Todd Brown is the brains behind some of the most successful marketing funnels online today and in this interview he doesn’t hold back. If you want to know the real secrets behind the most successful marketing funnels, listen to this interview.
- To find out more about Todd: http://marketingfunnelautomation.com/welcome
- For marketing funnel tracking: conversionfly.com
- Book recommendation: Breakthrough Advertising, by Eugene Schwartz
- Find some great marketing examples at http://stansberryresearch.com/
Transcription Episode 86: The #1 Strategy Every Successful Marketing Funnel Employs
Welcome to the Project Ignite podcast. A podcast designed to skip the hype, skip the BS and just give you guys real actionable tips, strategies to help you grow your business on the internet.This is your host, Derek Gehl, and today we’re going to be diving deep into marketing funnels, online marketing funnels and our guest today is considered one of the authorities on creating profitable marketing funnels. This guy has worked with the A list of marketers, the who’s who of digital marketers.
His agency, Marketing Funnel Automation, creates campaigns for some of the biggest marketing companies out there. I love getting guys like this on the show because he’s got such a broad view of what’s working.
He’s not just working in one specific niche or one specific campaign saying, “This is what’s working.” Here he’s saying, here is what I’m seeing across industry. I love getting guys like these on the show. So without further ado I’m excited and honored to welcome Todd Brown to the show.
Todd thanks so much for being here to discuss marketing funnels.
That’s it, and I’ll go for some attention here. One of my beefs, I listen to lots of podcasts and stuff like that, so many of them are just fluff. They never get into the good stuff, they never get deep into topics and I love it when I get real experts like you and we can go deep into things and give real value to the listener.Before we do that can you just give me and the listeners give us the Coles Notes version, how did you become the marketing funnel guy, like how did you get started as an entrepreneur. What was your journey leading you to be this marketing funnel expert?
Yeah man, I’ll give you. I’m going to share something that I don’t think I’ve ever shared on a podcast before that I think will be great for your listeners. Let me get the fluff out of the way, this is some background, so been at this for about decade and a half, direct marketing. Started really mainly offline, lot of small space advertising.At the time was working with a massage therapist, my background is in nutrition and fitness. So when I was in … I used to live in New Jersey, brought up in Jersey worked for a monster health club company for a number of years.
That’s when I was first exposed to direct response marketing, started learning from guys like Gary Hilbert, and Dan Kennedy, implemented the stuff that I learned from them in the fitness company that I worked for. Had tremendous success, my department like shot to the top, we were producing millions of dollars a year in personal training.
Then I decided, I wanted to dip my toe in the world of info publishing and so I decided to share with massage therapists what it is that I had done in the fitness company to grow revenues and our clientele and what not.
Then that thing grew really quickly. Then I ended up leaving the fitness industry, running that business full time. Then I want to skip ahead and I want to skip ahead too, you asked, how did I become known as the marketing funnel expert. Let me be brutally honest with everybody to share what I believe is a very valuable lesson and that is the truth, I engineered that.
What I mean by that is that so, I was fortunate to, throughout my journey I was a partner with Rich Schefren over at Strategic Profits, brilliant, brilliant dude, brilliant marketer, tremendous connections.
He introduced me to really most of the biggest players that I know today, Mark Ford, Clayton Maypeace, Jay Abraham and I did a whole stint with Rich for a couple of years and it was great. It became too much for me running the marketing and strategic, running my own companies.
I stepped out of strategic and I said to him, about a year after that, I said, “Look man I want to start to share more stuff again that we’re doing in our companies with online marketers. But I don’t … I know I can’t simply be just another person in the field. Right, I don’t want to be another guy teaching general internet marketing. I don’t want to be another guy teaching traffic. Right like we know that at the root of marketing man there has to be differentiation.”
I said to Rich, I said, “Look, right now I’m seeing a trend.” This was whatever it is, 3 years ago or something like that, three and a half years ago. I said, I’m seeing a trend that more and more people are starting to talk about marketing funnels and use the word funnels and talk about marketing sales funnel and marketing funnels.
Right now I said, there is no authority, there is no number one individual. I said ,so I’m going to stake my claim on that space, begin teaching the stuff that we’re doing with marketing funnels. Because we were getting some phenomenal results at the time $24 a lead on certain marketing funnels and what not.
That’s what I did, that’s being brutally honest. It became this combination of I believe that I had the chops but I orchestrated that positioning. I strategically created this view in the marketplace, I’d love to tell you that right, like I’d love to sit here and say, “Hey Derek it happened naturally out of my marketing funnel skills and knowledge. Like just naturally I was crowned or coined as the guy,” but I orchestrated it and brought it to fruition. That’s the brutal honesty man.
