Online businesses can scale faster by launching an NFT membership
By
Hellfire Jack
Hellfire Jack,
Aug 1, 2023
Let’s do a thought experiment.
Say you run a hypothetical online male oriented supplement company called “Supp Bro”. I know, it’s genius and therefore probably already exists. But let’s keep this hypothetical.
Disclaimer: Supp Bro is a made up company for this thought experiment. We are not referring to any particular supplement companies that may have this name or similar.
The plight of Supp Bro is a common one, and pretty standard across most ecommerce companies. Especially those with a physical product.
But what if there was a way to generate a greater monthly revenue, while also kickstarting the scaling process and growing your brand?
If you think it sounds like a fairy tale, let me pile on the fantasy talk for you: It can happen using NFTs.
Before you dismiss me as a paid mercenary of Gary Vee, let’s look at a hypothetical case where leveraging NFTs could work.
Step 1: Find the Demand
A great way to build an NFT playbook is to find your power user. These are the guys/gals doing more than everyone else with your product.
Many businesses may know them already, and finding them can happen in many ways. But one useful trick is to ask the question: in what areas of my business do I see demand outpacing supply, and what does that tell me?
Assume Supp Bro sells a variety of manly goods, but its greatest seller is
Chad Cola:
A pre, during, and post workout beverage with focus boosting, muscle building, ab shredding, babe snagging, and bedroom stamina surging abilities.
Understandably, Chad Cola is one of the highest demanded items that Supp Bro has. It’s always sold out and it has the most bulk ordering of any product for sale.
Because of high demand, we can assume that people would be willing to pay a premium to get early access to a drop. Of course, different customers are likely to have a different number for that premium, but there is usually a customer profile that’s the sweet spot.
Step 2: Identify the Power User
You decide to run a test by doing a waitlist for the next Chad Cola drop. Those who apply can get in ahead of time.
There’s limited access. About 200 slots available. To be placed on the list you must fill out a questionnaire.
It gathers info about the purchaser, the quantity they would buy, and how much premium they are willing to pay.
The slots get filled quickly; and what you find is interesting. The bulk purchasing is happening from college age individuals.
After a bit of internet snooping (there are community forums where people discuss your product after all!) you discover just why the bulk orders are happening.
The group of heaviest Chad Cola buyers are rich frat kids that have been reselling it at events. (It also turns out they’ve been using it as a drink mixer but let’s not get into that..)
Step 3: Create a Platform for the Power User
Believe it or not the findings made are quite useful. You know that someone else has been profiting off your product and they also know the identity of this target audience.
While the old school way of thinking would be to lay the legal smackdown on this behavior, by leveraging NFTs Supp Bro can actually benefit from this.
You run some numbers and conclude that the resellers are making around $100 profit per case resold and the most common case amount requested is 20. That would be $2000 per customer.
You could raise prices, but that would price out the rest of the customer base who aren’t reselling. Ultimately Supp Bro still wants more customers to grow the brand. In a way, the resellers themselves are actually helping with this.
Instead you decide to do something different and release 150 NFT membership passes at $1500 a pass called The Plug Pass, and brand it toward Supp Bro redistributors.
This NFT membership would let resellers get on the Supp Bro site, be able to access Chad Cola drops early, make discounted bulk purchases (with a limit). As they purchase they get to influence new flavor releases and certain product decisions. They even get merchandise at a discounted price. They could also be seen as a verified seller on your site and send traffic your way for an affiliate return.
This return could even be a greater discount on their bulk purchases, would keep value locked on Supp Bro’s platform but increase margins.
Due to it being an NFT, anyone can resell their membership pass at any time, and Supp Bro would take a 10% transaction fee when they do.
Step 4: Plan for the long term value
Why should Supp Bro do this? Because you realize that you can use this situation to grow the brand and generate up front cash to re-invest while subsidizing outreach.
The price point itself was determined since the resellers on average make $2000 on a bulk buy (direct sale).
Running a demand test early allows us to have conviction that selling only 150 passes will have high likelihood that the passes will have excess demand for that price point.
The goal here is to generate high demand on sale and secondary market activity so your market maintains liquidity.
But the initial sale is only a starting point, we want to continually provide value for the pass holders and by doing so naturally increase the demand for their NFT membership price on the secondary market.
Currently this is achieved by:
1. Setting the price at a point where the first bulk buy would pay for the pass with some bonus
2. Including bulk purchases but other benefits, such as discounted merchandise (which can also be resold)
3. Affiliate traffic returns. This gives even more brand spread alongside even more lock in from the redistributors.
Reality is that this is just the tip of the iceberg, and you can likely utilize far more techniques to scale with your membership pass and release more passes in the future.
We will go into these techniques in later posts.
But what’s important to recognize the following:
1. On your membership pass sale alone, Supp Bro can receive $225k revenue and begin reinvesting in growth immediately. Whereas before they would have either needed to wait to scale or seek external financing.
2. This technique turns your power user into a marketing arm/evangelist of your product. So you get a marketing multiplier.
3. You’ve opened up the opportunity for a new income stream as you continue to release pass sales (balancing for demand) and gain revenue from secondary transactions.
