How to Develop Residual Income in a Sustainable & Scalable Business With David Perdew

The one thing that I’m going to promise people today is by the time
they finish this segment, they will know exactly how to create a
sustainable and scalable business with residual income.
First off, I’m going to use “passive” and “residual” income
interchangeably here, and the reason is that there’s kind of a
stigma with “passive income”.  People think that’s
kind of “get rich quick”.  “Residual income” seems to be from
working once and getting paid forever.  That’s what I
like.  Do the work once and get paid forever.  I have
experience with the big telecom companies, as a consultant, and
they are basically the biggest membership sites in the world. 
They know that you get a subscription every month to your phone
bill, and they get a monthly contract from you, and it’s a
subscription model membership site. What they’ve done is, they’ve
actually been just the masters of creating monthly, residual
income.  Now, when you start residual income, you can build on
it every month because you know what’s coming in
automatically.  That’s the way businesses grow, every
business. The PIE Test - Passive Income Evaluation Test You know, I
was a systems guy.  I like to build systems, and that’s
processes as well.  So, I developed my own little system
called the PIE test.  [bctt tweet="The PIE test is the
“Passive Income Evaluation” test. "
username="danielhall"]It’s easy to remember, PIE
test.  We all want a piece of that pie, right?
There are five steps to the PIE test: The
first one is “lifetime database referral”.  That’s my
own term for commissions that you get paid over and over.
The second step is “plenty of products”.  You
want to make sure that you’re working with people who have plenty
of products. The third is very high-quality
products. Because, it’s your reputation no matter if
you own the product or not. The fourth is “great product
sales funnels”.  Is it a “one-hit wonder” kind of
sales funnel or is it something that gives an opportunity to buy
more and more? The fifth thing, and this
is the biggie that I think a lot of people will bypass, is to “know
your numbers”. If you know your numbers, you have a
pathway to scalability.  That’s incredibly important. Step # 1
- Lifetime Database Referrals Step 1 is “lifetime database
referrals”.  A lot of people would call that lifetime
commissions.  It’s very tricky, when you’re doing
online business, because in the online business world people talk
about lifetime cookies.  Lifetime cookies are completely
different.  Anything that is a “cookie” goes
away.  A cookie is a technical term for a little
piece of code that goes on your computer when you are referred by
somebody else in affiliate marketing.  Sometimes those
cookies are set for 30 days, sometimes 90 days, and sometimes
“lifetime”.  Everybody thinks, “Ooh, lifetime
cookies!  Those are awesome!”  And, they are awesome;
they are pretty good.  They’re my second choice. My
first choice is “hardcoded in the software” because if you can get
hooked up with the people that are hardcoded in the software to
your referral, then you’re going to get a commission on anything
that they purchase in the future.  That’s what I
like. You know who I learned this from?  It was insurance
agents.  Insurance agents, when they make a sale, like a life
insurance policy or a medical insurance policy, they make a sale on
the first policy and then they sell you additional policies. 
