-minded and who are really passionate about the things that they love, and build a business around it.
That’s what McKeel Hagerty did. He’s the CEO and founder of Hagerty Insurance. Now, what’s really cool about this is they have over 1 million fans, they have 1 million followers on their YouTube channel. They have 650,000 members of the Hagerty Drivers Club and they sell automobile insurance, which is probably the most hated business on the planet. Because number one, everyone hates to buy it. And number two, no one wants to use the product, because it means you crashed your car.
And so McKeel Hagerty told me I can’t do business like everybody else, because everybody hates my product and I just will be a commodity. So what he did, he focuses on ensuring classic cars. He realized there was already a huge fandom around classic cars and all he had to do was tap it.
So not he personally, but his people go to over 100 car shows a year. Classic car shows where they meet with classic car fans. They put out this YouTube channel. They have the drivers club. They have an app for valuing classic cars. And by tapping into the fandom that already exists, Hagerty Insurance is by far the number one provider of classic car insurance, double digit compound growth since they started. They’re going to grow by 200,000 members this year. Fabulous success story, all about tapping into an existing fandom.

J: That’s awesome. And so what I want to do real quick, because I don’t think I introduced the book in our discussion, I’m holding it up for those of you who are on video and you can see a copy, but it’s called Fanocracy: Turning Fans Into Customers and Customers Into Fans.
I need to point something out, because I thought this was really interesting. The book is all about you helping business owners, brand managers, people that control brands, increase their sales, increase their marketing to build a customer base, to build a fan base.
So, the book is talking from the perspective being a business owner and how to do this, but the very first story you told about the Grateful Dead, you came at it from the other side. When I think of the Grateful Dead, I’ve never been to a Grateful Dead show, I can probably name one song they’ve ever written.
But my brother is a huge Grateful Dead fan. And even the millions of us out there that have never been to a Grateful Dead show, that don’t know anything they’ve written, we know the Grateful Dead. They have done such a good job of creating this fandom, even amongst those who aren’t deadheads, quote-unquote, we are still fans to some degree. If you ask me if I’m a fan of the Grateful Dead, I wouldn’t use the word fan, but I respect them. I get that they had this tremendous culture.
So, you’re looking at it from, even though you’ve written this book that’s geared towards business owners, this first story you tell, you talk about your fandom for this other brand, this band. And I think of it as like probably the single greatest example of what fandom can create. The Grateful Dead is unbelievable, any other band that I’d never been to a show, couldn’t name one of their songs, I probably wouldn’t think twice about.
But I feel like I know the Grateful Dead, just because of this brand that they built and this connection they have with so many people.

David: They’ve done a fabulous job with it. And I’m going to move my camera over here now. So you should be able to see a Grateful Dead Steal Your Face which is their logo. And even if you’re not a fan of the Grateful Dead, people recognize that logo. And in fact, now young people, Gen Z and Millennials who weren’t even alive when Jerry Garcia passed away, are wearing that logo as a T-shirt and it’s remarkable.
The Grateful Dead did something to build fans that we talk about a lot in the book through different contexts, but they actually allowed their fans to record their concerts. They were the only band that did it. If you got a Rolling Stones ticket or Pink Floyd ticket or a Who ticket, it would say on it no recording allowed, no audio equipment allowed, no video equipment allowed. The Grateful Dead said, sure, why not?
And in the beginning it was cassette tapes and it became MP3 files that people could trade. They said please don’t sell those recordings, but feel free to record it, share it with your friends, share the tapes, share the MP3 files. That grew an incredible fan base, and people who become fans of the Grateful Dead, it’s very much a tribe. We have the language that we talk and the people who are Grateful Dead fans, what was your first show? And in my case, it was in January of 1979 and people always know their first show. They know how many shows they’ve been to.
And that opening story in the book, J, is so interesting, because when I talk about is going into a meeting with Brian Halligan, who’s the CEO of HubSpot.

J: HubSpot.

David: I had never met him before. This was 2007. HubSpot didn’t have any customers yet. They had beta software only and they only had eight employees.
I was invited to a meeting, which I went to, I went to the meeting. I opened up my MacBook Pro and within one minute of meeting Brian Halligan, within one minute, we shared an instant bond. Because on the back of my computer, I had a Grateful Dead Steal Your Face logo. And Brian said, oh my God, you’re a Grateful Dead fan ago. I go yeah, I’ve been to 50 shows. Brian says I am a massive fan. I’ve been to 100 shows.
I reached into my briefcase and I go, I’ve got two tickets for the Phil Lesh show next week. He’s the bassist for the Grateful Dead. Would you like to go with me? Sure. That was the first minute I met him.

Carol: Awesome.

