What Is A Value Ladder? (And Why You Need One In Your Business!)
Updated: Oct 4, 2019
In the modern business climate you cannot survive without a value ladder.
Customer Lifetime Value (CLV)
The value ladder is all about customer life value.
Put simply, how much money are you making off of each customer. If your business is only serving a customer once, then your business is in trouble. You will be constantly in a cycle of acquiring customers.
If you have been in business for any amount of time, outside of operating costs, customer acquisition costs are one of the largest expenses for any business. It becomes really hard to scale if you are not able to increase revenues outside of acquiring new customers.
You need to increase the average value (revenue) generated by each customer you acquire.
Enter the Value Ladder
I first heard of this concept of the value ladder from the marketing genius himself, Russell Brunson. The value ladder is well documented in Russell’s book, Dot Com Secrets which by the way, is totally free at the moment if you pay shipping and handling. It’s by far one of the best marketing books I’ve ever read, so if he still has some in stock I recommend you secure yours before their stock expires.
The value ladder is all about guiding your customers through a sales funnel that obtains the maximum revenue from each of them, while providing value at the same time.
As you can see from the diagram, users enter a sales funnel by being baited into a free + shipping book offer.
If this is where the offer stopped then you would most likely be breaking even or possibly losing money. When a customer opts in for the book they provide their email address and shipping information in exchange for the book. Now you have acquired a customer.
The next step is to use an automated mailing system like the one included in ClickFunnels, you can easily push them further and further up your value ladder. The higher your customers are on the value ladder, the more money you are charging them for higher ticket items.
Maintain continuity by increasing value
In business, many of the rich say that “a business without continuity, isn’t a business at all”.
I have to say that in most cases, they’re right. If you can put yourself in a position to charge customers regularly (monthly/annually etc) for a product that that they end up relying on, then you are onto a winner.
If somebody relies on value from a subscription product, then the pressure to cancel their subscription is higher. Some examples of subscription products could be software, or a exclusive membership access to a community. These days you can get software designed online for a few hundred bucks via one of the many outsourcing sites available. Let’s say you took the outsourcing approach and launched a software product that managed web statistics for a customers website, when the product gets traction and your customer base grows, you can always use the money earned to hire a team of developers to redevelop your product if that’s what you’d prefer. You do not need to understand how to code, instead just an idea and the will to execute. I’ve seen this done many times with MASSIVE success. Lock those customers in.
High Ticket Items
As you ascend your users up your value ladder, you should always have a high priced item in mind, because there WILL be a subset of customers that are willing to pay a lot of money for the right value. An example of this could be an event, or one to one training with you. You could have customers paying as much as $5000+ for 3 days training using this exact method. Not every customer has this budget, and that’s fine, but throughout your sales funnel process, a subset of these customers will have the disposable income to buy in. Take advantage of that and make sure you provide value. Give them their money’s worth.
Give Yourself The Best Chance of Succeeding
Creating a highly profitable value ladder is easiest when you have the tools that save time. I fully recommend a product called ClickFunnels to build out sales funnels and carve out money making value ladders. The growth of this product is booming, I genuinely believe it is changing business forever.
The DotComSecrets book is free and goes into great depth on how the value ladder can improve your business. It’s the single greatest book I’ve ever read, and for me, that’s saying something.
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