You’re already in the system, and they get commissions on your
insurance forever.  So, you know, that is real passive income,
and that’s why this is such a good business model.  It’s kind
of boring.  I never thought that I’d want to be an insurance
agent, but man, it’s a great business model because it’s passive
income and it builds cumulatively. This isn’t just about affiliate
marketing.  You can do this with your own products in your
system so that other people promote you, which is what we’ve
done.  Affiliate marketing is when you’re promoting
someone else’s product and you get a commission for
that.  It’s like commissioned sales except that it’s
very simple, very easy, and it’s a fast way to make money.  In
fact, I think it’s the fastest way for somebody to get
started.  If they can build a list or drive traffic, they’ll
know how to make money with this pretty quickly with affiliate
marketing. Now, the other part, the cookies versus the hard
coding on the machine, that is, in my mind…You have to get the
right software to run the system.  So, if someone
tells me they are using, for example, JV Zoo, which I love JV Zoo;
I sell on JV Zoo too, but JV Zoo is not a lifetime database
referral program.  It’s a cookie program.  If you and I
were promoting the same product, and somebody came to me and looked
at the sales page through my affiliate link and decided not to buy,
then they came through your link and looked at the sales page and
decided to buy, because you were offering a bonus, you would get
the credit for that sale.  In a hard coding situation, if they
came because I introduced them to the product and they clicked on
me first, or even last (sometimes), but whoever gets the sale is
then hard coded for all future sales. So, that’s the
difference.  It’s that first sale that gets made, but
then the future sales are yours.  One thing that you
need to understand is that people can flush their cookies off of
their machine.  So, even if you set a cookie on someone’s
computer, they can clean the cache, they could get a new computer,
etc., and your cookie is gone.  The next person that might be
promoting will then set their cookie because yours is not
there.  Another good example is that if I visit a site on my
computer and I don’t buy, but then I go to my iPad and I decide to
buy from there, it could be a completely different cookie
arrangement.  It could be a different link, right?  So, I
would still get a commission no matter where they purchase
from.  That’s the difference there. If you want to
know if you are going to get commissions, the easiest way is to
ask, but you have to be very careful because often the promoter
doesn’t know.  They’ll say, “Oh yeah, we’ve got
lifetime cookies set,” and you can say, “Well, is it lifetime
cookie or lifetime of full?”  Then, you might have stumped
them.  If they come back to you and say that it’s a lifetime
cookie, then you might need to educate them. Another way to
know is by what software they are using in their
system.  Is it aMember, or Zaxaa, or DAP, or
Infusionsoft?  These can all be set up to be lifetime
referrals.  Then you have to just ask questions about that.
Step # 2 - Plenty of Products I know now that someone has
lifetime referrals.  The next thing I ask is, “How
many products do you have in your system?”  If I’m
getting lifetime referrals for one product in your system, I’ve
already sold that and I’m not going to get any more money. However,
if someone has dozens and dozens of products, let’s say, you’re
going to get a commission on all of those, and I would be very
excited about that.  Then you’ll know that whatever you
promote, you’re going to get some money out of it.  That’s
what happens with lifetime referral programs.  I get a lot of
people who say that they love to promote our stuff because they
know when I send an email, they get money.  That’s the way
that works. I also promote things that don’t have any cookies to
them because I like to have a base income, but I also like to get
peaks on good stuff.  We can do that.  In the
kind of business that we’re in, we can identify products that we
like to promote because it fits a niche in our system, it fills a
training hole for us, or because it’s just a really good product
and it converts really well. Lifetime Referral Programs
Yeah, this is really hard to find.  Like I said, anybody that
has an aMember system set up is usually using that.  It takes
a little bit of investigation to find those people.  So, those
kinds of programs, you have to start asking around and just learn
who they are. Now, one of the other things that you want to find is
tools. I like tools a lot because tools will give you lifetime
referrals. For example, AWeber; you get lifetime referrals for
AWeber.  Anybody that buys into that system, you get the
commissions forever.  Zaxaa is one.  Zaxaa is a really
good commission system.   You get people into
that point system, and it’s a very good point system, and you get a
lifetime commission from that.  So, those are
examples. Step # 3 - High Quality Products The third step in my
system here, in the PIE test, is very high-quality products. 
Very low-quality products do not convert, and if they do, you get a
lot of refunds on them. [bctt tweet="The key to knowing if you
should deal with somebody is by asking them about their refund
rate." username="danielhall"]The refund rate, if it’s less than 5%,
I’m interested.  If it’s over 10%, I’m not interested
because I don’t want to deal with refunds.  It’s my reputation
on the line.  You have to be very careful about that.
My definition of a great product is that it solves a real
problem that isn’t going away.  I love evergreen
solutions.  If a product is out there that’s more of a
solution to a fad, I’m not interested.  If it’s a solution to
a problem that is going to be around for a while, and a lot of
people have expressed interest in it, that’s the kind of product,
to me, that has legs. Step # 4 - Great Product Sales Funnels The
next step is to have a great product sales funnel.  That means
that the front-end converts really well, but that there is
something on the back-end as well.  If I’m sending someone to
a $17 product, or a $27 product, or a $5 product, or whatever it
is, that’s only the first step of the process of getting people
into that system.  A great sales funnel is something
that has upsells, downsells, cross-sales, long-term sales,
automated sales, and all of those kinds of things. 