David: Since then, we’ve done so many things together, he’s among my closest friends. We’ve been to probably 100 live music shows, other than the Grateful Dead, other bands too. He invited me within a week of that first meeting in 2007, he invited me to join the HubSpot advisory board, which I did. I’ve been on the advisory board since 2007. And every year, I get a stock grant.
When I first joined, the company had eight employees, no customers, you can imagine what the stock was worth. It’s public on the New York Stock Exchange now, something like a $6 billion market cap.
I not only got a great friend out of this, it was also incredibly lucrative business wise to do business with HubSpot, based on the fact that I had a sticker on my computer.

Carol: That was the best sticker you ever could have purchased. Most valuable piece of currency ever to rock your [crosstalk 00:15:02].

David: I know. Can you imagine? Joining an advisory board of a company, because you bonded with the CEO, because you’re both fans of the same band.
And that happens all the time. Wearing a T-shirt with a sports team or whatever it is, people talk about it with golf. That’s the cliche. I’m going golfing with someone, but it’s all kinds of different things that build those bonds with people in the business world.

J: That’s awesome. Now, I want to go back, because you told a story a few minutes ago, and we got sidetracked. I was so excited to talk about the Grateful Dead that-

David: I’m always excited to talk about the Grateful Dead, going down that rat hole.

J: But you brought up a great story that led into a question that I had for you. And I should point out for anybody that reads this book, that reads Fanocracy, I love the way you wrote it. It’s very narrative form. It’s story after story. So it’s not just telling you what to do, you can see what dozens of other company owners and companies have done.
I love that, and you tell the story in the book about Hagerty Insurance. And that leads me to my question of, a lot of us are running businesses that on first blush, we tend to think, no, this doesn’t work well. Fanocracy, the whole concept of creating fandom doesn’t work well for a business.
Maybe we are an online company, maybe we’re B2B. Maybe we’re a company that literally we have one touch point ever with a potential customer. And so we’re not the Grateful Dead, we’re not a consumer product that we can build a long term relationship.
So, for those business owners that are in a space where we don’t necessarily see the obviousness of how we build a fandom, what’s your advice to them? And would you say that anybody can build a fandom, regardless of the space they’re in?

David: Yeah, so after spending five years researching this topic, I’m absolutely convinced that everybody can build a fandom. There’s no question about it.
And one thing we haven’t touched on, which is very important is I co-wrote Fanocracy with my 26 year old daughter, Reiko. And this is important, because I’m a middle aged white guy, and I love the Grateful Dead, typical baby boomer love. But my daughter Reiko is, she’s a mixed race Millennial woman who loves Harry Potter and gets dressed up to go to Comic-Con every year.
So we’re completely different on one hand, but as we researched the idea of fandom, we realized that our ideas around fandom were exactly the same. And so when we decided to write this book together five years ago, she also interestingly, did a neuroscience degree at Columbia University and is now in her final year of medical school. And you know that from having Read the book, because she tells some stories around that.
So we looked at the neuroscience aspects of fandom, of which there are several. And I want to share one in just a moment. But what Reiko added, which I think is so interesting is the idea that even if you're a doctor or a dentist or an insurance agent, you can still build fans. And she shares how if a doctor, for example, really, truly begins to understand the entire patient through a concept called narrative medicine, understanding the narrative of the patient, not just the patient symptoms, that bond between that doctor and that patient becomes fabulously strong.
That’s because of neuroscience. They become a fan of their doctor. But if the doctor is simply, okay, what hurts? Your heart rate is this, your blood pressure is this, take these pills, go away, there’s no fandom that’s built. So it’s any business. It’s any entrepreneur. It’s anybody who is out there doing business in any form who can develop fans.

Carol: Excellent. Yeah, go ahead J.

J: Yeah, I was going to say because you mentioned the doctor thing, it reminds me of a story of a friend who is a surgeon, and she once told me a story about how with malpractice and doctors that the largest correlation between malpractice and doctors, the largest indicator of whether a doctor is likely to get sued for malpractice is whether the patient likes them. It has nothing to do with how they feel their treatment was, whether they feel they’re a good doctor or surgeon, whether they would give them a five star on their technique as a doctor, but it’s how much they liked them.
And if you like your doctor, you’re less likely to sue them for malpractice. And that always stuck with me. I think that says exactly what you were saying from a different perspective.