Well God, there is such a big lesson in there for our listeners as well because when I’m working with people I’m doing conferences and stuff like that. People say, “Hey I see this idea, this business, this niche I want to go into it but …” But they say “I’m not an expert.”I always throw it out there, I’m like what is an expert? There is this natural tendency to believe that you need to have some kind of formal certificate or degree. Okay, all be it if you’re going to be a medical doctor or something like that, you probably should have a certificate, but in a space like you’re in what’s more important than the education is the result.
Like you said, you have the chops, you’ve gotten the results and you have the track record so it’s easy for you to go in there and say, “Yeah I am the expert and let me point at these results.” I think that branding is smart in how you positioned yourself, I think that’s awesome and I love how you’re just very candid about it with the listeners here. So right now-
Derek, like for your listeners I’ve never shared that on any other podcast. That’s typically like behind the scenes stuff with our tribe that I’ll share but I do think man, that like for everybody listening, I think you nailed it dude.You don’t wait to be crowned or coined with the title, you’ve got to stake your claim. Like you’ve got to recognize that so much of marketing right, wrong, or indifferent, is engineered, it’s engineered perception is reality. It’s engineered and that’s such a huge a thing that I hope everybody gets.
Absolutely it’s so true. Let’s dive into marketing funnels, I’m going to start kind of high level, I’m going to start at the beginning here because funnels … I’m not going to call marketing funnels a new concept. Funnels have been around for a while.I think the term marketing funnels really blown up I think in the last few years. It’s funny because you said there weren’t any experts in marketing funnels and when I started online back in the ’90s you didn’t even really need a funnel you sent people to a long copy sales page they bought and it was a lot easier.
I think just by virtue of the sales circle now taking longer, more options, more stuff going on you need to have a bit of a funnel but what is … How do you define a marketing sales funnel for somebody. If somebody said to you, “Hey I’m just getting started what the hell is a marketing funnel?” What are you going to tell them?
I think that’s a great question and let me say this. I couldn’t agree with you more, like look, right I said that this is no fluff no BS. The reality is that the concept or the idea behind a marketing sales funnel is absolutely nothing new, it is really at the core of direct response marketing and to a large extent it’s been at the core of direct response marketing since the beginning of direct response marketing.What is new is the term, sales funnel or marketing funnel.
The reality is that, maybe not to the same extent as let’s say back with Corey or many many moons ago. The funnels weren’t as extensive as they are today because the technology was different and so on and so forth.
At the end of the day the way I view a marketing funnel is it’s the process that I lead a prospect through to lead them from … To take them from their desired to demand for my product.
So sometimes that marketing funnel is a couple of steps, a couple of web pages, sometimes it’s multiple web pages, sometimes it’s a combination of video and email and the written word and direct mail. All it is, it’s a … The simplest way to look at it is, it’s a marketing campaign. It’s a marketing campaign that’s really all it is. It’s a marketing campaign.
It totally is and back to what you were saying I think the complexity has increased a lot in terms of the number of steps, the number of methods of reaching people, communicating with people, touching people through a marketing funnel has increased.The complexity has increased but on the flip side of that as well I think the technology that now exists today to make funnels, the development of funnels is just so much easier than what it was when we first got started.
Yes, yes and so today you’re absolutely right, it’s never been easier. Ironically, and I love where you’re taking this conversation and I could talk about this, I know we could talk about this for hours but I really think Derek that, because it’s easy today or significantly easier today to put up a funnel there are a lot more struggling marketers out there because they think that the answer lies in the tactical aspect of the marketing funnel.Meaning they think that the answer, they think a winning funnel is having a squeeze page or an opt-in page. Having a VSL, having an order form and then having an upsale.
They think that those pages make the funnel a winning marketing funnel and the part that they’re missing which is the part that I really focus on and spend the majority of my time with our clients and coaching students and what not is the message behind.
Like again, going back to old school direct response marketing. What are you saying to prospects because you could have the nicest website, your colors could match, the pages that you love, the marketer that you love.
At the same time, on the flip side, if you nail the core, meaning the big idea for your marketing funnel. You put together a rock solid logical and emotional argument for your product, for your offer and then you put together an irresistible and superior offer you can have an ugly page.
You don’t have to have all the bells and whistles and you’ll still make money. That’s not to say that you want an ugly page, that’s just to say that the core is where the answer lies and the core is what so many people are missing today because of how easy it is to throw up a marketing funnel these days.