So, I want to know what the sales process is with the people that I
deal with, just as I want them to understand out sales processes
when we put our products out there. There’s this seven-upsell
syndrome, which I think is just insane because it wears people out
before they get to the end of it. B the other thing that makes
people really angry about upsells, and downsells, and all of that,
is that they’re not related.  If they’re not related,
people are just going to think you’re stupid because, you know,
you’re just trying to extract money any way you can. 
If I buy a course on how to do webinars, and you try to sell me on,
I don’t know, “how to create PLR,” that’s not related.  Why
would I even think that you know what you’re doing?  So, it’s
not a good thing. Before we get to the next step, I want to give
you a quick example.  We had somebody come into our system who
loved the lifetime referral process and saw the benefit of all the
products that we had, and they drove in 2,500 people into a free
opt-in product, just to get them into the system.  But, then
they said ROI… the short-term solution was not good enough to
continue promoting. Well, that 2,500 people, over 18 months,
because of our upsells, because of our promotions, and because of
our product line, turned into $14,000 in commissions for
them.  So, they didn’t do anything else, 18 months,
$14,000.  Not a bad deal, right?  That’s a great little
income stream.  If you have the right things in place, this
becomes a stream of income for people. Step # 5 - Know Your
Numbers The last thing is “know your numbers”.  I
love numbers.  Numbers are what we do.  Once you get your
products created, it’s all about numbers after that. 
It’s…“How do I improve conversions?  How do I improve the size
of my list?  How do I create sales copy that goes from 1% to
2% on the conversion trail?  How do I add customer value,
taking it from $10 to $50?”  It’s all numbers at that
point, and the only way to do that is to stay in the numbers and
have tracking systems in place so that you can see your numbers on
the back-end.  Luckily, almost every cart system out there
these days gives you a really good tracking system. 
You just have to be willing to dig into them and understand them.
Now, if you’re working with somebody else,I want numbers of
those people that I’m promoting.  I want to know what
those conversion numbers are.  I want to know which piece of
the funnel converts best.  I’m working with a guy right now to
do some product launches, and the very first time that I promoted
his product, a third of my income, on a pretty good launch, came
from the front end.  Sixty percent came on the back end. 
That’s a good number.  I loved that.  So, knowing that
there’s more money on the back-end, and being able to point out the
numbers that actually give you those indicators, is good
information to have.  You’ve got to ask for it. Final Tips on
Developing Residual Income I think we’ve covered the formula. 
Coming back to our promise in the beginning, if you create
one stream of income, and you’ve got it working for you, you’ve
tweaked it out so that your conversions are just about maxed out to
what you can get for this income stream, the next thing you do is
you create another income stream.  And so, it starts
stacking.  I’m doing this all of the time, and a lot of the
most successful marketers online are doing this.  Nobody goes
back to the well every day and creates the wheel over and
over.  Boy, I’ve mixed all of my metaphors up, but nobody
creates the wheel over and over again every day, right?  You
just don’t do it. Connecting With David Well, you know, I’m talking
about how to create passive income streams here today, and I
actually have something for you.  It’s basically our $197
program that we have called “Found Money: Creating Passive Income
Streams”.  It’s a three-part, four-hour video passive income
course, and it’s an in-depth look at three websites that drip
passive income daily.  I mean, we went out and did some case
studies with this and really took a look at some websites that are
doing a good job with this. We’ve got a checklist for adding
passive income to your site, and we’ve got video presentations for
all of this, we’ve got MP3 audio downloads and PDFs of the
presentations.  It’s just a really robust course.  If
people go to NAMS.WS/Hall they are going to get this $197 for
$17.  It’s almost a four-hour course for people on how to
build these streams of income.  We go through all five of
these and show you which niches to look at and how to find people,
and exactly which processes, which products, which platforms to
focus on. Resources David's Program: Found
Money: Creating Passive Income Streams Lifetime
Referral Tools: aMember AWeber Zaxaa Real
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