A value ladder functions like a sales funnel. It’s basically moving from a low-value product or service to high-value ones.
You see, your customers will be less likely obliged to tell you about the amount of money they wish to spend on your business. Even if you ask them, they will most often underestimate or lie about their spending potential.
Hence, most of them will never convert into customers when faced with a price entry barrier. You can quickly solve this challenge by having a value ladder. A value ladder is a chain of products or services that increase in price and meet people in the stage they are to become your customers, such that your products and services cater to all; the heavy spenders and those who are cautious about spending.
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Here is an Example of What is a Value Ladder
If a product costs $1 like the Legendary Marketer, someone will not give it a lot of thoughts before keying in his credit card information.
But for a ClickFunnels membership worth $97/month, not everyone will sign up that easily without giving it a bucket of thoughts. All these are your customers, but they don’t have the same purchasing potential.
How can you cater to all prospects from the awareness stage to the moment they decide to purchase your upsells?
That’s what a value ladder is. A value ladder helps make marketing your services easier.
A Real Illustration What is a Value Ladder
I think illustrating it using real-life examples will help you understand it effectively.
If, for example, you have a coaching program geared towards Facebook marketing, you will need a value ladder if you are going to maximize the value of every prospect. Don’t have a single price of $99 because not all your customers will give out their hard-earned money that fast.
Emily might be having $10 to spend
Mark might be having $100
While Linda might be having, let’s say $500
Remember, all of them are interested in learning Facebook marketing. Their buying potential, however, is different. Are you going to lose Emily and Mark because they didn’t part with $99? No.
Supposed you approach it this way:
- Have a simple but really valuable guide worth $10
- Create a course with several videos that shows how to launch ads, and understand the Facebook ads manager dashboard and charge $50 for registration.
- And lastly, have all A and B plus offer templates, Facebook group support, and expert interviews and charge $150
Send Your Offers to Them
If you launch ads and target Emily, Linda, and Mark, all of them will click the ‘learn more’ button since they would want to learn about Facebook marketing.
After checking through your sales page, Emily will most likely take the guide at $10 since it’s within his spending budget. Linda and Mark will also take it. Do the math, and you will have made $30 from the three customers.
After a couple of value-packed emails (they are now in your funnel after giving you their emails) relating to Facebook marketing, present to them the second offer.
If they found value in your guide, they would most often want to check out what you have in the course.
Emily had $10 to spend. So, she will not likely buy the course.
Mark is now left with $90. He will most likely take the course
Linda will see this as something within her budget. So, she will take it.
If you do your calculation well, you will have made $100 from two customers. If you add with the returns from the guide, it will be $130.
Lastly, send them the third plan.
In that case, only Linda will be able to purchase it. The end result is you will have about $280 in total. With that, you will have maximized the value of every customer. If you could have sent all the offers to them at once, you will have had $230.
Benefits of a Value Ladder
You now know what’s value ladder. Which benefits does it have when you make it your business model?
Here are some benefits:
You can earn trust faster
In business, trust is a crucial element to success. Customers buy from people they trust. So, the first thing you would want to get from a new customer is their trust.
It allows you to earn trust, scale your business by increasing the lifetime value of a customer, and move away from selling your services like a commodity. How can you do this?
Well, just don’t sell to them because most of them will not buy the first time. And if you do, let it be a low-priced offer; something less than $5.
You can even start off with a free guide. After reading it and finding value in it, present to them a low-priced offer. Most of the prospects will have already known you from the guide, but they don’t trust you.
So, the first offer is where they will want to know if they can trust you to deliver precisely like what you promised them. If your course is valuable to them, they will trust you. Some of them will follow you on social media to avoid missing updates from you.
After a while, you will realize that the customer lifetime value from a simple FREE guide is about $30k.
You can upsell and downsell
The best thing about having a value ladder is the ability to upsell and downsell based on the customer’s buying potential.
For example, if a customer purchases your e-commerce guide for $1.89, you can choose to present him a mini-course that contains in-depth knowledge about e-commerce for $50. If you employ the right emotions in your copy, most will buy.
However, not all of them will buy. That’s where you need to downsell to those who didn’t buy. Just send them a quick email, “I saw that you didn’t sign up for my e-commerce course. How about this e-commerce blueprint?” You can choose to sell the blueprint for $10 or less.
You can present a masterclass to those who bought the course and charge $189 or more.
That’s the whole trick about a value ladder; to maximize the value of your customers. They are also benefiting from your offers. So, they will stick around.
The law of sales clearly states that if someone purchases from you the first time, he will most likely buy from you the second time if they find value in what you offer. So, instead of looking for new customers, create a value ladder and maintain current ones.
Most of the people who bought our Your Profile Lead Machine ended up buying a lot more from us after we delivered the right system to them.
