Bringing a Brick & Mortar Business Online: Next Level Guitar Case Study

Today, I want to profile how an a formerly brick and mortar business of private guitar instruction has translated into a revenue generating online business with thousands of customers. Included are key takeaways for business owners in other markets.

Years ago I noodled around with the guitar, making loud sounds, but never properly learning technique. Recently I began learning how to play guitar, and was amazed at how different the process is today than it was 20 years ago.

The Old Way

Brick & Mortar Retail

For years, private guitar instruction was offered through a local music store or from an independent instructor. Today, this would cost between $20-30 per half hour session. With that model, here are some things required from the service provider:

  • You may need to own a storefront.
  • To balance cost vs revenue, you will likely need to sell products that bring in customers and create new ones. This creates overhead, inventory capital & management expenses and perhaps the hiring of employees.
  • Likely, paid advertising in local media outlets such as newspapers or cable TV would be requires, or perhaps sponsoring the local little league team or donating instruments to the elementary school band.
  • Your potential client base is limited by the region you serve. To grow, you need to spend more time convincing people to play an instrument, or open up branches in neighboring towns.
  • Every dollar you earn, is a dollar that you need to work for, or pay an employee to work. As you scale, you must scale the amount of money you put into the business and the amount of work it takes to coordinate.
  • If a competitor opens up in town – especially a big chain like Sam Ash or Guitar Center, you could loose a sizable chunk of your business.

From the perspective of the student, there are requirements as well:

  • You need to live within proximity of the instructor.
  • Your choice of instructors is limited – you must choose someone who is close and affordable, but this might not be someone that resonates with your personality & musical style preference, or that teaches in a way that works best for you.
  • You need to account for the travel time & expense to get to each lesson.
  • You must schedule classes within the hours that the store offers lessons
  • You pay each half hour you are taught. Even at a half hour a week, this could be $100 per month.

Clearly, the old way still works. This article is not trying to do away with the old model, I am simply illustrating how it can be a single part of a larger – and more profitable – system.

The New Way

Guitar Lessons on the Web

When picking up the guitar again, I first considered following that first path – finding a local instructor in order to learn the guitar. But then, I quickly realized how highly evolved the online courses have become.

My first stop was YouTube, and I typed in something simple like “Guitar Lessons.” 433,000 results. Wow. So I started clicking on some of the videos, and found them really clear and useful. I also liked how many of the instructors were regular people like me – not some slick professional production that made me feel removed from my distant goal.

I began refining my search, using different search queries. Within an hour, I had found some instructors that I liked, and some I didn’t. It wasn’t a scientific process, I went on my gut feeling.

I had a wide range choices in instructor personality, lesson types, music types, etc. To do a comparable comparison where I live, with an in-person instructor, would have taken a lot of time, effort and money.

I began noticing that some instructors were just folks who created a few videos in their spare time as a hobby, some had created a series, and others had created many videos that were clearly part of a professional instruction course. I sampled widely here for a few days, trying out lessons from many different people.

Once I decided that I wanted to take this seriously, I began focusing on those who offered a more comprehensive program. Clearly, I preferred free lessons, and sought those out first. They were good, but oftentimes didn’t provide a 100% clear path from beginner to master. So, I began looking at paid courses.

There are many online guitar courses, I want to dive deep into the one I selected. This does not mean it’s the best – there are many other great courses out there, the one I chose simply caught my eye, resonated with in terms of style and personality, and got me to give them my credit card number. That says something.

Case Study: Earning Money Online

Some of my favorite free courses on YouTube were by David Taub, whose YouTube channel is called “rockongoodpeople.” Here are a couple sample video lessons:

It’s not long before you realize he offers a paid service though his website NextLevelGuitar.com. Here are the basics of his business model (as far as I can tell):

  1. Create educational videos.
  2. Share these videos on popular channels such as YouTube. (note: YouTube is the world’s second largest search engine!)
  3. Give it away for free.
  4. Upsell to paid products that offer more structure, more customization, or completeness. They do so by directing potential customers to NextLevelGuitar.com on their videos. Their paid products include a monthly subscription to video lessons on their website or DVD’s of the lessons.
  5. Establish a relationship with current fans and find new ones by constantly creating and sharing new videos and educational materials.
  6. Strategically create and optimize these videos based on popular search queries – things people want to see.
  7. Create a forum to further engage fans and students.
  8. He still keeps his in-person one-on-one guitar lessons going.

