PDF Summary:Oversubscribed, by Daniel Priestley

Serial entrepreneur Daniel Priestley begins his business guide Oversubscribed with an unusual premise: Get more people interested in your product or service than you could possibly serve, and don’t start selling it until that happens. In this guide, we’ll discuss why and how you should build this extreme level of demand for your products before starting to sell them. Then, we’ll explore Priestley’s suggestions about how to run a successful marketing campaign.

Our commentary will expand on Priestley’s ideas by comparing and contrasting them with the ideas in other influential business books, such as Seth Godin’s Purple Cow and Salim Ismail’s Exponential Organizations. We’ll also provide some actionable ideas to help you get started in the world of business, such as how to create remarkable products that will get people talking about your company.

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(Shortform note: Sometimes, making a more convenient product doesn’t require overhauling the product itself, just changing how people use it. For example, in Purple Cow, Godin explains how Schindler Elevator Corporation dominated the market by improving how people interact with elevators: Rather than simply making elevators bigger or faster, Schindler integrated a computer into its elevators that calculates the most efficient way to get all the passengers to their destinations, then tells them which elevator to take.)

Method 2: Advertise Your Company, Not Just Your Products

Almost any popular product—no matter how innovative—will soon face competition from imitators and cheap knockoffs. Therefore, you need a customer base that’s loyal to your company, not just to your products.

Priestly says that you can create a market niche and build brand loyalty by carefully designing your company’s image, and he offers a few tips for doing so.

First of all, advertise your company values. Make it clear that your company stands for a good cause and you’ll attract customers who also support that cause. For example, you could advertise that a certain percentage of your profits go toward a particular charity, or that you pay your employees well and encourage a healthy work-life balance.

Second, focus on good customer service. Remember that you’re not just making a sale, you’re building a relationship; you want repeat customers that advertise your company to their friends. Priestley suggests using customer surveys to gauge the strength of your customer service and learn what you could improve.

In Other Words: Build a Tribe

In this section, Priestley is suggesting that you create what Seth Godin calls a tribe around your new company. In Tribes, Godin explains that a tribe is a particular type of social group whose members have three things in common:

• A leader. In this case, you’re the leader—as the head of your company, you’re the one guiding the group’s interests and actions.

• A shared belief. A tribe forms around a shared belief and is motivated by that belief. This is why advertising your company values is so important: You’ll form a tribe of people who share your values and who therefore support your company as a means of promoting those values.

• Connections to the rest of the group. This should happen naturally; people who support the same company and buy the same products will discuss their shared experiences and build interpersonal relationships as a result. This is also why you want to focus on good customer service—you want the experiences people share with each other to be positive so that your company has a good reputation.

Elon Musk is an example of someone who built a tribe. In his prime, Musk had millions of fans who shared his vision of the future (the belief) and trusted him (the leader) to make that vision a reality. In fact, Musk’s tribe is so strong that he still has numerous die-hard supporters even after his recent apparent missteps with Twitter.

Drive Interest With Campaigns

We’ve covered why Priestley wants you to build more demand than you can meet and why he believes that word-of-mouth is the most effective way to do that. But how do you get enough people talking to make your business profitable?

Priestley says that running a successful business—one with more demand than supply—requires you to be a campaign manager rather than a salesperson. In other words, he suggests that you connect with large numbers of people at once through special events and mailing lists rather than trying to draw in one customer at a time like a hawker on the street.

In his book, Priestley organizes his method for running a successful marketing campaign into five phases. Here, we’ve organized Priestley’s method into five steps; the first three steps correspond with Priestley’s first three phases. We’ve broken Priestley’s fourth phase (“Sales Follow-Through”) into Steps 4 and 5 to distinguish between selling products (Step 4) and delivering them (Step 5). We’ve also incorporated ideas from Priestley’s fifth phase (“Celebrate and Innovate”) into Step 5.

Step 1: Determine Your Supply

Before you even begin your campaign, Priestley says that you need to figure out exactly how much supply you have—in other words, how many customers you can serve and how often. Only once you know your business’s capacity can you start making plans to exceed it.