David: It’s fascinating. And there’s also evidence that suggests that if you like your doctor, you’re more likely to follow the directions your doctor gives you about how to get healthy. If you don’t like the doctor, and they say you have to do this exercise or take this medicine or avoid this particular food, you may not be as willing to do that as if you like, and trust your doctor. So there’s all sorts of reasons to do this.
The other thing that I found so interesting on the neuroscience side of things is the idea of physical proximity. And that’s one of the chapters in Fanocracy, but we’re learning now through neuroscience that we humans are hard wired. It’s in our DNA. It’s in our ancient brain, that the closer we get to someone physically, the more emotional that human connection becomes, the more powerful that connection becomes.
And so this means the closer you get to someone, if you trust and like them, like your doctor, for example, the more positive that connection becomes. But if you don’t like someone or don’t trust them or don’t know whether you can trust them yet, like you get into a crowded elevator, then that can be a negative reaction.
This is hard wired. It’s part of our DNA, because we need to understand as humans, do I need to begin to worry about fighting or fleeing this particular human being or not? And so there’s four levels of proximity that have been defined by a neuroscientist called Edward T. Hall.
The first one is 20 feet or further away. In that area, we don’t track those people, we know they’re there, we’re conscious they’re there, but we don’t really pay that much attention to them. That’s like going into a big room and you are aware there’s other people far away from you.
Then, four feet to 12 feet, that’s called social space. And within social space, our human brain begins to track people. We can’t help it. We are unconsciously looking at those people. Are they friends, foes, potential mates? We can’t help it.
Within four feet and about a foot and a half to four feet, that’s called the personal space. So you got personal space, social space and public space. With personal space, it’s cocktail party distance, a foot and a half to four feet. That’s when it gets really powerful. That’s cocktail party distance. That’s when you have close friends and our brains bond with those people when we like them.
What that means for all of us to grow fans and to build business and to grow our businesses, the more opportunities we have to get proximate with other people, to get closer to other people, the old going to lunch thing, or can your company host a meeting with other customers? Can you run a conference or an event? Can you get on an airplane and go visit people? That’s really important stuff and it’s very, very, very powerful.
I’m going to take it one step further. So some people listening in might say, yeah, well, but I run a digital business or I run a commodity business. Well, it turns out there’s a virtual proximity that everybody, every single one of us can do. And that is our brain is also hardwired that when we see somebody doing something, our brains, the neurons in our brain fires as if we’re doing it ourselves. They’re called mirror neurons.
I have a lemon in my hand and those of us on video can see the lemon, and here’s a slice of lemon and you can see the slice of lemon. If I take a bite of this lemon, my brain fires. My eyes unconsciously close and my mouth begins to water and I pucker up and it’s a really powerful thing that goes on in my brain.
I would guess that everyone who saw that, and most of you who are simply hearing it are also experiencing the exact same firing in your brain.

J: I just tasted that lemon.

David: I would guess that you’re tasting that lemon, that your saliva glands are pumping from me just talking about or showing in the case of those of you who are watching the video, that lemon.
Now, here’s why that’s so important. Because every single one of us can create virtual proximity using video, and virtual proximity using photographs. What that means is, if you create a YouTube channel, you put videos on your website, use services like Instagram or Facebook Live, you can show people that you’re in their social or personal space, simply by cropping a video as if you’re within four feet of them for personal space.
And their brain fires as if you’re right next to them physically, which is exactly why we feel we know and are friends with movie stars and television stars. We’ve never met them. But our brain fires as if we’re friends of them.
And this is a really great way to build business. And there’s a dentist, his name is Dr. Jon Marashi. Dr. Marashi is a dentist and people would say how can a dentist grow fans? He’s got 12,000 or 13,000 followers on Instagram, because he’s using this concept of mirror neurons. He’s constantly pushing out photographs of him and sometimes with his family, he loves to skateboard, sometimes skateboarding, and sometimes with his clients out onto his Instagram. And that helps to build fans. And he’s one of the most popular dentists in Southern California where he practices.
So any one of us can use this technique. I know you asked me a really simple question, J, and I blabbed on a long time about neuroscience, but I think it’s really fascinating that we’re just now learning through neuroscience that it’s possible to build fans, just by getting close to people, or even virtually close to people.

Carol: I love that you expanded on it, because as you’re talking through this something really struck a chord with me, right? I’m thinking about especially like you mentioned the fact, which is so accurate, so many of the entrepreneurs out there, they are in a digital space. We have to look for different ways to virtually get into somebody’s personal space.
You’re talking about that personal space being within four feet, and making it feel like they’re really there and this is what occurred to me, David. We have two little boys and they are obsessed with a few specific YouTubers, to the point where it makes me crazy to be honest. I never thought about it until I’m sitting here listening to you.
The ones that they are obsessed with aren’t people who have videographers. There are people who walk around, they’re shooting video on their phone as a selfie. So, they’re like right in, they are like front and center and they feel, my kids feel like they’re off doing whatever random antics these YouTubers are doing.
I suspect, does that sound about right, that it’s probably a neuroscience based thing, because of the proximity with which they’re shooting that video? It takes it to another whole level of relatability, of connectivity, and making them feel like they truly are part of that and they want to get others to be part of that as well.

