[40] 10,000 True Fans
[40] 10,000 True Fans
How brands can think about community engagement
By LJW and Shaman4646
Last week, I had the pleasure of writing with Shaman, who leads Non-Fungible Heroes and Gen City Labs. He has deep experience introducing new technology to Fortune 500 brands. But, he also is a Degen — at a recent conference, he was the only speaker who used his BAYC NFT as his PFP. He straddles the best of both worlds — professional degen.
We recently hung out at the D2 Summit, a conference exploring how brands and companies might leverage Web 3 technology. We talked a lot about engagement — a topic Shaman is an expert in (he is literally building a company around this). 👀
Today we explore how brands might change their engagement strategy and think about 10,000 True Fans.
Since good writing is composable: H/T to Li Jin’s 100 True Fans and Kevin Kelly’s 1,000 True Fans for inspiring this essay.
Contributing Writer: Shaman4646
[Twitter], [Linkedin], [Medium]
Mike Schaiman aka Shaman has deep experience introducing new technology to Fortune 500 Brands such as Mercedes Benz, Visa, Coca Cola, Capital One, the NFL, Salesforce, Emirates Airlines. Prior to Web 3, he founded and exited a leading experience design studio. In Web 3, he founded and scaled Non-Fungible Heroes, an interactive NFT project. He is currently building GenCity Labs, a community creation, engagement and loyalty platform for brands, powered by Web 3. 👀
🧱 Building Blocks:
Some relevant previous essays: Why NFTs + Infinite Design Space + Evangelists + Value to Users
📈 Life in Color Tip:
Follow us on Twitter to get the TL;DR as a Tweet Thread. 🐦 🧵 🧶
Kevin Kelly introduced the concept of 1,000 True Fans, then Li Jin pushed it further with 100 True Fans.
At heart, these are quality frameworks where the foundation of success is built from quality versus quantity.
Both frameworks share similar logic: it’s perfectly fine to have a smaller number of [x] as long as each [x] is higher quality. E.g., you can make a living as a creator with 100 true fans as long as they all support you in a big way. Li talks about each true fan paying a creator $1,000 / year, which is ~$83 per month. It’s an interesting framing that highlights the flexibility of the new economy.
Since Shaman and I both worked with (and for) brands directly, we started thinking how these quality frameworks can be applied to brands in light of Web 3. We explore this through our 10,000 True Fans thesis.
Traditional Business Model
A timeless framework for any industry and business is Revenue = Price x Quantity.
Quantity is the amount of goods / services that consumers purchase.
Price is what consumers pay.
In some product types, you charge a lower price but make up for it by increasing the quantity sold (commodity goods). In other product types, you charge a higher price but the quantity sold may be lower (luxury goods). See 2x2 Matrix.
2x2: Price of Goods x Quantity Sold
What is interesting is that in all quadrants, we have a tendency to focus on changing quantity. Even in luxury goods, the phrase “selling more” implies increasing quantity.
In both corporate and startup environments: defining, setting and changing price is hard. And psychologically, it’s hard for consumers to accept a higher price, so we default to selling to new customers versus selling more to existing customers.
Read: Instead of optimizing for more depth (more value to justify an upsell + higher price) with each consumer, we are willing to rush toward quantity by finding new consumers.
But customer acquisition costs (CAC) have gone up over time, and it’s gotten more expensive to play the quantity game.
This has led to zero sum dynamics:
Brands / products proliferate: Cost of starting a business has gone down.
Increased CAC: More brands spending more on marketing with lower ROIs.
Razor Thin Attention Spans: Consumers are being flooded with offers, leading to razor thin attention spans.
More Marketing Activities: Brands have to spend more on marketing to capture attention.
CAC compounds: 📈 🥹 😭
10,000 True Fans and Consumer Engagement
10,000 True Fans offers a different path to the status quo. 🌞
What if the consumer and brand relationship isn’t purely transactional?
💸 💛 🧧
At heart, 10,000 True Fans is just a quality framework (depth, engagement, etc).
It is about turning your consumers into evangelists and building an evangelist community at scale. Note: Evangelist / Super Fan / Contributors are synonymous with True Fans.
Why 10,000 and not less or more?
It’s an order of magnitude or two larger than the creator framework by Li Jin and Kevin Kelly. 🤷♀️ But don’t get caught up with the numbers. Focus on 10,000 True Fans as a quality framework. This is about compounding the relationship with each consumer to build a community that cares enough to help you grow your brand.
This means once there are 10,000 engaged True Fans in your community, they will probably help you find your next 10,000 True Fans or at least evangelize the brand among net new regular consumers.
The math for 100 / 1,000 True Fans was more straightforward. But for 10,000 True Fans, we have to reframe the value that True Fans bring to a brand.
True Fans bring value in 2 major ways:
They buy products / services from brands
They evangelize the products / services of the brands (talk about the products, convince others to buy, bring others into the community, etc etc)
The 1st point is timeless: this is thinking through LTV to CAC (Lifetime Value to Customer Acquisition Costs).
The 2nd point, however, is harder to quantify and harder to incentivize.
Some illustrative math:
Say a brand has 10,000 True Fans that:
Spend [$100] [per month] or [$1,200] [per year]
[Each] brings in [3 new consumers] that spend [$25 per month] or [$300] [per year]
At this point, the brand generates revenue of $21M. But in the next iteration, the 30,000 new consumers that were brought in by the 10,000 True Fans, perhaps some of them can also convert to True Fans.