Your answer to this question will largely depend on your business model. For example, if you’re selling handmade clothing, you might only be able to fill a couple of orders each month. On the other hand, if you’re opening a family restaurant, you can serve dozens of customers every day.

(Shortform note: When determining your supply (in other words, your business capacity) make sure you’re taking human limitations into account. For instance, if your planned capacity requires you or your employees to work 60 hours a week, you’re probably being overambitious; you’ll soon find your employees suffering from overwork and fatigue. On a similar note, don’t plan your capacity around everything going perfectly—you’re bound to encounter problems and mistakes, so make sure you’ve left yourself a comfortable buffer rather than assuming you’ll reach your maximum possible production every day.)

Step 2: Prime the Market

Now that you know what you’re selling and how much of it you have, you need to know who you’re selling to. What kind of people would you enjoy working with? Would those people want what you’re selling? Can they pay your prices?

For example, maybe you’re offering a rideshare service that would make it easier for low-income families to get around crowded urban areas. However, if you have to charge more than those families can afford, that won’t be a good market for you—you might be better off branding it as a luxury service and targeting a higher income bracket instead.

(Shortform note: When selecting your target market, it’s crucial to research that market instead of making assumptions about it. For example, demographics like the average age and gender of your target market can be just as important as that market’s average income—every piece of information you collect helps you understand what your future customers want and need and how much they’re willing to pay for a product.)

Once you know who your target audience is, let those people know what you’re selling and get them interested in buying from you. Communication is the key here: Priestley says you need to send very clear messages about what you’re offering and why people should want it, as well as providing a way for people to clearly express their interest.

Priestley suggests sending regular newsletters with information about your products and services, upcoming sales and special events, and what you’re working on next. This will help keep your company on people’s minds, and people who sign up for your newsletter are indicating interest in your company.

Aside from a general newsletter, you might offer customers subscriptions for updates about specific products. This maintains the relationship between your business and your customers and also provides a way for customers to show you what they’re interested in—the products that get the most subscriptions are the ones that you should focus on.

(Shortform note: In addition to educating people about your company and your products and helping you gauge people’s interest, newsletters and mailing list subscriptions can help foster a sense of community between your company and your customers—remember the importance of building brand loyalty, which we discussed earlier. For example, you can highlight individual employees, share and celebrate your successes with your customers, and publish personal statements to apologize for missteps or clear up misunderstandings.)

Step 3: Reach Critical Mass

As previously noted, the core concept of Oversubscribed is that you should have more demand than you can fulfill; now Priestley clarifies exactly how much interest you should have in your products before you start selling.

Priestley sets three different goals and says that if you’re meeting at least one of them, you’re in good shape to bring your product to market.

1) If people express strong interest, sell when there’s five times as much engagement as there is product. Strong interest means a nearly-guaranteed sale, such as preorders and people putting down deposits for your product. So, for example, if you can sell to 10 people at a time and you have 50 preorders, you’ve met this goal.

2) If people express moderate interest, sell when there’s 10 times as much engagement as there is product. Moderate interest means that people have gone out of their way to learn about your product and express interest in buying it, such as going to an event or signing up for a mailing list. Again, if you can handle 10 customers at a time, you’ll meet this goal once you get 100 people at this level of engagement.

3) If people express mild interest, sell when there’s 100 times as much engagement as there is product. Mild interest suggests that people are curious about your product but not yet invested in it. People at this level of engagement might click on an ad, watch a short video, or download information from your company’s website. If you’re looking to sell to 10 customers at once, you’ll want at least 1,000 people at this level of engagement before moving to the next step of your campaign—making the sale.

Save Time and Trouble With Crowdfunding

It can be hard to gauge exactly how much interest there is in a product, which may make it hard to apply Priestley’s advice on determining when to start selling. Fortunately, crowdfunding sites like Kickstarter can help you manage this step and the next one (making the sale) simultaneously. Instead of advertising a product, building people’s interest in it, then moving on to sales, you can advertise, know exactly how many people are interested in your product, and make sales at the same time with a preorder campaign.