So I just did an interview with Ed O’Keefe and we had this exact same conversation of, what is the most important skill that you need to succeed as a digital entrepreneur and it’s the marketing, it’s the strategy.I asked Ed, where did he start learning, he says, copywrite. It’s learning how to sell, the positioning, the languaging. Then the marketing funnel automation tools like ClickFunnels and Leadpages and stuff, that just makes it easier for us to get it out there faster and to test more things at a faster rate.
That’s what I love about today is the speed at which we can create and test is massive, but too many people are overlooking the real ingredient for success in the funnels and it’s exactly what you just said.
Yeah now man, we’re so sympatico on that view man like the tools are not … It’s funny and I want to make sure that we give like some great guidance today but just to finish this little tangent, it’s amazing how many marketers are enamored by like … They’re like Todd, what tools do you guys use at MFA.I’m like, I’ll tell you the tools but the tools are insignificant, because you take me, you, you take Russell Brunson, Ryan Deiss and you line up the 10 best marketers you know, mark my words, there are going to be a variety of different tools. Different autoresponders, different CRMs, different page, because it’s not the tool, the tool isn’t the answer. It’s what you do with the tool, it’s the idea behind your funnel. It’s the hook, it’s the message, it’s the offer, it’s the core of direct response.
It’s amazing Derek to be honest with you man, it really … This is me baring my soul on your podcast. It’s amazing how people think that I’m this marketing funnel wizard. They think that I have this skill set, like look I have certain skill sets but the reality is that I just recognize that at the core of everything that we do with today’s technology.
All the advanced stuff that we can do with retargeting, with segmentation, with dynamic follow up, with personalization, with all these things that act … None of those things matter if you don’t have the foundation, and it starts with the foundation man.
Yeah that’s awesome man, oh my gosh, you have no idea how happy I am to hear you ask me that question and not another question man. It’s so awesome, so wow that’s, oh my gosh I’m so happy.Let’s start big picture and then you tell me where you want to drill in. So first and foremost really big picture, so I got one of the best pieces of advice on marketing that I’ve ever gotten from anybody, from Mark Ford. Many of your listeners might know him as Michael Masterson, he is New York Times bestseller, dude is brilliant, guy behind Agora, half a billion dollar of your company.
Out of all the things that he said, I’ve learned a tremendous amount from him, I’m just blessed that he lives 15 minutes away from me.
He said this to me, he said, “Todd,” he said, “At the foundation of what we do first and foremost we are in the idea business. We are in the business of developing interesting, compelling, engaging ideas. Everything that we do as marketers stems from ideas, and the quality,” he said to me, “Of your ideas. The ideas behind your funnel …” which we’ll talk about in a second, “Are ultimately what determine the quality of your marketing funnel message, or marketing promotion, your marketing campaign.”
First and foremost at the root of a wildly effective marketing funnel is what is typically referred to as a big idea. A big idea, and we’re going to get a little bit in-depth in just a second and if I pass something quickly Derek definitely tell me.
A big idea first and foremost … I’m not talking about a big idea for your product. I’m not talking about your next breakthrough product, your next breakthrough management strategy, I’m now talking about the idea behind the marketing message. The idea behind your copy.
Remember a headline is just a communication device to communicate an underlying idea. That idea could be plain vanilla, it could be nothing new, it could be average, it could be nothing compelling or it can be a wildly compelling interesting, new, fresh, unique idea that’s being communicated in a headline.
You can also take a headline and change the copy, change the verbs, change the words but still leave the underlying same boring plain vanilla run of the mill idea there.
Before you write a single word of copy for a marketing funnel, you need to develop a big idea. Big idea is made up of two components. The first component of a big idea is that it is emotionally compelling. We make a big idea emotionally compelling with two sub-components.
First is that there’s always a primary promise. What is the promise not of your product, not of your company, not of your brand but what is the promise of transformation of result, of change that you are making to your prospects when they engage with your marketing funnel message?
How are they going to benefit from engaging? Meaning in the type of marketing that we do in direct response there’s information that’s conveyed. We’re going to tell them something, we’re going to strategically teach them something with strategically designed education. What is the transformation … The big transformation?
I’m not talking about all the benefits of your product or service, I’m talking about the primary promise, the big most exciting, most compelling, most audacious, true and believable promise that you’re making to prospects. The thing that they want, the thing that gets them excited or gets their blood boiling or gets their hearts pumping right? That’s number one.
The second aspect of making it emotionally compelling is where a lot of marketers go wrong. Because a lot of marketers get that that their jobs is to make a promise. Like they get that is all about the prospects, it’s all about the benefit but here is where the magic comes in, that that the second component of being emotionally compelling is that your primary promise is backed and delivered by what’s referred to as a unique mechanism.
