Dave Woodward is the CEO of ClickFunnels, the premier sales funnel software that generates more than $100 million per year, and has been used to create more than 1,000 million-dollar funnels (This page contains affiliate links and we may earn a commission if you click on the links and buy).
In the last episode with Dave Woodward, we discussed the benefits of using sales funnels to monetize a business. In today’s episode, we’re going to discuss how we can create a value ladder for our business to guide our customers on the buyer’s journey.
The Value Ladder
Part of creating a sales funnel is creating our value ladder. A value ladder is a lineup of value we offer to our customers at each step of their customer journey so they move from a visitor to a repeat, loyal customer. At each step, the value and cost increase. For example, the bottom of our value ladder may be a free newsletter or downloadable workbook while the top of our value ladder maybe a subscription to our software.
1. Determine What Value We Want to Offer
The first thing we need to do is figure out what our offers are going to be. What are the steps of our value ladder? “I always look at trying to create the offer before you create the funnel, and then from that determine what type of funnel you’re going to create,” Dave said.
There are many different ways to provide value to our customers, and we certainly don’t need to provide them all. The best way to determine what value to provide is by first determining our core offer. What are we trying to get our customers to buy? A product? A software? Tickets to an event? The best offers aren’t usually just one product, but instead are a bundle of products and services that are related and make our offer very valuable and unique. Whatever the case, once we have our main offer, we can work backward from there. What will lead our customers to buy our product or service?
Here are many different ways we can provide value to our customers in our value ladder. And, the concept of a value ladder is that we pay to acquire a customer once, and then we nurture that relationship and help them progress up the value ladder to buy more and higher value offers from us. Here are a few examples of different types of products and services we could provide on our value ladder to our ideal customers:
7. Free trials
8. SaaS products
14. Blog content
17. Inspiring quotes
18. Social media posts
At ClickFunnels, their value ladder includes books, software, virtual summits, live events, challenges, coaching sessions, a membership site, virtual summits, webinars, and more. I’ve purchased all of those products and services from ClickFunnels. Within those steps are additional steps. For example, they offer different coaching bundles for different prices. One of the programs they offer is a five-day challenge where they teach their customers how to generate leads.
They look at their audience and create many front-end offers to attract them to their business. After ClickFunnels customers receive the initial value, ClickFunnels tells them how they can get access to their software. ClickFunnels offers a free trial and additional access to a bunch of great content and training to help their customers make and be excited about a purchase decision.
While creating a value ladder can seem overwhelming as there are so many different ways to provide value for our audience, there are tools to help us create our own value ladder. ClickFunnels is a software that lets people design and creates sales funnels, landing pages, order forms, and membership sites to help businesses with their sales funnels and customer journey so we don’t have to do it on our own. By signing up today, you can get two months free at ClickFunnels.com.
2. Design Our Offers
Once we’ve mapped out our value ladders, we can start designing and developing our offers. If we want to use a book to attract our customers, we need to write it. If we want our customers to subscribe to weekly newsletters, we need to design them. On top of that, we also have to determine how we will present our offers to our audience.
We can design our value offers as one-time offers (OTOs) or give them away for free in exchange for an email address. Dave explained that he sees a conversion rate of about 10% to 20% with his one-time offers. On top of OTOs, we can also consider recurring revenue models. Instead of making a single purchase, customers can subscribe to a software, membership site, coaching, or other product or service for which we charge a monthly fee.
Dave sees 85% of his revenue coming from monthly recurring revenue plans. No matter what business we are in, we want recurring revenue whenever possible. Recurring revenue provides value every month to our customers and provides income and stability for us each month.
However, no matter if we are using an OTO, a recurring revenue plan, or giving away value for free, we have to work just as hard to sell it. “No matter if you’re exchanging [value for an] email, you have to sell things that are free just as hard as you have to sell something that has a price tag to it,” Dave said. “I think the biggest mistake a lot of people make is thinking that because it’s free, [they can] just give it away and people are going to want it. It doesn’t work that way. The whole idea behind building a list is to create an offer that has value.”
Choosing between an OTO or a subscription model is just the beginning. Once we determine our price model, we can look at different ways of offering our products or services.