As Salim Ismail explains in Exponential Organizations, crowdfunding has other benefits too: Most notably, seeing how many people fund or preorder your product provides valuable market research about what people are (or aren’t) interested in. Also, if your campaign doesn’t perform as well as you hoped, you can cancel it at minimal cost to yourself—you’re only losing the money you spent on advertising—and no cost to your customers, which will help them to keep a positive view of your company.

Step 4: Make the Sales

Once you’ve got enough engagement to be confident that your product will succeed, it’s time to actually make the sales. This should be the most straightforward step of the whole process—people are already interested in your company and educated about your product, so at this point, a simple conversation with the customer is all you need.

(Shortform note: Priestley talks at length about having sales conversations with your customers, but that's not always necessary, or even practical. If you provide a relatively inexpensive product or provide a product to many people, then there's no reason to have individual sales conversations with all of them—just let the customers make their purchases and move on. In that case, automating your sales process with tools like chatbots, automated mailing lists, and FAQs will be a much more effective use of your time.)

Despite this step’s simplicity, Priestley says that this is where a lot of new companies stumble. People often feel uncomfortable asking for customers’ personal information and money, so they waste time with small talk and fail to actually close the deal.

Just remember: If you’re having a sales conversation with someone, it’s because that person has already expressed interest in buying your product. In other words, you and the customer both know that the purpose of the conversation is to collect information and money, so there’s no reason to feel uncomfortable about it—you can get through this step easily and confidently.

How to Have a Sales Conversation

Sometimes, people feel uncomfortable leading sales conversations because they’re simply unpracticed or unsure of what they’re doing. If this is something you struggle with, here are a few tips to make sure you’re prepared.

First, be knowledgeable and confident about your company and your product. Project an air that you know what you’re talking about, that this customer will want this product, and that you’re not just trying to make a sale by any means necessary. Uncertainty and desperation will drive customers away.

Second, make sure it’s an actual conversation—in other words, that you’re having a back-and-forth discussion to learn what your customer needs and explain how your product will meet that need. Make sure you’re not just interrogating the client, but also make sure the customer isn’t leading the conversation the entire time; after all, you’re supposed to be the expert.

In short, any successful sales conversation starts with trust: The customer has to trust that you know what you’re talking about, that you’re not trying to scam or cheat them, and that your product will perform as advertised.

Step 5: Keep People Talking

Your work isn’t done just because you’ve made the sales. When fulfilling orders, Priestley suggests giving your customers more than you promised. Exceeding your clients’ expectations will excite them and get them talking about your company, making it so the end of one marketing campaign is also the start of the next one. For example, you might include a free sample of another product you sell or send your customers thank-you notes and small gifts.

Note that exceeding expectations doesn’t mean you have to work harder or strain your resources; you can accomplish the same thing by setting customer expectations a little lower at the start. For instance, if you’re prepared to deliver your product in one month, you might tell your clients that they’ll have it in two months—they’ll be very happy when they get it earlier than expected.

(Shortform note: “Underpromise and overdeliver” is popular business advice, but some research suggests that it might not be as helpful as people think. A behavioral study found that, although people were indeed disappointed when others failed to uphold their promises, exceeding those promises didn’t make the test subjects any happier. In short, this study suggests that the best approach is to make the most appealing promises you can live up to—that way, you’ll attract as many customers as possible and those customers will be satisfied with your company.)

Finally, when you start your next advertising campaign, make sure to broadcast how successful your business already is. Remember: Demand breeds demand, and people want what’s hard to get.

(Shortform note: Although Priestley is arguably correct that people will be more likely to support a company that’s already proven itself to be successful, make sure to stay humble in your advertising—an arrogant tone could drive away potential customers. In other words, celebrate your victories instead of gloating about them, and make sure to acknowledge that your success is due to your customers, not due to your own “greatness.”)