Business Systems Architect

The Unadulterated Truth About Sales Funnels

If you have spent any amount of time reading what marketers say, and what gurus say, you have probably come across the term “sales funnels”.

The idea behind this “sales funnels” concept is simple… If someone buys a product or service from you, you ought to sell them something else too, and then something else, and then something else as well.

The more someone buys, the more you sell to them.

The more expensive the offer they take, the more expensive the offer you market to them.

That’s an ascension funnel.

If someone buys a $10 product, offer them the $40 product. After that, show them the $100 offer, and then the $500 offer. And so the funnel ascends.

The pop theory goes that if you can get someone started with a funnel … even if it is by selling them a meagre $10 product or service, you can potentially sell the $40 product to a subset of those people, and then the $100 product to a subset of those, and then the $500 offer to a subset of those.

And there’s some truth to this. Ascension funnels are great when used properly… and can double, or even triple the overall revenues of your company… because a certain percentage of your audience will invariably “ascend” to the next level. The process is called customer value optimization. First you get a customer, and then you “optimize” how much money you can extract from their pocket.

Except, there is some grave misunderstanding about this model.

Firstly, while it may be easier to sell a $10 product to someone who doesn’t know you from John Doe than it is to sell a $1000 product… the advertising doesn’t get any cheaper. It costs you the same amount of money to advertise to a person whether you are selling a $10 item or a $10,000 item. Your media platform does not care about what you sell, or how much you sell it for. They care about their own rate card, which in the modern world is largely governed by your competition.

Secondly, the odds of someone buying your $1000 product after they have bought the $10 product are better than those of someone who is just visiting your website for the first time, yes. But it also costs a lot more money to sell a $10 product than it does to bring someone to your website. For instance, if it costs you $20 to sell a $10 product, and you convert 2% of those people into buyers for your $1000 program, you barely broke even. Yet, if it costs you 40 cents to bring a visitor to your website, and you convert only 0.5% of those visitors into buyers… you still make $200 on each sale.

Make sure you let the bottomline make your decisions, not fancy theory.

Thirdly, while funnels are great, there is a limit to how much you can upsell and cross sell in one transaction. You can’t present ten different upselling offers one after another after someone has bought a $10 book. As far as my own experiments are concerned (with my clients’ businesses) I have observed that it’s largely impossible to increase the transaction size by more than 150%. Sure a 150% larger transaction is better than just the original transaction, but if your first transaction is super cheap… the odds of you recovering your marketing dollars within one day are slim to none.

Fourth, you can’t make someone “ascend” unless they already are able to. Most people you advertise to can’t afford your $10,000 product, especially if it needs to be paid for upfront. And they certainly can’t afford your $100,000 offer, unless you are hyper-targeting your prospects and going direct.

The goal of an ascension funnel is not to convert a non-prospect into a buyer. That is something that just won’t happen. It’s either hot or not to someone. And if it’s not, it’s not.

No.

The objective of an ascension funnel is an ascension of trust.

And that is accomplished in the following two ways….

  1. Someone who can’t afford the $10,000 offer sees that a reassuringly expensive product is available, and spends the $1000 that he can. Of course, in most cases you don’t know who is a prospect and who isn’t, and so you send your marketing messages to everybody. These marketing messages have an effect on a non-prospect too, even if they do not buy. Especially your soft messages, where you communicate and entertain and inform (in that order) do a great job at strengthening the trust and rapport you already have.
  2. The marketing messages you deploy in order to (soft or hard) sell the $10,000 convince the true prospect to raise his hand, and buy, or inquire.

The sales funnel or the ascension funnel can’t really make someone ascend. Sure there are anecdotes about someone who couldn’t afford to buy the $10,000 program having bought the $10 book, and using the principles to enrich his life, and then later bought the $10K program. But I wouldn’t count on too many of those things happening.

My book Wired to be Poor is a great resource for anyone who wishes to “ascend” in the domain of finance. Properly used, it’s all one needs to accrue massive wealth. The principles are in there. The strategies are in there.

And yet, I don’t expect most of the buyers or readers of that book to invest $250,000 with our firm. Nor do I expect most people to change much in their lives as a consequence of having read that book.

What I do expect, however, is that those who are already in a position to co-invest with us will feel a greater degree of trust and rapport upon having read the book. Plus, they’d be able to see if they have philosophical alignment with us and our principles.

The job of this ascension funnel is two fold

  1. Ascend trust. Increase credibility with everyone – prospect or non-prospect.
  2. Filter out the real prospects by getting them to raise their hand in some way

One of the questions I always get when I explain this to my clients is, “Why should I care about how much the non-prospects trust me?

My answer is three fold…

Firstly, because you are the authoritative figure for them, and they are looking to you to show them the right way. It’s your moral imperative.

Secondly, it doesn’t cost you anything extra. You have to create your messages anyway, if only to filter out the prospects, and to establish trust with them. Might as well send those messages to your non-prospects.

Lastly, just because they are non-prospects for a particular program you have does not mean they are non-prospects for everything else. Maybe they can take another less expensive offer you make. Maybe they can buy from someone else on your recommendation if they trust you, and so you might even get compensated in the form of a referral fee.

Sales funnels can work well when you know what you are trying to use them for.

But they aren’t the magical silver bullet marketers (especially those selling training programs about building a sales funnel or those selling a done-for-you funnel development or a consultation) pretend they are. They are good for maximizing revenues, sure. And they are good for finding people who can or will ascend to the next level.

But…

Nothing replaces the need for a great offer.

A great offer presented to the right audience will always work wonders. Even if there is no strategic sales funnel in place. And it doesn’t even take a genius copywriter to sell a truck load of goodies. But only if the offer is hot.

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