“Order form bumps are one of the [best] kinds of secrets we see,” Dave said. “Usually you’ll find a successful order form bump is typically in the neighborhood of anywhere from 20% to 30% of people clicking on that. For us, I know that’s probably one of the fastest ways of recapturing some of our ad spendings, and then breaking even.”
An order form bump is an offer of something that is related to a previous purchase of a custom-made. For example, when a customer goes to checkout, we may include links to other related products or services they can buy along with what they have in their cart. Or, in the order confirmation email, we can include additional links to similar products our customers may like.
Where we position our offers on our website, our newsletters, or landing pages matters. We also can implement different strategies to encourage our customers to take our offers.
Here are a few strategies we can consider:
2. Membership programs
- a. Buy one, get one free
- b. 15% off if they subscribe
- c. 10% off for recommendations
- d. Seasonal discounts
5. Free shipping
6. Free samples
As we design our offers we should always keep our audience in mind. What discounts will they appreciate the most? What areas on our website get the most traffic? By designing our offers to meet the needs of our customers, we will see a much higher return on our advertising investment.
3. Look at Metrics and Test
Once we have our value ladder completed, one of the best things we can do to ensure its success is to look at metrics and data. “The most important thing is to really understand metrics and do some testing,” Dave said.
One key metric we want to pay attention to is our opt-in rates. What is our opt-in percentage? We should look at the metrics of our funnel to determine if our marketing strategies are effective. One of our main goals should be to get a customer to “opt-in” by giving us their name and email address. Even before a customer makes a purchase, we want to get their contact information so we don’t lose that lead. If we find that visitors on our website often leave without opting into our newsletter or program, we know we need to make a change.
The next step is to get our leads into the check-out so we can get their address and credit card information. This is where we start to see conversion rates. Dave said, “I don’t think you have a real business until you can start driving paid traffic.” In order to get paid traffic, it may take a few months or even years of trial and error.
The first thing Dave does with a funnel is trying to break even on his customer acquisition costs. If he can make enough money in the first purchase a customer makes to cover his marketing or advertising costs, he essentially gets customers for free.
After looking at opt-in and conversion rates, we want to take a look at the metrics of our steps inside the actual funnel. Are customers accepting our offers? Are customers following the journey we mapped out with our funnels? If they aren’t, what can we change? If they are, how can we do better?
Dave explained that the biggest mistake people make is giving up too early. He finds that entrepreneurs often try one funnel, find that it doesn’t work, and then give up. No one can expect to create a perfect funnel on the first attempt. This is why testing and tweaking are so important. We need to look at the metrics to find ways we can improve our sales funnels to increase customer opt-in rates.
“There [have been] so many times where we’ve created funnels that just didn’t work,” Dave said. “The numbers weren’t where we needed to be. And so for us, it’s [about] going back and testing and re-tweaking and changing and doing whatever we can to get to where we need to be. Sometimes it’s a pricing thing and sometimes it’s a different offer.”
Dave created ClickFunnels to help entrepreneurs manage their sales funnels. ClickFunnels provides the opportunity of seeing the entire customer journey. As a person comes into our funnel, we want to see where they fall out. ClickFunnels is a great tool that allows us to do a lot of testing and make changes to the order form to find what works and what doesn’t. As we use metrics and data, our sales funnels will become much more successful.
Thank you so much Dave for sharing your stories and insights with us today. Here are some of my key takeaways from this episode:
1. A value ladder is a lineup of values we offer to our customers at each step of their customer journey. At each step, the value and cost increase.
2. The best way to determine what value to provide is by first determining our core offer. Once we have our main offer, we can work backward from there.
3. There are many different ways to provide value to our customers such as books, courses, software, membership sites, and events.
4. We can choose to sell our offers as OTOs, subscriptions, or give value for free in exchange for customer information.
5. We have to work just as hard to sell things that are free as we do to sell something with a price tag on it.
6. We can implement different strategies to encourage our customers to take our offers such as using discounts, order form bumps, and promotions.
7. Once we have our value ladder completed, one of the best things we can do to ensure its success is to look at metrics and data. We need to look at the metrics to find ways we can improve our sales funnels conversion rates, increase customer opt-in rates, and optimize our customer lifetime value.
Connect with Dave
If you want to learn more about Dave or connect with him you can:
1. Connect with him on LinkedIn
3. Join ClickFunnels today to get two months free.
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