And Why You Need One In Your Business!

Have you ever asked, what is a value ladder and why you need one in your business? I will explain, by asking another question. Why is it that when you go to McDonald’s wanting a burger, you leave with fries and a drink? This article will further explain and discuss that process called a value ladder.

Value Ladder

When performing online marketing, it is often easier to start with an entry product, at a lower price-point, then increase value and price as the relationship develops.

As shown below, a value ladder is used to start the relationship with a customer, warming them up with a low end item, perhaps a free item.

source: Legendary Marketer

The point is to provide value or at least perceived value, so they take the first nibble. It has been demonstrated that once someone makes the first purchase, even for a dollar, they are more likely to spend as a customer from you, as long as they are getting value.

If done properly, from the very beginning the buyer is thinking “boy, this is a steal… I better get more from this person, they don’t even know what this is worth”. That is what good looks like in online digital marketing.

Then, before they know it, they are ready to pull out that credit card again and if we are doing our part right, they don’t even have to pull out the credit card, as the card info is already stored on our site.

Example

What this normally looks like is a series of up-sells and down-sells and cross sells that purposely adds value and increases price, until the maximum point the customer is ready to consume at that time. This point will be different for each person. For example, some may just want the free item. Others will take the first step up, perhaps at a $7 price point. Others will then take the first up-sell at perhaps $30, even others may take another up-sell at $300 or even $3000.

It is a whole lot easier selling to your existing customers than finding new customers. Here is an example, when you are in the grocery store, they know you are in buying mode, and when you feel you are done shopping, you head to the checkout line. What are you presented with? You will find “feel good” items right there while you wait to checkout. Why? The store knows you are still in the buying mode, you may just take another offer, if presented.

Key Point of Online Marketing

In terms of online marketing, the first free offer is often called a click magnet, which incentivizes someone to give up their email address. Then, the next sale is called a one-click up-sell. Those who take that up-sell help offset the cost of the marketing. This is a key point to online marketing, the front end sales are only intended to recapture the advertising cost. So again, the low ticket items at the bottom of the value ladder only exist to break even on the advertising cost and bring even more people in the front door.

As David Sharpe, CEO of Legendary Marketing explains, the real value is in the email list. We will cover that in our next article, where we present click funnels and why web pages are dead(or at least on life support).

If you want to learn more about my preferred passive income stream, check it out here.

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Dr. Allen Harper

Financial Freedom Hacker

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Any income claims, or claims of success are not necessarily true for everyone. Just like any other career or business venture, hard work and persistence is required. Many people succeed…and many fail as well. It is up to YOU to determine your fate.