Let’s model out a VERY conservative look at what Next Level Guitar could be earning from these efforts. They recorded about 700 videos, and I believe they did so in their home with a regular consumer video camera and other supplies. On the low end, this is what they could be earning: $250,000 per year.  Let’s break it down:

  • $237,000 per year in monthly subscription revenue. 660 premium users were online the other night, so I just multiplied that out by $30 per month, which is what they charge. Likely, their active subscriber base is more than 660 folks, but I’m working with what I know.
  • $20,000 per year in DVD’s. This is assuming that they sell just 20 DVD packages per month at varying price points.

It should be noted that Next Level Guitar consists of only two people as far as I can tell. Likely, you can easily double or triple the amounts listed above and reasonably expect it to be more accurate. That’s about $500,000 – $750,000 per year. Keep in mind that much of this isPASSIVE income. They don’t have to sit there each day and teach you guitar, the 700 videos do that over and over again. This is what allows him to continue his in-person lessons.

So what are the benefits of a system like this? Here are some lessons that could help any brick and mortar business build their brand (and revenue streams) online:

  • Credibility
    This all started with David providing lessons locally in the traditional manner. Clearly, he is talented and a great instructor. When he moved that online, his online courses have given him national exposure and a brand that he can leverage to sustain his original business of working with students in person, and build new opportunities to expand his international brand.
  • Word of Mouth Marketing
    The web is inherently social, and when your business and products are there, online word of mouth becomes very powerful. Likewise, there are many music blogs, forums and websites that review Next Level Guitar and discuss the pros and cons.
  • Free Advertising
    When you search on ‘Next Level Guitar’ within Google, you get page after page of results. This is all free advertising, and not just within Google; these results are comprised of mentions from across the web. These organic search results are free. The larger goal however, is to rank well for search queries such as ‘online guitar lesson.’
  • Affiliate Programs
    Next Level Guitar offers an affiliate program whereby those who refer new customers get a portion of the sale. So these partners only get paid when you do – there are no upfront costs.
  • Inexpensive Targeted Advertising
    I am not sure if they use either of these options, but if they wanted to pursue more traditional display advertising, they could do so very cheaply on Facebook or through Google adwords. Can start with very small budget – even $5, and target it by demographic on Facebook or by search query on Google.
  • Creating a Product, Not Just Selling Expertise
    Creating a paid online course allowed David to scale his efforts. When he created his system, he put on his entrepreneur hat, which is a level above just putting up a flyer at his local foodstore advertising guitar lessons. Likewise, he opened himself up to have his product reviewed on the web and in national publications.
  • Passive Income
    With the online subscription program and DVD’s, David has created a passive revenue stream. He can take a month off of teaching in person, and still be generating revenue from these products with little effort on his part. He created once and is selling many times. It also gives him the choice as to whether or not he NEEDS to continue trading his time for money via half hour in-person lessons. It becomes a choice, not a requirement.
  • Opportunity for Expansion
    More recently, you are seeing David feature other instructors on his YouTube channel. He is giving others the opportunity for exposure through his well known brand, and in return, posting more highly useful content on his website. This allows his channel to capture more search queries from those searching on YouTube, and helps engage more people who may connect with different instructors and teaching styles. So now David can concentrate on other things when others are filling up his channel with premium content. Win-win-win.
  • Contests
    I don’t think I have seen Next Level Guitar doing this yet, but when you build an online fan base and people are talking about you in forums, it is a ripe opportunity to further engage them with contests. Perhaps he could give away DVD sets to people who upload videos of themselves playing a certain style or song. This gets people talking and makes them take an additional effort to be involved in your brand. This is priceless in a crowded marketplace.
  • Avoid the High Costs of a Brick & Mortar Business
    Before the internet, if David wanted to grow his in-person guitar instruction business, likely he would have opened up a physical studio. Since he has been able to expand on the web, he is less reliant on the high cost operation of owning a store front and on using traditional advertising. This gives him personal freedom as to where he lives and how he spends his time. He could move to Japan, and yet his online reputation and online products would follow him without a hitch.
  • Scale is Unlimited
    If David had opened a physical storefront, his revenue stream would be limited by the population size in his area. But online, he gets a constant stream of new business, as his market is a worldwide audience.
  • Partnerships and New Product Launches
    The Next Level Guitar website offers a free eBook on their homepage, which requires you to share your name and email address in order to download. Between this and their past and present members, they must have thousands and thousands of names on their email list. If they ever decide to sell branded stress balls to build muscles in your hand or partner with Fender to offer Next Level Guitar guitar picks, they have a powerful tool to launch these items via an email promotion.

