Before you start working on building your sales funnels it’s crucial to take some time and create your value ladder – your products and services mapped in ascending order of value and price. Don’t underestimate the importance of the value ladder! It’ll help you bring structure into the variety of your offers and figure out how to better cross-promote them.
General Concept Of The Value Ladder
As your customers “ascend” your value ladder, you offer them more valuable products/ services. Thus, the prices of your offers also grow.
Your value ladder may consist of fewer tiers than on the diagram above. Although, offering multiple value tiers at various prices gives you a higher chance to meet all the expectations of your customers.
Tiers Of The Value Ladder
This level includes some free materials you give away to attract your potential customers and grow your email list. The ultimate purpose of this tier is to qualify and capture your leads. As a lead magnet, you can use a checklist, cheat list, video, free sample of your product, trial or coupon.
2. Initial Offer
It’s a low-end product you offer that ideally should cover the cost of advertising. If your leads buy this product it means that they’re willing to spend money to resolve their pain with your product.
The price of the initial offer ideally should be less than $10 or “Free plus shipping”. A book, course or product can be your initial offer.
3. 1st Tier
For your first tier of the value ladder you may use low or middle range products and services you. Their main goal will be to generate profit and build trust with your customers as they receive more value from you.
At this level, you may sell a course, low or middle prized product or service.
4. 2nd Tier
Products from this tier serve to generate profit for you and ideally recurring revenue from membership or continuity programs. Courses, membership, custom service, or products from this level should be priced less than $1,000.
5. Top Tier
This level includes the best product or service you have and which you’ll price more than $1,000. It can be done-for-you services or masterminds which will increase your profit even further.
Many times, businesses that sell physical products can’t “ascend” customers the same way as digital and service-based businesses can.
It’s quite easy to structure all your offers into a value ladder if you offer your clients some digital products or services. But if you sell physical products the approach will differ a little.
The Hub And Spoke Model Of Value Ladder
If you sell physical products you should use the hub and spoke model. Your core product will be the hub and all the accessories and peripherals that supplement the core product or solve problems it creates for your customers will be spokes.
Let’s imagine you’re selling cars. It shouldn’t be difficult to come up with an idea of an item you may use as a lead magnet. You may even find a product under $10 to sell as an initial offer. But after that there’s not much you can do – you have to sell a car.
However, after your customer buys a car they’ll need a lot of additional stuff – accessories, maintenance, insurance, etc. In this example, the car is a hub and the additional products/ services are the spokes.
It may take your customers weeks or even months to go to the next level of your value ladder. Some of them will only buy a product from one tier and leave. This is where offering a continuity program will give you an advantage as it’ll help accelerate ascension. What you can offer:
- A car dealership can offer oil changes as any car needs them.
- Digital products businesses can offer a community and/or premium support as a recurring offer.
- Dentists can offer 6-month check-ups.
Down Sells Hack
One of the best ways to help people ascend your value ladder quickly is to reduce the entry price to the next tier. You can do this by offering payment plans to your customers.
For example, instead of selling your product for $147, you can split the price into three payments of $49.
To sum it up, while working on the creation of your offer devote some time to map out your value ladder. It’ll help you to get more leads, better market and cross-promote your offers, and as a result, sale more.