All in all not a bad play bro.
Let’s do a thought experiment.
Say you run a hypothetical online male oriented supplement company called “Supp Bro”. I know, it’s genius and therefore probably already exists. But let’s keep this hypothetical.
Disclaimer: Supp Bro is a made up company for this thought experiment. We are not referring to any particular supplement companies that may have this name or similar.
The plight of Supp Bro is a common one, and pretty standard across most ecommerce companies. Especially those with a physical product.
But what if there was a way to generate a greater monthly revenue, while also kickstarting the scaling process and growing your brand?
If you think it sounds like a fairy tale, let me pile on the fantasy talk for you: It can happen using NFTs.
Before you dismiss me as a paid mercenary of Gary Vee, let’s look at a hypothetical case where leveraging NFTs could work.
Step 1: Find the Demand
A great way to build an NFT playbook is to find your power user. These are the guys/gals doing more than everyone else with your product.
Many businesses may know them already, and finding them can happen in many ways. But one useful trick is to ask the question: in what areas of my business do I see demand outpacing supply, and what does that tell me?
Assume Supp Bro sells a variety of manly goods, but its greatest seller is
Chad Cola:
A pre, during, and post workout beverage with focus boosting, muscle building, ab shredding, babe snagging, and bedroom stamina surging abilities.
Understandably, Chad Cola is one of the highest demanded items that Supp Bro has. It’s always sold out and it has the most bulk ordering of any product for sale.
Because of high demand, we can assume that people would be willing to pay a premium to get early access to a drop. Of course, different customers are likely to have a different number for that premium, but there is usually a customer profile that’s the sweet spot.
Step 2: Identify the Power User
You decide to run a test by doing a waitlist for the next Chad Cola drop. Those who apply can get in ahead of time.
There’s limited access. About 200 slots available. To be placed on the list you must fill out a questionnaire.
It gathers info about the purchaser, the quantity they would buy, and how much premium they are willing to pay.
The slots get filled quickly; and what you find is interesting. The bulk purchasing is happening from college age individuals.
After a bit of internet snooping (there are community forums where people discuss your product after all!) you discover just why the bulk orders are happening.
The group of heaviest Chad Cola buyers are rich frat kids that have been reselling it at events. (It also turns out they’ve been using it as a drink mixer but let’s not get into that..)
Step 3: Create a Platform for the Power User
Believe it or not the findings made are quite useful. You know that someone else has been profiting off your product and they also know the identity of this target audience.
While the old school way of thinking would be to lay the legal smackdown on this behavior, by leveraging NFTs Supp Bro can actually benefit from this.
You run some numbers and conclude that the resellers are making around $100 profit per case resold and the most common case amount requested is 20. That would be $2000 per customer.
You could raise prices, but that would price out the rest of the customer base who aren’t reselling. Ultimately Supp Bro still wants more customers to grow the brand. In a way, the resellers themselves are actually helping with this.
Instead you decide to do something different and release 150 NFT membership passes at $1500 a pass called The Plug Pass, and brand it toward Supp Bro redistributors.
This NFT membership would let resellers get on the Supp Bro site, be able to access Chad Cola drops early, make discounted bulk purchases (with a limit). As they purchase they get to influence new flavor releases and certain product decisions. They even get merchandise at a discounted price. They could also be seen as a verified seller on your site and send traffic your way for an affiliate return.
This return could even be a greater discount on their bulk purchases, would keep value locked on Supp Bro’s platform but increase margins.
Due to it being an NFT, anyone can resell their membership pass at any time, and Supp Bro would take a 10% transaction fee when they do.
Step 4: Plan for the long term value
Why should Supp Bro do this? Because you realize that you can use this situation to grow the brand and generate up front cash to re-invest while subsidizing outreach.
The price point itself was determined since the resellers on average make $2000 on a bulk buy (direct sale).
Running a demand test early allows us to have conviction that selling only 150 passes will have high likelihood that the passes will have excess demand for that price point.
The goal here is to generate high demand on sale and secondary market activity so your market maintains liquidity.
But the initial sale is only a starting point, we want to continually provide value for the pass holders and by doing so naturally increase the demand for their NFT membership price on the secondary market.
Currently this is achieved by:
1. Setting the price at a point where the first bulk buy would pay for the pass with some bonus
2. Including bulk purchases but other benefits, such as discounted merchandise (which can also be resold)
3. Affiliate traffic returns. This gives even more brand spread alongside even more lock in from the redistributors.
Reality is that this is just the tip of the iceberg, and you can likely utilize far more techniques to scale with your membership pass and release more passes in the future.
We will go into these techniques in later posts.
But what’s important to recognize the following:
1. On your membership pass sale alone, Supp Bro can receive $225k revenue and begin reinvesting in growth immediately. Whereas before they would have either needed to wait to scale or seek external financing.
2. This technique turns your power user into a marketing arm/evangelist of your product. So you get a marketing multiplier.
3. You’ve opened up the opportunity for a new income stream as you continue to release pass sales (balancing for demand) and gain revenue from secondary transactions.
All in all not a bad play bro.