Everything in [brackets] are assumptions and inputs, each brand exploring this needs to think through what is reasonable for them and compare it with the status quo (traditional CAC game).
But the more important point to explore is: how do you create a community of True Fans that cares about your brand?
“Caring about the brand” is ultimately about designing intrinsic and extrinsic incentives. True Fans want to feel like they are part of a special sub-culture, but more importantly, they need to feel like owners — they create value, but they also capture some of that value.
This is where NFTs come in.
NFTs: One Size Fits All = Wrong Size Fits None
NFT-based communities are new and offer an Infinite Design Space.
With NFT experimentation costs decreasing (i.e. technology is improving, with an increasing focus on building with product adoption and frictionless UX/UI in mind), brands can tap into that Infinite Design Space to customize and curate a community that resonates with their True Fans.
Read: NFTs can be a cheaper alternative to the traditional ad model for customer acquisition and they may align incentives in a more meaningful way.
The missing gap isn’t one of possibility, it’s one of tactical execution.
What brands need to get right when designing NFT-powered communities:
Incentives Alignment: If the brand grows because of the work of their True Fans, are the True Fans capturing value? And remember value for each brand and segment needs to be designed specifically with them in mind. Read: There must be True Fans x incentive fit.
Data-driven Approach: One of the marketer’s hardest problems is understanding the evolving consumer. Web 3 solves this problem with on-chain data. But on-chain data is new and requires new skills to access. Thought experiment: you are a sneaker brand… you believe holders of RTFKT’s Clone X NFTs are also a fit for your community… well, you can easily find the existing holders of Clone X NFTs with blockchain data and design a campaign for them as it relates to your brand.
Differentiated Utility: True Fans are getting something novel and unique, above and beyond what the regular consumer is getting. The utility applies to what the True Fans truly want. Is the utility on-brand? Read: so many NFT campaigns feel cringe.
Curating Vibes: Is there a community where True Fans can engage with other True Fans? Is it curated well, with experiences that are on-brand? Does the design of the community encourage the intended behaviors? Read: True Fans want a community with peer-to-peer connection over shared interests.
🍝 Do Not Copy Pasta: Copying and pasting does not work. If you simply do an NFT drop and copy the next brand, you are making two critical assumptions:
You assume the brand you are copying from knows what they are doing and their context applies to your context.
You assume their strategy is your strategy.
Getting the NFT design right enables True Fans to think and act like owners — they are incentivized to create value for the brand because they will also capture some of that value.
Experiencing Ownership through Community
A core philosophy of Web 3 is ownership, experienced through tokens (NFTs). See Tokens are Products for thoughts on Ownership Experience.
Ownership is about moving from a transactional model to an engagement model with consumers, through community.
When it comes to brands, many brands use loyalty programs to drive engagement. But too often we see ‘loyalty’ purely as transactional activity rewards (i.e. buy more stuff, get some rewards).
What we really need to consider in our customer interactions is the depth of relationship and connection — not just from brand-to-consumer, but from consumer-to-consumer. This means a core component to the ownership experience is enabling peer-to-peer connections through community.
Community formation is going to be an incredibly powerful driver of brand loyalty. Web 3, NFTs and digital assets turn consumers into owners. When consumers (and people in general) have ownership, they are more eager to contribute and are more engaged. The brands that provide pathways for communities to connect and flourish will be the brands that win. That initial set of 100 true fans turns into 1,000 turns into 10,000, so on and so forth.
The consumer traditionally engages with a brand in single player mode, Web 3 and NFTs turn on multiplayer mode.
Btw, this is not a new concept. The concept of pride in ownership already exists! When consumers connect with products and find other consumers who do the same, healthy communities form (e.g., luxury goods, automotive purchases, sneakers, NFTs, video games, etc).
Web 3 and NFTs supercharge what is already innate to us as consumers, by adding digital ownership, community engagement, better incentives… all at scale.
Bringing It All Together
For brands that execute the above well, they create a positive flywheel that builds momentum over time:
NFTs turn consumers into owners / true fans
Owners / true fans aggregate in a community (with utility and experiences curated by the brand)
Peer-to-peer connections form, driving further community engagement, stickiness and pride in ownership
Owners / true fans evangelize the brand (in collaboration with the brand) and bring in new consumers
New consumers become owners / true fans through NFTs
Flywheel repeats
🎡 🦄 🚀
In this new world:
Brands: evolve from just seller to curator (of products, experiences, community, vibes)
Consumers: evolve from just buyer to owner / True Fan (and become evangelists, community builders, etc.)
All of this creates a community that is highly engaged with aligned incentives to help your brand grow.
The 10,000 True Fans thesis is not saying finding 10,000 true fans is the end all, be all. At heart it’s about experimenting with and enabling user-owned brands.
Finding your 10,000 True Fans is merely the first step.
GM 🌞
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[40] 10,000 True Fans
Learned a ton! Super concise and well written primer on Web3 growth. A must read for those looking to understand how to apply growth tactics to a decentralized world.
Great read - thanks for sharing. The thesis is well stated. How brands can create meaningful community events that can be rewarded is the next big wave of web3.