By Chris Christoff, co-founder of MonsterInsights
Passive income is when you bring in revenue without having to constantly monitor or maintain the work. People assume that because you’re getting paid while doing nothing, it can’t be that difficult to set up this stream of income. But this couldn’t be further from the truth. If you want the numbers, you have to do your research and commit to putting in lots of work upfront.
There are many ways to earn passive income:
- Create an online course.
- Invest in stocks.
- Create an app.
- Leverage affiliate marketing.
- Sell an ebook.
- Buy an existing blog.
- Start a blog.
- Sell a product with staying power.
The best type of products for creating passive income are those that offer value for an extended amount of time. If your products are only relevant for that season or year, eventually interest will wane and sales will decline.
When done right, passive income can really boost your earnings. If you’re a business owner looking for ways to earn passive income this year, here are three tips to help you get started.
1. Build a relationship first.
In an ideal world, you would create a product, set it up for sale and watch the profits trickle in. But no one is going to invest in you or your product if they don’t care about your brand. How can you get people to care about your business? You invest in them first by building positive, trustworthy relationships.
It’s rare that someone will hear about a product and have the urge to make an immediate purchase. Interest builds over time. If you take the time to acquire visitors who will eventually turn into paying customers, it will pay off in the end. According to the Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. So, it’s important to acquire the right customers from the start.
Show potential customers the value you have to offer them. Create a lead magnet -- a freebie in return for a customer’s information -- to start a relationship between business and consumer. By giving them something valuable for free, you’re showing them you’re a business that’s reliable, honest and willing to help.
2. Cater to consumer needs.
You can’t create a product of value without keeping your customers in mind. The great thing about just starting out on your passive income journey is that, with a small consumer base, you’re able to personalize your approach and speak to them directly. In an intimate setting, you can grow a list of visitors who feel connected to your brand and want to learn more.
So, how can you best cater to your audience? Find out as much as you can about them, then take that research and tailor your products to their needs.
Create buyer personas, or profiles of ideal customers who you believe would best benefit from your business. If you have existing customers, use the information you already have about them to map out your personas and survey them to get to know them even better. You can also look at the consumer bases of businesses similar to yours. Buyer personas should include relevant information about your audiences such as demographics, interests, location, shopping behaviors, needs, goals and more.
3. Be patient, but persistent.
People assume that because passive income pays you while you sleep, you don’t have to put as much hard work or effort into it. This is wrong. If you want your products to continue bringing you passive income, you have to be willing to put in the time.
Don’t expect money to start rolling in the second you start your passive income journey. It will either take time or money in the beginning to create something of value that people want to invest in.
By remaining patient and persistent in your endeavor to earn passive income, you’ll end up creating products consumers love because you put thought into what you created. The process doesn’t happen overnight, so don’t be too hard on yourself if your journey takes longer than you anticipated.
Passive income can be a great way to keep cash flow to the bank as you sleep. While it sounds efficient, it’s important to remember that it still requires work, time and sometimes money upfront. No income stream is completely passive and there are a lot of different ways to go about making money through this method. As long as you know your audience, give them what they want and persist, you will see the funds roll in.
Chris Christoff is the co-founder of MonsterInsights, the leading WordPress plugin for Google Analytics.