David: That’s exactly right. That’s exactly the powerful thing that’s going on in their brains.
And it’s interesting that the old 60 Minutes style of shooting a video interview, they have two people seated next to one another, and they’re talking to each other and there’s two cameras, one pointing over each of those people’s shoulders. And then there’s a wide shot, that shows both of the people in there.
In none of those cases is the person speaking directly to the camera. So, you don’t bond with people who are doing that stuff 60 Minutes interview, but you do bond with what those YouTubers are doing, which is looking directly into the camera. And you also used the selfie word. This also explains the selfie phenomenon because many people dismiss the selfie as frivolous.
But in fact, the selfie is hugely powerful, because by definition, if you’re holding your phone in your own hand, it’s by definition about four feet away, which is right within that personal space. And when you snap that photo, you’re looking at the camera, you’re looking at the lens. And if there’s several other people in the photo with you, they’re all looking in the same direction. So, your brain says those people are aligned with each other, and they’re both looking or all three or all five of them are looking at me. That’s really, really powerful.
What a lot of people have found is if they go and look at the stats on their Instagram or Facebook, those photos, selfies and other photos that you’re looking directly at the camera, where it’s cropped as if you’re in someone’s personal space, are among the most shared and liked and commented on images that people put out. I had a chance to share this idea with a quite well known author. She won’t let me use her name.
But she has an Instagram and she had been posting landscape shots and pretty flowers and things like that. And she finally said, David, I didn’t really want to put anything about myself. And then she did a selfie for the very first time. It had huge results. Way more engagement than anything else. And it’s because of this phenomenon. And all of us can do that. You can do it. I can do it. Anybody listening in can create videos or photographs or simple selfies, which are fabulously powerful to grow fans, and then in turn to build business for you.

Carol: I love that, thank you for expanding on it even more. And I want to make sure too, our listeners understand, we’re talking so much about fans and the power of fans. And can you define for us what are those characteristics that make a true fan, so we can understand why being a fan is so important for your business? What are those things that make them a fan and what just makes your business grow because of having those fans?

David: Sure. So we have a loose definition of a fan as somebody who is incredibly passionate about something. They can’t wait to do that thing, whatever it is, again. They have people who they do that with, who become among their closest friends.
And interestingly, there’s a lot of people who share a fandom with somebody, with other people and they become very close friends, but they rarely see those people outside of that fandom. That’s like me and my Grateful Dead friends, we go to concerts six or eight times a year, but we almost never see each other outside of that environment.
And then another characteristic is that people are eager to spend time and/or money to do that activity, to be a part of that fandom, they spend time and/or money. And so that’s the loose definition.
Now, what becomes really interesting for business people is that and it’s the subtitle of our book, you can either tap existing fandoms to turn those fans into your customers, and/or you can have your customers and turn them into your fans. And they’re much more likely to stick with you, much more likely to spend more money with you, much more likely if you run some subscription style business to re-up every year and continue to be your fan.

J: So is there an optimal direction to go? Should we be trying to turn fans into customers? Should we be starting businesses around our fans? Or, is it just as effective to say, hey, we already have a business. We already have customers. Let’s turn them into fans.
It sounds like it works both ways.

David: It works both ways. For example, we talked earlier about Hagerty, they were able to tap the existing fandom around classic cars, and then make those existing fans of classic cars into the customers of Hagerty. But then over time, they also become fans of Hagerty.
And incidentally I’ve been 1973 Land Rover Series III that’s been insured by Hagerty since 2005. Three days ago, I got my renewal notice, please pay for another year of auto insurance. Normally, if it’s my regular car, I just drive my classic car for fun on weekends. But when it’s my regular car and it says you got to pay us for insurance, I don’t even know the name of the company that insures my regular car, right?
I’m like, I don’t like you. I hate you. I don’t want to give you $2,000 or whatever number it is, to insure my car for another year. I don’t like that I have to pay you that money. I don’t want to ever use the product that I’ve just bought from you.
But when I pay the money to Hagerty, I like it, because I love their YouTube channel. They send me a magazine every other month, which I love. I read it cover to cover about classic cars. They have the valuation report. I can see on a graph how much my car is worth. I love those guys, and I’m happy to give them the money every year to insure the car, because the alternative is a company I don’t like. So not only have they turned fans into customers, but they’ve also turned their customers like me into fans.
And it’s not a mutually exclusive thing. For many organizations, they might do both or they might do one or the other. I’ll give you another example of an organization that really just goes one way and that is Duracell batteries. Now, they’re totally in a commodity business. And you would think Duracell batteries fans? What are you talking about? That’s ridiculous.
But in fact, they have a program called Power Forward. Power Forward gives away free batteries to the victims of natural disasters, hurricanes, floods, tornadoes, and hey, now that you’ve moved to Florida, maybe you’ll be in the hurricane zone.

