A Letter to Influencers: Take your Money Back

Dear Influencers,

This letter is on behalf of private-labeling companies everywhere and is one of great encouragement. We commend you and your ability to create a following, to get people to want to hear from you is every marketers dream as well as every companies mission, well done! Some of you have even been able to monetize your following by collaborating with companies who offer products and/or services that are relevant to your audience, again well fucking done. BUT, you’re leaving money on the table. You’re missing out on some big daddy bucks and leaving them with the companies who are leveraging your audience to fatten their pockets instead of yours. Yes, they seem happy to pay you (minimal) money for your services, because it represents such a small percentage of the money that you are making them. The rest of this article is about how to take that money back (through private labelling) and details why you need to cut the middle man out.

What is Private-Labelling?

Private labelling is selling products one business manufactures, under another business’s or individuals’ brand, like your own. It’s an easy way for influencers (like yourself) to tap into manufacturing companies core competency and expertise to sell products branded by you or your business, completely removing the overhead and headache that comes with operating a manufacturing facility. Everyone is doing it, companies like Nike, Amazon, The Honest Company, and your grandma. What do they know that you don’t… keep reading.

Why Private-Label?

Aside from me telling you to do so, here are some cold and hard facts about why you need to get your head in the game:

- 7 out of 10 millennials’ buying decisions are based on peer recommendations while only 3% of consumers buy products because of a celebrity endorsement.

- To reiterate, people WANT your products; in their annual consumer survey ‘Power of Private Brands’ from earlier this year, FMI and IRI found that 60% of shoppers said it was very, or somewhat, important for a retailer to have a good assortment of private brands

- Your following (Instagram & YouTube users) enjoy seeing posts of products. According to L2 research, 69% of top performing Instagram posts feature products. In fact, product posts beat out even lifestyle posts or image/video posts from celebrities.

- When a user sees a post from a person rather than a brand they are 4.5x more likely to convert.

- Influencer marketing has on average a 2.5% conversion rate, and beats out Google on 3 of 4 key metrics, see graph below:

If these facts haven’t buttered you up, then let’s get down to business and talk about the goods, money. Below is a high-level example of what you can hope to achieve with your private label business. Because I work for a cosmetic/personal care private label and contract manufacturing business, I’m going to base my hypothetical example around these types of products.

Use Case

Take Brianna for example (yes, I used my fiancé's name, and yes, I’ve recently become engaged, I don’t know how it happened, but it did), she has a thriving social media presence that mostly consists of fashion, makeup and her almost unbelievably awesome life. Her platforms of choice are Instagram and YouTube, but we’ll focus on Instagram for the sake of this example. Her Instagram following is hovering around 200,000 people and she’s done multiple brand tie-ups with cosmetic and fashion brands. She noticed that her posts about cosmetics performed the best and that got her thinking… what if I create a line of personal care products? After doing a ton of research she landed on Petra Soap as the partner to help make her products. (Because she spent so much time researching, you don’t have to, you can simply click here to learn more.)

After our initial talks with Brianna, we landed on creating an all-natural, paraben free, sulfate-free line that consisted of a body lotion, lip balm, and hand cream. Below are her all in costs for these items (bottle, label, and formula) as well as the retail price she decided for her higher-end following and products:

If Brianna were to sell any of these items, her Gross Profit Margin; the % of money she would be left with after considering the costs from the manufacturer would be:

Pretty healthy margins. Brianna was starting to see why these brands are okay with spending so much on their influencer marketing budgets. So, she spent the weekend building a website to facilitate the selling of these items and used Fiverr to help with some of the setup needs that she wasn’t competent at. She decided to post once a week about her new offering. To help get her following excited about her new venture, she offered a 15% off discount code. After a month of selling (and using the average conversion metric mentioned above of 2.55%) she realized the following results:

After one month of selling Brianna has earned $22,000+ in profits! And she immediately quit her day job. The reason we can’t stress the use of private-labelling enough to influencers is because you’ve already done the hardest part, you’ve built a willing and listening audience. But before you pick up the phone to call me 1–800–463–2516 ext.220 to get your products made, it’s worth mentioning that there are some hard costs to getting this going. Most manufacturers will require you to pay for your products in full before they’re shipped to you and every manufacturer will have a different minimum order quantity they’ll require of you. For Petra, it’s 500 pieces. So we’ll use that and Brianna’s line as the example.

You’re all in cost to get a project going is $5,500. $5500 for your chance to make more than $20,000 per month, seems like a no-brainer to me.

Obviously, any business venture won’t be as simple as me writing this article, but it goes without saying that this is an underutilized revenue opportunity for a lot of Influencers out there.

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