A unique mechanism is nothing more than the unique part, piece, process, aspect, component, system, methodology of your product or service that fulfills the primary promise. It’s the unique part, piece, component, process, aspect of your product or service that actually delivers the result that is responsible for the transformation.
Those things in combination, the primary promise and the unique mechanism combined, the reason why they make that the idea emotionally compelling is because it gives prospects hope, it gives them hope that maybe this time around with your product, with what you’re talking about, with the information you’re giving them that they will experience the promise … The outcome because it’s being delivered by a unique mechanism.
Because it’s being delivered by something they’ve never seen before, they’ve never heard before, they’ve never experienced before, they’ve never tried before.
It allows them to get excited about the promise because maybe it can be fulfilled, because there is this unique thing that I’ve never experienced before.
When you take out the unique mechanism, it becomes another, “Yeah, right I’ve heard that. I’ve heard that I can lose weight in a week, I’ve heard that this can get me first page ranking zone on Google, I’ve heard that this can give me an Amazon store, I’ve heard that this can turn me into a copywriting genius, I’ve heard that.”
So without that unique mechanism it triggers what we call mental opt out, “Oh I’ve seen that, oh I’ve heard that, oh there’s a video on that, there’s a book on that, so and so was talking about that.” That’s the first component that right? That idea is emotionally compelling because it has a primary promise that’s backed by unique mechanism.
The second of the two components that make up a big idea and this is the one that 99% of your typical average digital marketer leaves out. I believe they leave it out because they’ve just never been taught this. I know I wasn’t prior to becoming friends with Mark and that is that a big idea is intellectually interesting.
That means that it is of interest to the prospect, that means that they view it as a sort of a news item, they view it as something that they’ll be interested in hearing more about and understanding more about and knowing more about, even if there was no primary promise or unique mechanism.
It’s something like that that is of interest to them and so you’ve got a big idea that is intellectually interesting and emotionally compelling.
Now a couple of other quick things Derek, a big idea is an idea that meets the following criteria. It’s new, it’s unique, right? So it’s different, it’s new, unique, it’s different, it has the feeling of being fresh and timely, it’s made up of one idea, it’s not like a mix of a lot of little ideas like what a lot of marketers do.
If you look at some headlines you’ll see that they … Because they don’t have clarity on a single big idea, they end up trying to strengthen their idea. Strengthen their headline by incorporating multiple mediocre ideas.
They end up with this jumbled one idea and it’s immediately understandable. It’s not something that they need to watch the rest of the video or read on in the copy they get it right away. Immediately understandable.
Those are the ideas that we are … Before we write a single word of copy before we craft any aspect of the marketing funnel…We always work to develop an idea that the market is going to see as new, unique, fresh, different, exciting, intellectually interesting, and emotionally compelling.
Today you have to have that if you’re going to stand out in the marketplace get attention and create engagement. That makes sense man?
One of the best things that I would tell your listeners to do is the company that’s hands down bar none the best at this, and the company that built their empire because of this is Agora. I would recommend that you go to agorafinancial.com, my buddy Joe Shriefer runs that division, phenomenal stuff they put out and Stansberry Research.These are divisions that are wildly successful, Stansberry Research put out, the most successful financial investing newsletter promotion of all time many years ago.
I love the example and there are tons, but I love the example from Porter created a promotion … The promotion that really launched Stansberry Research, today Stansberry Research is like about $100 million a year division at Agora.
He released a promotion many moons ago. Now before I give you the idea, I just want everybody to know that this … The promotion, this marketing piece, this marketing funnel, this marketing campaign whatever we want to call it was selling a $47 a year printed newsletter about investing and stocks. Nothing revolutionary, right? A 47-dollar a year paper black and white newsletter on investing in stocks.
The promotion was something like … I’m going to paraphrase this you could probably do a Google Search and find this, I can also give you a screenshot of this if you want to include it in the show notes or something.
The headline said something like, “There is a new railroad across America and it’s making …?” What did it say, “And it’s about, and it’s making some investors extraordinarily wealthy.” Then there was a sub-head that was like, “In fact one trader has done a million dollars a day for the last 526 days straight,” something like that.
You think like … Let’s look at a couple things. Number one, you’ve got this, “There’s a new railroad across America and it’s making some investors extraordinarily wealthy.”
Right off the bat as an … If you’re an investor in the equity markets, that’s an interesting idea, that’s like, “What is that about? If I’m an investor I’m curious to know what do you mean there’s a new railroad and where is this railroad being built and how are people making money from it and is there an opportunity for me to make money?”