Carol: Yay. I can’t wait.

David: I live in the Boston area, so I’m in the heavy snow range. So, they help people, Duracell helps people when the power goes out. In my case, a heavy snowstorm or floods or tornadoes or whatever it is, and they have a fleet of trucks that go into disaster zones and give batteries away for free.
Now, this is fascinating, when their batteries are in the most demand, when the power is out and people need to turn on a flashlight or power a radio or whatever it is, they’re giving away their product for free. And this Power Forward program is really popular. They actually airlifted some of their trucks and 700,000 batteries to Puerto Rico in the aftermath of Hurricane Maria and gave away all those batteries and people become their fans.
Because they remember, in the time of need, this company wasn’t trying to gouge me. They weren’t trying to get me to pay for this thing. They gave me four batteries for my flashlight. I will always remember that. And when I go into the store, even if it’s a couple of cents more for the Duracell batteries, I’m going to buy them.
So in their case, they’re taking customers and turning them into fans.

J: I love that and this goes back, I think this is a great tip, the idea of giving freely, giving more than you ask in return. And you used an example from the Grateful Dead earlier in this interview, where they basically said, take our music, take the videos, we’re not going to license it to you, we’re not going to make you pay for it, take it, share it, it’s free.
And basically they were in a way, they were potentially giving up money, because people aren’t necessarily going to buy as many things or they’re not going to license it or they’re not going to go buy the album when they have the video of it from the concert. But ultimately, that giving away came back to them in spades.
They no doubt made millions and millions more by giving away than they ever would have made just by selling.

David: Absolutely right, because you’re right, they probably missed out on selling some albums, because people got the music for free. But at the same time, people like me, I’ve been to 75 shows, I spend a lot of money on Grateful Dead tickets every year. And some listeners might be saying, well, shoot, I don’t sell batteries, I can’t go give them away. I’m not a musician. I can’t let people tape my concerts.
But here’s where the giving gifts without any expectation of anything in return comes into play for many other businesses, and that is giving away free content on your website. So, many companies have things like white papers or eBooks or other types of content that they give away for free. But most of them put a gate in front and say I’m not going to give you my white paper until you give me an email address.
That is not giving something away for free. That’s actually setting up an adversarial relationship with a potential customer before you’ve even met them. This is the exact opposite of building fans.
What I recommend you do, if you’re giving away things like white papers or eBooks or other content on a website, in order to build business, is to give it away completely for free with no expectation whatsoever of anything in return. Make it completely free, Grateful Dead style.
I’m a believer, first of all, I’m going to give you the Northern California airy fairy part of my reason for doing this and then I’m going to get really much more specific. But the feel good vibe here is that when you give something away like that, you’re giving the universe something, you’re giving people something. The universe will give back. That’s the hippie bit, which I believe very strongly. The more I give away in my life, the more I give away in my business, the more it comes back to me.
But here’s the solid part of this is, give away your first bit of content completely for free with no expectation of anything in return, instead of trying to put a gate in front of your content. But then embedded in that initial free content, have an offer where they might want to register for something.
So that the way that feels is the white paper is completely free to get people interested. Then people will share it, they’ll put it on social networks, they’ll give it to their boss, all sorts of things will happen to that content. Then, inside the white paper, say, did you like this white paper? Then, register for our webinar. Or if you liked this white paper, why don’t you sign up for an email newsletter or if you liked this white paper, why don’t you contact us? We’ll do a free assessment of your business. Whatever business you’re in, I don’t know what would make sense. If you like our white paper about landscaping, give us a call, we’ll come and give you a free assessment of what landscaping would look good at your property.
And that drives fans, number one, but it also drives business, when you make that initial content free, but so few people do that.

Carol: That’s great. Yeah, it is counterintuitive. Like you said, so few people do that, it is typically, we’ve got lots and lots of stuff to give you, but you’re going to give us an email address first if you want to access that. So by flipping that on its head, like you said, you’re throwing it in their lap, you’re making them come back for more and more and they want to stay connected with you.

David: Exactly right.

J: It feels like you’re basically saying let’s be friends before we make a transactional, because once you make a transactional, you’ve set… what’s the term? You’ve set the stake in the ground.

Carol: The parameters, expectations for how [crosstalk 00:42:07].

