How Direct Sales is Making the Novelist's Dilemma More Apparent

Novelists struggle to increase this important direct sales metric

I was browsing Tumblr this morning and I found an old gem from 2018 courtesy of Steph Pajonas (cannot believe you were at this event!)

Not a surprise, now Steph is a friend, has several amazing businesses going, and is speaking at the Future of Publishing Mastermind! (Our upcoming conference.)

I digress. What I really wanted to talk about is something that is coming up around direct sales for me. It is something I spoke about for the first time when this picture was taken, back in 2018 at the Sell More Books Show Summit!

It’s called the Novelist's Dilemma. And it's going to become a more prominent topic as the industry gets excited about direct sales!

Back then, I predicted that direct sales would be more prominent in fiction in five years. It's 2023, so we're pretty much on track.

What is the Novelist's Dilemma?

It's the idea that we simply don't have enough to sell to our readers.

Let's say you have 25 books. You are offering an ebook bundle of 8-10 books at a good discount through your web store. You make $20-30 from this bundle.

But what next? You have maybe another bundle, maybe a second small bundle, to sell to this customer that you just gained.

Let's assume they expect a deal again. So now you're getting about $50 total from this customer.

And then what??? That customer has your entire catalog. They will maybe buy your next release at $5, but then what??? They will maybe buy their favorite book in paperback (which is not that profitable for you to sell) or audiobook, but then what??? Maybe they will buy some merch from you (also not very profitable), but then what???

The lifetime value (LTV) of your customer is still max ~$50-75 if you stick to mostly profitable digital items (ebooks, audiobooks), or it goes up to double that if you sell not very profitable physical goods...But all that extra money is pretty much eaten up by COGS anyway.

Fiction advertising is incredibly cheap right now. But advertising tends to get more expensive over time, as competition for the same targets takes over. What does the math look like in five years? (I can tell you what it looks like in nonfiction—$5-50 per lead acquisition, depending on what you're doing.)

The Novelist's Dilemma is that the LTV on an ebook-only catalog is not sustainable. And when you add in physical products, the profitability sinks—so you need to be careful to prioritize profitability.

Do the math for 50 books, 100 books. Your max LTV doesn't go over $200-300.

In nonfiction, the current LTV for my company is probably $10-20k, at least. Those are far easier numbers to build a direct sales business from!

The Novelist’s Dilemma isn’t actually new, and it is not just a challenge in direct sales. It was even more true on retailers. We simply couldn’t do much about it, because retailers don’t have easy ways to increase your LTV, besides giving them more $5 ebooks to sell. Hello, 70% industry-wide burnout.

A lot of what I’m seeing in direct sales right now is actually just re-creating much of the same environment we find on retailers, only the gatekeeper is Facebook advertising. The big and improved difference is getting the sale money directly in a few days from the point of purchase, and collecting the customer data.

And this still doesn’t necessarily solve the Novelist’s Dilemma. It helps, but it isn’t the full solution.

What is the Answer to the Novelist's Dilemma?

Put simply, true fandom.

Fandom is built the easiest through a few things I can think of:

1. Launch Crowdfunding - With Kickstarter, we teach how to drastically increase your $$$ per reader while still staying at 50% profit, with fiction. Instead of getting $5-10 per reader on a book launch, you can get $25-50 per reader on average. With special editions, you can do even more—$75+ per reader (though watch your profitability). And you don't necessarily have to run a Kickstarter, it's just a good way to test things. Kickstarter is really just a starting point or mechanism to think in these terms…If it’s working on Kickstarter, it makes a great ongoing offer for website sales that increase your LTV, too.

2. Subscriptions (and Memberships) - With a subscription, you are selling both content and experiences. The emphasis is very much on experiences, though—and this is useful for fandom. Same as Kickstarter, you are able to upgrade readers into higher monthly tiers, plus you are getting paid each month rather than one-time. Kickstarter is a pretty quick payout (though not easy), while subscriptions are a slow climb (and also not easy), but what I like about subscriptions is how they snowball over time into something substantial. Your tiers are also a great place to find workable ongoing offers for website sales that increase your LTV.

3. Live Events and Signings - There’s nothing more valuable than in-person, human connection right now. This is a place to build your fandom and find people who will support you at a deeper level. It builds fandom fast, and it can quickly increase your LTV, though you need critical mass for profitability.

The direct sales conversation currently focuses heavily on website sales. Website sales are fantastic, and they don’t automatically build fandom. They can be used to build fandom, just like retailers can. But they aren’t necessarily the best mechanism to do so unless you understand fandom and set your website up to focus on fandom in that way.

How To Build a Fandom

Fandom is not just about having data (though that helps!), it’s also about getting readers to make deeper investments in you and your work in four areas: time, energy, money, and physical space. The three items on this list are some of the best ways you can build a fandom through direct sales; they have natural mechanisms that help with it!

You don’t even need to fully understand the theory or concepts in this post to start developing your fandom with these three methods.

They are the solution to the Novelist’s Dilemma and have the ability to double, triple, or quadruple the LTV of your business quickly, often within a year of making a concerted effort in one of these areas. (I do not recommend attempting all three at once by any means.)

I am not an ads person or a web store optimization person—there are other amazing people for that. But I do know marketing, sales, and business, and if some of the theory around this is interesting to you in the direct sales conversation, I’ll be posting much more about this and answering a ton of questions in our new audience-requested group, Advanced Direct Sales Strategies For Authors.

Here is another photo from that weekend—such a throwback! This panel was with Lindsay, Chris, me, and Bryan. I honestly haven’t chatted with Chris in a while, as I know he pulled back from working with authors so he could enjoy his baby and his fiction writing. But it was a real honor to be on stage with these three humans.

Now it’s your turn! Tell me what you think of the Novelist’s Dilemma and if you see the challenges it points to in the direct sales conversation. Let me know in the comments!

Two Resources To Help With These Concepts

1. You asked, so we created it! We have a new free Facebook group where we’ll be posting more regularly about direct sales called Advanced Direct Sales Strategies For Authors: https://www.facebook.com/groups/167869352991047

2. We have an upcoming Kickstarter, launching November 6th, for our new book, Get Your Book Selling Direct to Readers. We are launching from a brand new Kickstarter account (with Kickstarter’s blessing) which means that if you want to be notified, you have to go and follow the project! https://www.kickstarter.com/projects/writermba/dsa