From an intellectual perspective it was different. Let me take a step back and say that, why couldn’t Porter have just said like, “How to invest in stocks and get rich,” or, “How to invest in the stock market and get wealthy. How to load your retirement account with smart stock investing.” Really couldn’t say that because the market was too sophisticated for that.
The market would have mentally opted out, the market has heard that, that’s nothing new, it’s nothing different, it’s nothing unique and therefore it’s not compelling, you have to have something new, unique, different to bring to the market if you want to get attention and create engagement.
That’s how Porter started. Now let me just explain what the promotion was really about so that you can see how this idea was developed and then we’ll talk a little bit about, very quickly how you develop ideas. The promotion was about how voice over IP at the time was radically changing the telecommunications landscape.
Voice over IP was going to … With internet phone calls and all that was going to blow up, change the way people made phone calls and if you knew which companies were leading the charge and you got in them now, you stood to make a fortune but what Porter did was and this is where, how do you develop this kind of big ideas comes into play.
What Porter did like big ideas coming up with ideas doesn’t require you to be this naturally creative individual. Coming up with big ideas, breakthrough ideas, startling ideas, arresting ideas is about you looking for connections that are between two things that other individuals don’t naturally see.
It’s again, looking for connections, finding connections, developing connections and ideas don’t just come organically, you don’t sit down at your desk with a blank document and expect that, “Boom, here’s a big idea.” They’re developed, they happen through the research and examination stage of developing a marketing funnel.
What Porter saw was … In his mind he saw a connection between the spread of voice over IP in the United States and the way the railroad was being built across America. He equated saw a connection between the opportunity today and the opportunity that they had years ago that the fortunes, the titans of industry that were created from the spread of the railroad and that’s how that promo started.
It was, “You’re looking out over train, you got Top Hat and Tails and blah, blah, blah,” and he started off that promotion talking about the industry, the vendor bills, the people that need monster legacy type fortunes from that and he equated that with a similar opportunity that we have now at the time with the spread of voice over IP and that promotion put their company on the map. That one idea put their company on the map.
Exactly, that’s … You’re so on the money, that’s exactly right. Let me say this, that there are some instances where you can get away with that, right. I teach clients that, if you’re in a level one … If you’re in a marketplace that’s level one marketplace sophistication and that term comes from Gene Schwartz.Everybody listening should read Breakthrough Advertising every single year. If you’re in a level one marketplace where the promise … The primary promise that you are about to make has never been made to that market before.
All you have to do to stand out and get attention is make that promise. The first time that, the first company released fat burners, you know that the pills that you take to burn fat and speed up your metabolism. All they had to say was take this pill and you’ll lose weight highlight.
Right it was revolutionary, it’s breakthrough it’s never heard before, it was different, it was unique, it was exciting, it was compelling, it was crazy, right. Today I don’t care how great your supplement is if your ad is just take this pill and you’ll lose weight, you’re going out of business.What happens is what if you’re in a market where you are talking about how to make money investing in voice over IP and other people have said that already. Well what do you do, how do you breakthrough the noise how do you get attention? You develop a big idea.
Absolutely man, I think that you, and that’s why that’s the brutal truth. The brutal truth … The brutal reality is that marketing is all about perception, marketing is about positioning, it’s about couching. You can present the same thing 12 different ways and those 12 different ways can have a widely different impact on the perception that people have of the product.You’re absolutely right. Look, you can allow your product to be viewed as a commodity by the way you describe it, the way you position it, the way you present it or you can differentiate it and there are always ways to do that, even in the most commoditized markets there are always ways to re-position what it is that you are bringing.
We’ve got clients in over 70 different niches with some of the most … Some typical products and some of the most insane products like custom soaps and all kinds of crazy, crazy products and there’s always a way.
The thing that we didn’t talk about is that you … All marketing funnel development, all marketing funnel engineering always, always begins with research or at … At Marketing Funnel Automation we teach a process that’s called, “E5 CAMP.” CAMP stand for customer acquisition marketing protocol and the first E … There are just five stages.
The first E is examine and we teach that you have to examine, research your prospects, your competitors and your product.
Because you have to … Meaning that there are things that you look for obviously with prospects, you’re looking for wants, emotions, beliefs. With competitors you’re looking for what’s their primary promise? Are they using a unique mechanism? What are their offers look like?
When you’re examining the product that’s where you’re digging in and you’re looking for fodder, you’re looking for bits that you can use for unique positioning. All of that … That’s why I say that a big idea is developed. It’s developed out of the examining you do and it can be done you just have to dig and invest ample time in that examining stage.