J: You’ve set the stake in the ground that now I’m trying to get money out of you. Obviously, as a business, you eventually want to get there, but you want to set the tone for the relationship first. And once you create the transactional side of things, and you define it as a transactional relationship, you lose a lot of leverage.

David: Exactly right. And the metaphor I like to use is the dating market. I’ve been happily married for more than 20 years. So it’s been a really long time since I’ve done this.
But if you’re at a singles bar, I don’t even know if there is such a thing anymore, it’s an old fashioned term, but you’re at a singles bar, you don’t walk up to someone and say, how much money do you make? Here’s my phone number, give me yours. That’s the moral equivalent of the demand for the information to get the white paper. No, you have a chat. You connect with somebody first. You get to know one another.
And then you might say, gee, may I have your phone number, your email address or whatever it is.

Carol: Excellent. Go ahead, J.

J: I was going to say, so we’ve talked about several or at least a couple of the nine great steps that you talk about in the book to create fandom. But the book, and one of the things I love about the book is it goes into all these steps. But there are so many other great tips, just around living a passionate life, about business versus pleasure and things like that.
Can you give us some additional tips on just as business owners, how we should be thinking about business, how we should be thinking about pleasure, how we should be thinking about life, to both make ourselves happy, and in return make our customers happy, and build our business?

David: Absolutely. So what’s been a truly remarkable thing that we’ve learned, my daughter Reiko and I as we did this research is how important it is for all of us humans to have things that we’re passionate about. It’s true of nearly everybody.
Now, there are some exceptions, there’s actually 5% of the population we learned that don’t have something that they’re really passionate about, only 5%. And here’s what I would say to those 5% who are listening in right now. We did learn that for many people the thing that they’re the most passionate of today as an adult, is the same thing that they were most passionate about when they reached puberty.
So in my case, I started to go to live music shows in my mid teens, as my hormones were raging, it’s still one of my biggest passions. And in fact, that’s true of more than half of us. The thing that we were most passionate about, as we were reaching puberty is what we’re passionate about now.
How about you guys? Does that fit in you Carol and J?

Carol: 1 million percent. I was all about, strangely enough, in my little itty bitty town where I lived right around the time I hit puberty, the first time it ever happened in our life, there was a new, just coincidentally, there was a new construction neighborhood. It was a big aha in a farm town that I came from. And I’m like, this is so cool. They’re building houses.
I was so involved in watching those go up, watching them be designed. Here I am, it’s not only a hobby, it’s what we do for our lifestyle business. It’s awesome how it came full circle.

David: Fascinating. Absolutely fascinating. So what I say to those people who say I’m not passionate about anything, and it’s about 5%, is think back to what you loved to do when you were 12, 13, 14, 15 years old, and maybe you can rekindle that passion.
But anyway, having a passion most of us have is a great thing. Celebrate it. Do it, do it even more. And then share your colors, wear the hat, wear the T-shirt, put the sticker on the back of your computer. I know people who get tattoos about the thing that they love, the logo of the company that they like. I’m actually going to get a tattoo of one of the Fanocracy T-shirts from the cover of our book to celebrate the book coming out and having written it with my daughter. That is cool stuff.
You know why? There’s a few reasons. Number one, when you are passionate, it expresses to the world that you’re a person that would be fun to get to know. And it doesn’t matter what you’re passionate about. It doesn’t matter what, because passion is infectious. When you’re passionate about something, you’re excited about it, people can’t help but get excited with you.
You guys are so exciting to listen to around building and around the ideas that you’re talking around and the podcast and you genuinely love to help people to be successful. That’s infectious.
I think that too many of us, in our research we’ve learned separate business from pleasure. They use their LinkedIn for business connections. They use their Facebook for personal connections. Or, when they meet somebody in a business setting, they never talk about their family or the things that they love to do.
I think that’s a mistake. I think that people who are more willing to break that barrier and share what they’re passionate about, when you meet someone for the first time, hey, what do you love to do on the weekend? And you never know what they’re going to say and you’ve got something you can talk about. When you get someone talking about what they’re passionate about what they do on the weekend, that person will light up because they love to talk about that.
I think that it also is important for hiring people. We spoke with a number of CEOs who told us that the most important thing when they hire someone is not, have they already worked in the industry? Or what school did they go to? Or, what are the things that they’ve done in their career? It’s, are they passionate about something? Because that passion is infectious for helping to grow a business.

Carol: J, I’ll take this. And I’m just curious, would you agree that by doing that, by going after those types of people specifically, you’re really building a really rich and robust corporate culture that has the tendency to be passionate about things, so they’re going to tend to be passionate about the business? And that, of course, sends that message out there, like join me in this enthusiasm, join me in this journey of all these cool things our business has to offer. So it all comes full circle.

