Value Ladders – Is Your Audience Set Up to Scale?

Ladder

Do you have the right marketing systems in place to scale your business? How much of your marketing budget is spent on acquiring new customers vs growing your existing customer accounts? Acquiring new customers can be exceedingly difficult and costly. Focusing on growing your existing customer accounts and turning first time buyers into repeat customers can often produce more profitable results.

Value ladders are the best way to do just that. Just what is a value ladder and how do you incorporate it into the sales funnel for your online business? That’s exactly what we will discuss in this blog, as well as some of the products and services to offer in each step of your value ladder. 

Let’s dive in.

What is a Value Ladder?

A value ladder is a sales strategy that is targeted at turning your first time buyers into repeat costumes. This is done through an escalating series of products and services, each more valuable than the last. As the value you offer increases, so does the price point. The idea is to hook first time buyers with a free valued-added product or service. This can be in addition to their first purchase, or as a loss leader for taking action such as providing their email address or submitting a contact form. This added value helps to immediately expand your reach inside a new customer account from the very first purchase, either through increased interest in your products and services or through the ability to consistently market to them through email. Value ladders are often explained through a three prospect scenario.

It goes like this:

You have three potential customers, each with their own available spending limit. Customer A has $50 dollars to spend, customer B has $100, and customer C has $200. If your core products are priced between $60 and $100, you automatically cut customer A out of the sale. Customer B will likely buy your lowest priced product at $60, and customer C with that lustrous spending ability will likely buy your highest priced product at $100 as it’s well within their budget.

By installing a value ladder in your sales funnel, you can offer additional value to each of these customers, inviting customer A back into your business, and increasing the likelihood that customer B will spend more. If you include a free (or low priced) product as the first step on your value ladder, then customer A will buy. As this customer sees the value in what you have for sale, they will likely increase their available spending budget to buy a higher priced product or service. Customer B may still buy the lower priced core product at first, but they will get something extra on top as they are buying on step two or three of your value ladder. This extra value will entice them to purchase a higher priced core product. You won’t always have access to accounts like customer C, so it’s best to provide a low level of entry into your product and service offerings, and grow accounts like customer A and B through added value at increased price points. 

How to Implement a Value Ladder

A good example of a first step on your value ladder is offering free educational material that can benefit your new customer. This can be an ebook or an online course. This educational material will position your online business as an authority figure within your industry, as well as provide new customers with actionable advice that they can actually use to grow their business. This first step on your value ladder brings a first time buyer into your sales funnel.

As your new customer begins to climb your value ladder, they become more and more invested in your products or services, and thus are willing to pay for the next levels on your value ladder. What started as a valuable free offer can turn into paying for a premium subscription to your content, a seat at your webinar, or even a high priced and highly valuable mastermind group at the top of your value ladder.

Value Ladders can also come in the form of tiered service plans, each with their own increased level of value. For example, a coaching business might offer educational material such as a book in their first tier, and then a greatly discounted online course in their second. As the customer progresses through your sales funnel, they may sign up for large group coaching via a Facebook group before finally subscribing to your premium 1:1 coaching program at the top of your value ladder. But what if you don’t offer service packages and don’t want to create an ebook or online course? Don’t worry. You can still create a value ladder that will increase your sales funnel and expand your reach in new accounts through strictly paid product offers. Online retailers do this all the time through discounts at different spending amounts, or through a tired membership that offers different levels of value at different levels of membership. This is perhaps the most common example of value ladders. 

Lifetime Customer Value vs Transactional Relationship

At the core of your value ladder should be the perspective of your lifetime customer value instead of a mainly transactional relationship. While some sales funnels are set up with a single transaction being the end point, a value ladder strategy puts that first transaction in the middle of your sales funnel. It’s the change in perspective that your new customer’s first purchase – or even just the first sign of interest – is only the beginning of their journey with your business, not the end. Keeping first time buyers within your sales funnel allows you to consistently market to the next steps in your value ladder.

Increased Revenue

It’s important to note that not every new customer will climb your value ladder, but as with your sales efforts, if you can increase your reach into your existing customer accounts by just 20%, you will see a significant increase in your revenue, and that’s from new customers who climb your value ladder but don’t make it all the way the top. If you can lead just 10% of your first time buyers to the top of your value ladder, your revenue will grow exponentially.

Need some help setting up your value ladder? Mountain Cane Media offers strategic planning solutions to help you do just that. Apply today to get started.

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