Yeah, absolutely and it’s funny because I’ve … I’ll never forget I was doing a conference in the UK and the conference was all filled through our funnel with direct response and I had probably just 800 people in this conference room in the UK and a couple of the guys came up to me after and he said, “I don’t think this direct response stuff will really work in the UK. It won’t work on the Brits.”I said, “Why are you here? How did you get here?” “Well you sent us an email.” “Where did the email send you to?” “Well to a page.” “And what was on that page?” “Well, sales letter.” I’m like, “Did you ever purchase other stuff from me?” “Well yeah, absolutely.”
I’m thinking like, “Okay it works on the Brits, right?”
To your point, you are right people would go there and they’ll look and go, “I would never buy that, that’s not the right, you know it won’t work,” but it will and I can’t … I’m glad to hear you say because I’ve had that conversation so many times … That argument so many times.
At the root of it is the idea you’ve broken it down, you have explained it the more succinctly and better than I think I’ve ever heard it explained which … Kudos that was amazing.
I think it really depends on … I’ll give you some general stuff that like just applies across the board but if you want to get into some specifics yeah we could talk about … I’m just trying to think of … Like it really depends like what is … It depends on the product, it depends on the price point you know there are different marketing funnels that are working more effectively for different products. Sometimes … In certain markets free plus shipping offers are doing really well.Even Ecommerce today like free plus shipping is a very, very effective strategy today because it allows you to advertise products for free on Facebook and then break even with your shipping cost but then through the up sales, you’re able to recoup your headspin.
Generally just a few things that I would say off the bat, number one … Let me just try to think for one second what, and push me if you want some other, some more. Number one, everybody on here should be adding a bump offer on their order form. I don’t care what you’re selling, a bump offer is just an extra offer on the order form that just requires a check box to be ticked for somebody to add the extra offer to the order.
It should require no more than three sentences max to explain it. It should be a fraction of the cost of what it is that they are buying. If you’re selling something for 40 bucks you should have a bump offer that’s $14, $19 even $23 max but you will see that a tremendous percentage … It’s a rarity that we don’t see at least 35% of people to take that in some cases we see as high as 60% take advantage of the bump offer.
One other thing that we are seeing is that, and we’ve see this for a little while now but the old school idea of offering a, “Up sale” like McDonald’s does a One Click up sale after the main product.
An up sale that’s three times the cost of the main product. Typically what you hear on the internet marketing circles is, “Hey do what McDonald’s does and after somebody buys your $100 product bring them to an up sale that is three times the price typically, offer them something for $300. That’s what McDonald does you need to do that.”
The reality is that’s not at all what McDonald’s does. Like I say … I’ve said many times before, “Where in the freaking real world of commerce can you go and are you offered something that’s three times the price of what you just bought,” nowhere. You go in you buy an iPad you’re not offered an iMac, you’re offered a charger, you’re offered a case, you’re offered …
One of the things that we found is that we use what’s called a reverse add-on. A reverse add-on is really the, it’s really the mainstream way of doing “up sales” A reverse add-on is an additional offer that delivers more value it either brings them quicker results, makes it easier or it gives them something that’s the next step in the journey for them and it’s a fraction of the price of what they just paid.
Typically we price those add-on offers up to 80%. If somebody paid $100, we’ll offer them an add-on that’s up to $80.
At 80% you can expect that … When you price it at 80% you can expect to see anywhere from 30 to 40% of your new customers take advantage of it. When you price it at closer to 60% meaning if you just sold somebody something for $100 and now you’re giving them an add-on offer for $60, you could see upwards of 50 to 60% of your new customers take advantage of that.
There’s additional benefits to doing that beyond just increasing average transaction size. One of the things that nobody talks about, Derek, is that we found over, and over and over again that there is an inverse relationship between take rate on your up sales or your add-on offers and refund rate. Meaning that the more of your people that take advantage of your add-on or up sale offer the lower your refund rate gets.
It’s something to think about, right? The people that take two up sales or two add-on offers are significantly less likely to refund compared to the individual that just takes the frontend product and nothing else.
You’ll test it … Measure it yourself and I think that you’ll see that are more often than not. We don’t only use our add-on offers to bump average transaction size, we use them to bump average transaction size and to reduce refunds and to identify our hottest new customers that should be moved into the backend that much quicker and so there is that.
The other thing and it’s more general for those people that are using Facebook advertising and doing any kind of media buying that the days of … The days of simply running an ad and sending people to a direct to a squeeze page are … Those days are dying a quick death and today unfortunately or fortunately it depends on how you look at it, you need to, with a lot of third party platforms, leverage an additional stage of content.
You need to use compelling content first. Like on Facebook without going into excruciating detail on the Facebook advertising platform. You need to put out valuable and content that’s related in front of your targeted audience so that you get your … I’m drawing a blank here, your score on Facebook down. It’s amazing how your cost by click will go up, excuse me, will go down when you’ve used content first to identify a targeted audience.