David: Oh, absolutely, 100%. One CEO we spoke with his name is Pete Cipollone, he runs a software company. He’s a former Olympian. He’s a gold medalist in the men’s eight rowing. He was the coxswain. And Pete told me that he specifically hires other elite athletes, either current or former Olympians, world champions and so on. Because he believes that they’re passionate enough about the sport that they love to get to the highest levels, that passion rubs off in the business that he runs.
One other CEO told me that when he’s doing an interview of someone to maybe bring them into the business, actually she, she asks a series of questions, but she says the most important question she asks is this. If you were in a room with 2,000 people, what could you confidently say you are the best at among all those other 1,999 people?
And the answer to that is the most important indicator of whether that person will get hired, because what she told me is, people light up, they can’t wait to describe how they are a fabulous acapella singer, or they absolutely love to water ski, or whatever it is. And that then becomes the passion is infectious piece, and those people make the best employees.

Carol: That is really cool. Because again, if you think of it on the flip side, that also weeds out a lot of people too, right? Because you’re getting those people who are willing to be vulnerable and willing to say, these are the things that I do that are not business related, because you’re always going to have those people. Like, oh, well, I’m the best at being detail oriented and paying attention to the steps of a project and boom, that’s not the person we need.
We need someone who is really going to get in there and live their life and live their business and help us all, together.

David: Absolutely right.

J: Yeah. And Carol and I came from the tech industry a long time ago. And what we were seeing or what I was at least saying back in like the early 2000s, was all these big companies, I worked for Microsoft for a long time, they started bringing in these people whose job title was brand ambassador.
And what is that? That is basically somebody who takes a company like Microsoft, a boring company, a software company, and says, hey, your job is to go out and create fans, your job is to build relationships and build that bridge between the company and the people that either already love us or could potentially love us. And if companies like Microsoft can do it, there’s no reason why all of us shouldn’t be doing that with every single one of our employees.
So you’re not just the QA person, you’re not just the salesperson, you’re not just the marketing person or the attorney for our company. Every one of them can also and should also be a brand ambassador, even if that’s not their title.

David: Absolutely, 100%. Microsoft actually does a number of things to build fans. They’re a surprising example that we put in the book. One of the things that they do specifically is they let their fans control the way they use the products and services.
There’s a lot of companies who try to dictate how customers should use their products and services. Microsoft says, go for it, you guys are in control, and specifically their partner channel, as you may know, J, generates the bulk of their revenue. $95 billion in revenue last year, just from the partner channel. And the partner network at Microsoft is self-running, which is remarkable.
If you go to the community, online community, it’s all run by the partners, and Kati Quigley from Microsoft who I interviewed for the book, she said that Microsoft, people don’t want to talk to us. We’re from Microsoft. They want to talk to their peers.
So what they did was they lost control of the way that people talk about Microsoft and that helped them to grow. I don’t know if you’ve seen their recent stock price, but they’re crushing it, they’re doing fabulously well, and people gave them up for dead just a decade ago, but they’re doing remarkably well.

Carol: Awesome. David, you have given us so many actionable tips and woven throughout that so many great stories, and we’re just so appreciative of everything you are giving, so that we can all grow our businesses and look towards the really great things we can do with these concepts. So, thank you.
We’re to the part of the show though where we want to do our segment that’s called Four More, and what we’re going to do is ask you four rapid fire style questions. And then the more is where you’re going to tell us more about where we can connect with you. Are you ready for the first one?

David: I am ready.

Carol: Super. J’s going to take number one, go J.

J: Number one. So what was your first or your worst job and what lessons did you learn from it that you used, let’s say in your current industry or to help in the writing of your last few books?

David: My first job after college wasn’t my first job. I worked at a company called Dean Witter. And the most humiliating and horrible thing was, I had to actually punch a time clock. It was a card that had my name on it, and you would go… when you came in the morning, again at lunch, again when you came back at lunch. And again, when you go out. I said to myself, there is no freaking way I am ever going to work for a company that doesn’t trust me.
I lasted about a year and I never looked back. Awful.

Carol: That was it.

J: You don’t think about that. But that really is, that directly ties to how you feel like your company trusts you. Interesting.

David: Yes. It was totally demoralizing. And if you trust your employees, they will do good things.

Carol: Very much so. Okay, here’s my second question for you. So David, what is something that you know now in your career after all these years, after doing so many different things, after connecting with so many people, that you did not know way back in the beginning, but you really, really wish you would have, if hindsight were 2020?