Guess where most marketers go wrong. It’s by charging high price entry into their funnels. If you are selling high-ticket products, you can offer a three steps ladder of your products or services and cater to your new and existing customers.
You see, you don’t create products and go looking for customers. You consider what your audience wants and look for products that can solve their challenges.
Increases the customer lifetime value
To maximize the value of a single customer, you will need to cultivate a long-term relationship. That goes into establishing a two-way conversation between you and the customer.
How can you create a conversation with people landing on your site? It could have been more comfortable with brick and mortar businesses because you can quickly strike a conversation. But yes, web visitors do talk; only that they talk indirectly.
If the conversion rates reduce, you will know that they don’t like your products and services. If the click-through rate is low, it means your sales page copy isn’t compelling enough.
By collecting this data about your prospects, you will know what they need in each step of the ladder. Keep giving them what they want and they will stay around.
How to Create a Value Ladder
Now that you know the benefits of a value ladder for your business, how can you create one and begin meeting your prospects at the position they are towards becoming customers?
1. Create a hook
Ensure the first rung of the ladder contains a freebie. I know some other marketer will recommend a low-priced offer, but that would cut off a lot of potential prospects, who might not purchase at that time, but will buy after engaging with your offers.
A hook is something that can attract your potential customers. Nobody would resist a value-packed FREE guide. They will jump in and devour the content inside. I know you like freebies too, don’t you?
Once you have their email, it’s the smallest piece of data you can have about your prospects; offer value to them. Don’t begin selling them right away because they don’t trust you. Build that trust by providing insights that can help them improve their businesses.
The hook can be anything like an e-book, checklist, software, a free trial, or a mini-course.
If you give a freebie, you will have an extensive targeted list fast. With a tripwire offer, however, you will have a small but highly defined list.
2. Begin with a mini-offer
Just like Emily, Linda, and Mark case above, don’t go for something costly. Based on the buying potential of your audience, a large percentage of them will fall in this category.
At this point, the audience knows about you since you have been sending them value-packed emails. They know that you are a domain expert and would be awesome to glean some wisdom from you.
So, if you present them a low-cost offer of below $5, they will feel it’s a good price point and reach for their credit card. They know they will get value from your offer because you have already proved that you understand their pain points.
If you were offering a guide, as a freebie, you could decide to provide a blueprint that provides an in-depth study of the topic and charge below $5. At this stage, the conversions are always high. So, you need to move to the third rung in the value ladder.
The third rung will require a financial commitment from the prospect. The numbers will have weaned at this stage and reduce to about 60% of your audience. In this stage, you can offer them an upsell between $100 and $197; let it be cheaper than your mid-tier offer but higher than your first offer.
You should aim for a quick win for your customers. Don’t let this increase in the prices make you think you are there to make money. It’s called a value ladder for a reason. Your customers are buying from you because the value is increasing with your price.
So, if your main offer was a book, let your upsell be a course relating to the same topic. A course has illustration videos. So, it’s always more valuable than a book.
You can also offer consulting services or a done-for-you strategy as an upsell.
4. Mid-tier offer
Next, you will need an offer in the fourth rung. It shouldn’t be as costly, but anything less than your high ticket offer is acceptable.
This is where you solve the problem that the client has yourself. After the course, some won’t apply the strategies effectively and would need assistance. Offer to do it for them in this offer. Launch ads, create offers and set up their funnels.
A mid-tier offer should be something really valuable. It should give customers a 10x ROI or more. That’s the only way to keep the clients grounded in your products and services. Once they know they can get value in return, they will not fail to invest in acquiring your knowledge and skills.
For those who can’t purchase this offer, downsell them something of lower value. Think of something closer to this, but not as many functionalities.
5. High-ticket offer
This is the last rung in your value ladder. I mean you could extend it, but 5 is recommended. Since it’s the most expensive, it should also be the most valuable.
Only some of your customers will be able to purchase your high-ticket offer. These are the customers who know that if they invest in your high-ticket offer, they will get much more.
So, apart from setting the system up for them, you can also create a community of these high-level clients and allow them to network.
You can include weekly group coaching calls, private Facebook groups, free software to enable them to solve the problem faster, templates, additional courses that tackle each specific sub-topic, and a membership site.
A value ladder can enable you to maximize the value of every customer because it meets them in the stage they are making a decision.
To create an effective value ladder that can take your business to the top, understand your audience. The modern digital marketing landscape needs you to understand the challenges your audience is facing and creating solutions. You can then package them and present them in the form of a value ladder.
A lot of this is explained in the recent version of Dotcom Secrets. Have you read the book? Get it here.
How to create a value ladder for my business?
Steps To Creating The Perfect Value Ladder
Step 1: Research your market.
Step 2: Establish your core offer.
Step 3: Splinter down to create a tripwire.
Step 4: Splinter down, again, to create a lead magnet.
Step 5: Add a profit maximizer.
Step 6: Build value – did I mention that?
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