When you create engagement with content on Facebook, your cost per click will … And so there is a whole different game today. We have somebody on our team that does that. That’s a massive shift.
Yeah, the answer is … And I feel you man because what you are asking is exactly the way that I felt and why I resisted it. Like thinking that, “Wow you are running an ad that’s actually a piece of content and then from the content you are either retargeting them or you’re running another ad to get them too.”The answer is ultimately, yes that in the end, the result that you’re looking for, the result that we’re getting is the same but let me just give a caveat.
The caveat after to that is this, this could be a whole another episode or conversation that we have. I’d love to have it with you man because I’d like to pick your brain a little bit but, is the fact that, we are in the math game right? Like we’re in the arithmetic game. That’s like something that I first learned very early on, ignored it for many years until I realized like that we are in the numbers game.
I don’t mean numbers as in volume, I’m not talking about salesmanship where it’s numbers, you got to see people, you got to see people. I’m talking about that it’s actual, it’s actual math. You need to understand the math of direct response marketing.
I say that in this context with what we’re talking about because ultimately, what we are looking for on the front end … The front end being all the marketing that we do to acquire new customers.
Not the marketing that we do, when we’re marketing a product to an existing customer, somebody who has bought already, that’s back end. Front end is all about customer acquisition. Our goal with the front end is to acquire the maximum number of new customers at a reasonable cost. What is a reasonable cost is different for every business and is what we’re constantly working on.
In our business we’re willing to go negative on the front. Meaning that, “I’m willing to pay …” Let’s just throw out an example, “I’m willing to pay $55 to acquire a new customer even if that customer only spends $45 with me.”
That’s only because right, we know our numbers, we know what the average customer is worth, we know when the second purchase is coming on average, we know how much the average new customer spends over the first six months with us. I share that with you because we’re always working on being able to invest even more, to get a new customer.
Let me throw this out. I know I’m rambling a little bit so I apologize for that.
I used to have this idea early on that I believe holds back … I know it held me back and it holds back a lot of entrepreneurs and small business owners. That is like the typical mindset is that you want to invest the least amount that you possibly can into marketing.That’s like what the average mom and pop believes like, “I want to spend … If I could spend zero on marketing, I’m crushing it. Like I don’t want to spend 10 grand a month or 20 grand or 50 grand I want to spend the least amount that I possibly can.”
The reality is that the biggest direct response companies, the most successful direct response companies and marketers view marketing and customer acquisition very differently from that. In fact it’s the antithesis of that view and that is that, “I want to be able to invest the most amount that I possibly can.”
We teach clients that there are three different ways to approach customer acquisition or three different ways to view what it is that you invest and spend in customer acquisition.
The first is the typical mom and pop. The typical business owner out there they’ve got a small business online, offline whatever, they look at every transaction the same way. That it’s a transaction is a transaction. They’re looking to get … They’re looking to have a profit margin in every transaction regardless of whether it’s with a brand new customer or a customer who is on their tenth purchase.
They don’t see the difference between front end/back end, there is no difference, the purpose of a transaction for them is to generate profit.
Then we’ve got the next level of entrepreneur or marketer who understands the difference between the front end and back end and the difference in objective between the two. For those at that level we start them on the frontend that break even. That just means if they spend a $1,000 or invest $1,900 in Facebook ads, in Google AdWords, in email solos, in banners whatever that all we’re looking to do in that campaign is to acquire enough customers to recoup the $1,000.
Because again the whole objective of the frontvend when you’re marketing to prospects is to acquire maximum new customers at a reasonable cost. In this case the safest cost if you’re going to use that word is break even. That means I lay out $1,000 I get $1,000 back but with that $1,000 I now have new customers that I’m going to put into the back end and I have leads that we can follow up with.
It’s not a cost, it’s not an expense, it’s an investment. I put out $1,000 I get the $1,000 back with customers, with leads and now I have the ability to put those customers into the back end to provide them with more value, they spend more money and we have the opportunity to follow up with leads with different promotions, different offers, different products and so on.
It’s not an expense, it’s an investment.
Then we’ve got the third stage which is exactly what I mentioned, which is where you go beyond break even when you have the cash flow and you know your numbers, you know your lifetime customer value. You’re able to invest in acquiring customers, you’re willing to invest based on not what their value is today but what their value is going to be in a month, in three months, in six months.
In essence when you operate at that third level, you’re thinking more like an investor. You’re investing in the acquisition of assets. Those assets are your customers and those assets have a certain worth today that’s what they spend with you today in that first transaction and they have a certain value with you over the next month, two months, three months, four months.