David: Oh, how interesting. I now make a lot of my revenue from delivering speeches. And I have to say that I was absolutely freaking paranoid about delivering speeches. I hated it, I didn’t like it. I realized I had to get good at it.
So a couple of decades ago, I really dug in to become good at it. I actually love it now. I call it my happy place. When I’m on a stage, I feel like I am Superman. It is absolutely… I love it. I got like the third eye going on, I’m seeing the world and everything around me in such a really interesting way. I wish I had realized that earlier, because I could have done a lot with it if I had figured that out earlier in my career.

Carol: That’s really cool.

J: That’s great. Okay, so you are in the marketing world and in the marketing world, even I know that there is a lot of really, really bad advice that floats around. what’s some of the worst advice that you tend to hear on a regular basis that you want to clarify for our audience right now?

David: So what I see a lot of is people paying for attention. They’re paying for attention by buying television ads or radio ads or newspaper ads or Google AdWords or boosting on the social networks. I believe really strongly that if you develop fans, if you create interesting information, put it out on the web, if you are building true human connections, that you are generating attention for free.
I think that so many companies are selling people short by insisting that the only way to generate attention is to buy it.

J: Love that.

Carol: Awesome. Okay, I have the fourth one. It’s my favorite. Okay, in addition to your amazing live music and Grateful Dead splurges, what is something else in your personal or professional life that you’ve splurged on along the way, that was totally worth it?

David: Oh my gosh, my wife and I splurge on vacations. We are going in three weeks to the Seychelles, which is a group of islands on the east coast of Africa. We sit in the front of the airplane, we get a beautiful hotel and in this case, it’ll be a villa. We go to the best restaurants. And it is a splurge, because it is a ridiculous amount of money, but it is totally worth it. We have never once regretted going on a fabulous vacation.

Carol: Awesome, I’m so envious. That’s sounds so nice. I’m picturing that right now.

David: I check emails once a day, I check social media once a day, I check the news feeds once a day, but then we unplug.

Carol: Awesome. Heavenly, completely heavenly.

J: Great. Okay, let’s jump into the more part of our Four More. Where can our listeners learn more about you? Where can they find your book and if they want to connect with you, where’s the best place to do that?

David: Absolutely. So, website is fanocracy.com, lots of really cool free, no registration required information on fanocracy.com. And then on the social networks, I am dmscott, that’s D-M-S-C-O-T-T. I do my best to respond whenever anyone pings me on the social networks. I would love to hear from anybody that way.

J: Awesome. I am holding up a copy of your new book that was just released in the past week called Fanocracy: Turning Fans Into Customers and Customers Into Fans. It is an absolutely awesome book. And honestly, I will be using many of the tips that you write about in your book in a business that I’ve recently launched. So it was-

David: Good. I’m so glad to hear that.

J: Great timing for me as well.

David: And then if we do an update of the book, I’d love to have the example of your success in it too.

J: I would love that as well.

Carol: Thank you.

J: Thank you, David. David, this has been absolutely amazing. Thank you so much for sharing so much knowledge and time with our listeners and with us. And we very much look forward to having you back soon.

David: It’s my pleasure, J and Carol. Thank you so much for having me on.

Carol: Thank you, David. We’ll talk to you talk soon.

J: Thanks, talk soon.

This Show Sponsored By


Fundrise enables you to invest in high-quality, high-potential private market real estate projects. I’m talking anything from high rises in D.C. to multi-families in L.A. — institutional-quality stuff. And each project is carefully vetted and actively managed by Fundrise’s team of real estate pros.

Their high-tech, low-cost online platform lets you track the progress of every single project, and keep more of the money you make. Oh, and by the way, you don’t have to be accredited.

Visit Fundrise.com/bpbusiness to have your first 3 months of fees waived

Serious entrepreneurs and finance teams run on NetSuite, by Oracle -the world’s number one cloud business system. NetSuite offers a full picture of all your finances all in one place, in real-time, right from your phone or your desktop. No more guessing. No more worry that what you don’t know could kill your company. That’s why NetSuite customers grow three times faster than the S&P 500 and you can too.

Schedule your free demo right now and receive their free guide –“Seven Key Strategies to Grow Your Profits” at netsuite.com/bpb

In This Episode We Cover:

  • How to create fandoms to grow your business
  • Discover how the 4 levels of proximity could help you get noticed
  • Why you should take more selfies
  • Characteristics that make a true fan
  • How to convert your customers into loyal fans
  • A story that turned David into a fan of a company
  • Giving freely vs. giving with the expectation of receiving something
  • Why you shouldn’t pay for attention
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

Connect with David

What does it take to start, scale, and sell your own business? Every Tuesday, J and Carol Scott ask this question to entrepreneurs of all stripes and delve into stories that go beyond the launch. F...
Read more