Can your business scale on the web in ways similar to Next Level Guitar? Sign up for my weekly newsletter (via the form below) to read more case studies about building your brand online. Or, feel free to reach out to me if you have any questions about moving your business online: dan@wegrowmedia.com.

(note: I have no connection to or affiliate relationship ship with Next Level Guitar, I just happen to use their service to learn how to play guitar.)

What the Movie Avatar Taught Me About Committing to Customers, Employees and Products

Recently, I went to see the movie Avatar. My experience was far more complex than I had expected, and has left me considering how businesses make and break commitments to their customers. The story is in two parts, as I had to go to two theaters to try to see the film.


Theater #1: Making a False Commitment to Customers

A False Commitment

I knew the movie was created to be viewed in 3D, so I found a local theater that offered that version. The movie had just been released, so I bought my tickets online and arrived at the theater an hour early. Four people had arrived ahead of me, I chose my seat, and by the time a half hour had passed, the theater was really filling up. Once 7:30 arrived, we were amped to see the movie, having held our odd 3D glasses for an hour, wondering if they would prove magical or not.
But, before the lights dimmed, two theater employees came to the front and told us there would be a slight delay, 5-15 minutes as they got the special 3D projector set up. Here is what followed:
  • 7:45 further apologies, further delays and handing out passes for a free popcorn or soda.
  • 8pm more apologies, and an outright promise that they would be showing the movie, and that we should just bear with them.
  • 8:15pm even more apologies and more promises that they are 100% going to show the film, that they were almost ready.
  • 8:30pm yes, even more apologies and an offer to go into another theater to catch the 2D version of the film that was starting at 8:30. Clearly, this means that even though you had waited an hour or two already, you would be getting the worst seats in the theater for a lower quality of experience (2D vs 3D)
  • 8:45pm the same two teenage theater workers come back in, this time with a security guard, and inform us that the movie was not going to be shown. The offered a free movie pass as well as a refund for the expense of this one.
Now, let’s revisit how many ways the movie theater mismanaged this:
  • Hiding Critical Facts
    Three audience members had managed to find one of the projector operators who explained that this was an issue at both of the previous attempts to show the film earlier in the day, and neither of those screenings could be shown. In fact, the movie had been downloading since the 3pm showing, and the theater operators were hoping it would be ready by 7:30.

    When people are paying close to $15 for a ticket, perhaps another $5 or $10 on food, and sitting there with their friends, kids and loved ones with high expectations, these are things that should have been mentioned at the ticket counter well before anyone sat down with the expectation of seeing the film at 7:30 – or at all.

  • Setting False Expectations
    Again and again, as the movie downloaded from the central server to their projector (a process that took 5 hours), they assumed they knew when it would be complete and that it would work. This despite the fact that this theater was new to using the 3D projector, and the projectionists admitted that they had little knowledge of the projector or the process of using it.

    So when the computer said 90% downloaded, they told the audience “it should only be 15 minutes” even though they had no idea.  So again and again they told us this, even though they clearly were wrong each time.

    Once the movie did download 100%, it was “corrupt” and would not play.  So their promises that they would absolutely show the movie tonight was based on a faint hope of what they would like to happen, not an experienced voice who felt an obligation to their customers.

  • Telling Outright Lies
    The theater employees made a comment that they were having issues downloading the film from the central server, and that this was happening at theaters across the country. A few quick searches on Twitter via my iPhone left me without a single other example of people complaining about the film being delayed or not shown due to this issue.
After waiting for two hours and forty five minutes, I got my refund and left the theater. Let’s compare this experience with my second attempt to see the movie.