In essence you’re investing a dollar for a stock that only pays you 50 cents today but then it pays you 50 cents again next month and the month thereafter and the month thereafter and the month thereafter and the month thereafter.
If you knew that, if you knew that with certainty because you know your numbers and you had the cash of course you’d trade a dollar today for six dollars and fifty cents in six months. The thing for everybody to realize is that going back to the second level which is where I recommend everybody to begin it’s the safest field to play on, is that why would you want to arbitrarily cap how much you could invest if every time you invest a dollar or $100 or $1,000 or $10,000 you got that money back plus customers and leads?
That’s you building your customer base, you building your list of leads for free. Why would you want you have an arbitrary marketing budget that says, “Hey we can only invest 2,000 when … If every time you put that 2,000 in you get the 2,000 back plus customers and leads?” It’s a foolish mistake to arbitrarily cut that.
Like when we used to work with agencies in the past, traffic agencies before we brought it in-house they would say like, “What’s your budget?” And I would say, “If you’re a break even spend as much as you possibly can as fast as you possibly can.” Like spend it all. Don’t … There is no limit.
That’s such a powerful message and you explained it so well and it’s one of my beefs right, I’m doing a conference I’m working with the clients and my students and one of the questions I get is, “Hey I’m about to start … I want to do some paid advertising by Facebook traffic or AdWords or something like that,” and they say, “How much should I budget?”I say, “That’s the wrong question, it’s completely the wrong question. We’re direct response marketers we’re not branding.” Right? That’s not what’s about.
Yeah, because you’re so right man, it’s that old school mom and pop mentality where they’re looking at that marketing as an expense, as a line item on their PNL as if it was the same as the telephone and lights.They don’t realize that like, “Look if you put a dollar out and you get a dollar back plus a customer and a lead, why the … You should want to put that dollar in every single minute of every single day constantly.“ That’s the game, that’s the difference in … There are some marketers that ask me like, “What is …?” Like Todd, “If there was one secret to growing big and growing fast, what is it?”
Well, certainly the sides assuming that they’ve got the marketing stuff now that we talked about like the basics of direct response, like they’ve got that stuff nailed, it’s all about how aggressive are you willing to be with customer acquisition. Like that’s it, that’s the whole game.
Here’s the thing, you’ve been doing this for a while you’ve worked in the offline world as well, you have … I’m sure you’ve done some direct mail stuff like that. The cost to test the speed at which we can test now and the ability now to shorten the lifecycle of selling and make back profit has shrunken massively.I mean we used to do direct mail stuff and just the upfront cost that you would have to put out before you’d even see a penny back was massive.
Today we can set up marketing funnels quick, we can buy traffic, we can start getting results quickly fine tuning up selling and it’s incredible what we can achieve today. For what comparably used to be a huge investment.I could go on all day. I’m really enjoying this conversation but we are almost out of time and you have fully over delivered. The last question is, where do people connect with you, where do they learn from you, where do they find out more?
That’s awesome, they can just go to marketingfunnelautomation.com, click on the blog, we’ve got a bunch of great articles, you can jump on our list somewhere if you want to keep hearing my crazy ideas.If you want to learn more we have a great marketing funnel tracking application that you can check out if you want to better understand your numbers that’s at conversionfly.com and certainly you can reach out to me on Facebook.
I love … We’re blessed men with what we get to do in terms of like, I could tell Derek how passionate you are and I’ve known that you’re passionate … I’ve actually followed you for some time myself which I didn’t get to say at the beginning of our time together. Yeah man, anybody can reach out but marketingfunnnelautomation.com is the spot to go.
Awesome love it. All right everyone that was marketing funnel expert Todd Brown who just absolutely blew us away with so much valuable information and knowledge and some incredible words of wisdom that I really want you to listen to this a few times, especially if you’re just getting started because there’s so much foundational stuff in there that if you don’t get this right you’re going to struggle.As always any links we mentioned you’re going to find that on our site at projectignite.com/podcast., we’ll have all the links included with our kickass transcript.
Don’t forget if you haven’t done so already, make sure you subscribe. Head over to iTunes, subscribe if you haven’t already, leave me a rating, leave me a review I love to hear that stuff if you don’t use Apple head over to Sound Cloud or now we’re on the Google play store or so.
Now guys time to take the tips, the tools, the strategies for marketing funnels, everything you learned here today and apply the ingredient that will actually make this stuff work for you, and that ingredient is action.
Go forth, take action, apply what you’ve learned and stay tuned for more info packed episodes of the Project Ignite podcast.
This is your host, Derek Gehl, signing off.