Theater #2: Living Up to Promises

Living Up to Promises

For my second attempt to see Avatar, I went two days later to a theater that offered a full IMAX 3D version of the film. I purchased my tickets online that afternoon, and arrived at the theater an hour before the show time. Here are four key ways that this experience differed from my previous attempt:
  • Committing to the Customers
    When I arrived at the theater (again – an hour before show time), there were already 100 people on line ahead of me. The usher clearly told me where to wait, even though the line was so long that it had to be broken into two halves. While on line, the manager walked around and chatted with patrons. This really got my attention. He wasn’t hiding, ordering underlings to tell people to be patient, he had nice slow civil conversations with people, setting reasonable expectations on the process of getting into the theater, explaining how good the experience was and why they were so excited to have Avatar in IMAX 3D. He really made you feel welcome and excited.

    When he came up to me and a few folks around me, he talked about when we would be let in, how the line would move, and allayed our fears about not getting a good seat. He told us that the projectionists felt that being in the first third of the theater was the sweet spot for IMAX 3D, and that most of those 100 folks ahead of us would likely run right towards the upper seats as a matter of course.

    He also went on to explain that some of the trailers were in 3D, and that they were quite stunning in their own right. He also told us the process of what went into installing the IMAX theater – where the extra speakers were, and how massive the project was. He really set an expectation that we were in for a treat.

    Some folks around me asked him when a few new films would be coming to this theater, and you can tell he was a real movie fan talking about films he was excited about.

  • Committing to Employees
    After that conversation, I still had quite a wait on the line. While I people watched, I kept an eye on the manager. It was amazing to watch him just chatting with folks all over the lobby. Always pleasant, always trying to make their experience a bit nicer.

    He kept checking in with the employees in the IMAX theater, as the cleaning crew went in, as other members of his staff talked to folks in the front of the line.

    Then I saw him behind the concession stand – SWEEPING THE FLOOR! He didn’t yell at anyone to do it, it wasn’t something that a customer would have even seen – he just saw some spilled popcorn or something, and quickly cleaned it up himself.

    I soon realized that his real reason for being back there was to help another employee bring the cart with the sanitized 3D glasses from the back room, through the concession area, through the lobby and to the entrance of the theater. Every step of the way, he made sure things were done right, and never ordered anyone around.

  • Committing to a Technology
    This is not a theater that went kicking and screaming into 3D – they renovated an entire theater, losing three rows of seats in order to install a full IMAX theater. They added a larger screen, extra speakers, and I assume other equipment like the projector. For the 3D glasses (which are much larger than non-IMAX 3D glasses), they are reused, and have to be disinfected between screenings. So this ads the cost of the disinfecting equipment, plus employee training on the process and the time-management to do this between two screenings. That is a big commitment. It should be noted that while this theater serves a very large region, it is not sitting in the middle of a high-income area. It is mixed-income, and requires a considerable drive for most patrons.  So they committed to the concept that they would sell enough $15 tickets to this market.
  • Committing to an Experience
    The end result is that this theater made a commitment to the overall movie experience.  While its customers deal with making ends meet in a deep recession and competing technologies make it cheaper and easier to get a comparable experience at home, this theater did everything it could to elevate the movie going experience and reinforce the belief that it is indeed worth paying for.

    And they didn’t need to offer Godiva chocolates or personal massages to do so. Just an attractive, clean and well-managed theater. It’s just that simple.

What is so interesting here is that I am not telling a story of a brand that exceeded expectations. All I wanted was for a business to live up to its promises and set reasonable expectations. For a $15 ticket to a movie, that is not a silly thing to ask.
In the end, it left me considering how many other types of businesses make partial commitments to their own products, undercut their employees and make false commitments to customers in the pursuit of revenue.
As I consider these same ideals in the online space, it reminds me of ways that some brands do a horrible job trying to connect with customers on the web, and others do a phenomenal job of leveraging social media in fun and meaningful ways that have a real affect on their business.
When you consider building your brand online, which type of business will you be?