Downsell Your Upsell Ep 379

Summary Notes


In the podcast, the host and entrepreneur, Speaker A, shares insights on optimizing offer structures to maximize customer acquisition and retention for service-based businesses. He advocates for selling a high-value, defined outcome upfront rather than a recurring membership, which can increase perceived value and cash flow for marketing reinvestment. Speaker A emphasizes the psychological impact of price anchoring and how presenting continuity services as a downsell can enhance customer commitment and satisfaction. He concludes by highlighting the benefits of this approach, including covering onboarding costs, attracting higher-quality customers, and ultimately increasing profitability. Speaker C provides brief interjections to affirm Speaker A's points. Speaker A invites listeners to visit for further business growth strategies.

Summary Notes

Introduction to Offer Flow and Customer Ascension

  • The focus is on structuring an offer flow to ascend customers in various types of businesses.
  • Emphasis on service businesses, including brick and mortar, online businesses, and coaching services.
  • The goal is to encourage repeat business and customer loyalty.

"In this video, I'm going to show you how we've structured our offer flow to ascend customers."

This quote introduces the main topic of the discussion, which is about creating a strategy to elevate customers through a business's offer structure.

"So if you're in a service business or a brick and mortar, you're an online business, any type of business that sells service or coaching or whatever, of any kind, where you actually have to do something that provides a service to the customer and you ultimately want to get that person to come back again and again, then you're going to want to listen to this video."

This quote contextualizes the discussion, indicating that the strategies discussed are applicable to a wide range of service-oriented businesses aiming for customer retention.

Downselling the Upsell

  • Speaker A introduces the concept of "Downsell, your upsell" as a successful business strategy.
  • The speaker's companies make just under $100 million a year, suggesting the effectiveness of the strategy.
  • The approach is presented as an alternative to the standard recurring fee model.

"And so one of the things that I've been touted as been mine is Downsell, your upsell. And that's because our current companies make just under $100 million a year."

This quote reveals the speaker's claim to fame regarding a unique sales strategy and provides evidence of its success through the speaker's company's earnings.

Avoiding the Recurring Fee Model

  • Speaker A criticizes the standard recurring fee model for service businesses.
  • The speaker argues that selling a defined end program is more effective because customers desire an outcome, not a membership.
  • The strategy focuses on selling the outcome the customer wants to experience.

"And you sign people up and they go right into that fee. Here's why you're making a mistake. And this is why I've never done that model because I think it's horrible."

This quote criticizes the common practice of signing customers up for a recurring fee, suggesting it is a flawed business model.

"So if you have a defined end program on the front end, what you'll be able to do is sell more easily because people don't want a membership or recurring service, they want an outcome."

This quote highlights the speaker's argument for selling a defined end program instead of a recurring service, emphasizing that customers are more interested in achieving specific outcomes.

Entrepreneurial Mindset and Financial Success

  • Speaker A is motivated to help entrepreneurs avoid financial struggle.
  • The channel is created to share knowledge and strategies that can prevent viewers from being broke.

"And the reason I make this channel is because lots of people are broke and I don't want you to be one of them."

This quote explains the speaker's intent behind creating the channel, which is to provide financial guidance and support to entrepreneurs.

Packaging and Pricing Strategies

  • Introducing an upfront program with a defined timeframe and promise can increase perceived value.
  • A higher price point for upfront programs can be justified due to the promise of delivery and limited commitment.
  • Upfront programs can generate more immediate cash flow for marketing and customer acquisition.
  • The initial higher price can serve as a value anchor for future services, making continuity programs seem like a bargain.
  • Customers are more sensitive to cash flow than to total price, affecting their purchasing decisions.

"Some sort of continuity. And so the first thing we do is we package that as an upfront program that sells the promise."

This quote explains the strategy of creating an upfront program that offers customers a promise, which is a part of continuity, to enhance the perceived value of the service.

"Now, when we do that, we're able to increase the price because it's a defined period of time and because it has a promise that we're delivering on."

This quote emphasizes that the ability to increase the price of an upfront program is due to its clearly defined timeframe and the associated promise, which customers find valuable.

"So people will perceive it as more valuable than a recurring service and because people are always willing to spend more one time than they are on a recurring basis because it's not a commitment for perpetuity."

The quote suggests that customers perceive more value in a one-time purchase with a clear end than in ongoing commitments, making it easier to sell at a higher price point.

"So one, it's an easier sale. Number two is that you actually are able to acquire more customers this way because you have cash flow from this higher price point to spend more on marketing."

This quote details the benefits of the upfront program, highlighting the ease of sale and the ability to attract more customers due to increased cash flow for marketing.

"So you can actually use this upfront program or whatever thing as a way to cash flow your acquisition."

Speaker A suggests using the upfront program's revenue to fund customer acquisition strategies, highlighting a self-sustaining business model.

"But you use this sale first because it's easier to sell, it's more profitable, et cetera."

This quote reiterates the advantages of selling the upfront program first, such as ease and profitability.

"The next thing is that if you raise the price on this front end defined period, it will actually anchor the value of your services in the mind of your prospect, so that when you do sell your continuity, it feels like a Downsell, even though you're actually selling a bigger ticket."

Speaker A explains that a higher upfront price sets a value benchmark, making subsequent continuity offers seem more affordable in comparison.

Perception of Cash Flow Versus Price

  • The way pricing is presented can significantly impact customer perception and willingness to purchase.
  • Breaking down costs into smaller, recurring amounts can make them seem more manageable to customers.
  • Customers are generally more concerned with how a purchase affects their immediate cash flow rather than the total cost.

"And so one of the beauties of this is that this number three point goes into this, which is that people will always notice the cash flow more than the price."

Speaker A points out that customers are more attentive to how a purchase will impact their cash flow rather than the overall price, influencing their purchasing decisions.

"So, for example, if I say, hey, it's $18,000, someone will go, whoa. But if I say, hey, it's $1,500 a month. And it's like, oh, that's not so bad, right?"

This quote illustrates the psychological impact of price presentation, where a large one-time figure is more intimidating than a smaller monthly amount.

"People will weigh the cash flow more than they will weigh the price. It's probably easier. I guarantee you this. It is easier. And you will sell more people at $1,500 a month than you would buy $10,000.01 time up front."

Speaker A guarantees that it is easier to sell services at a monthly rate rather than a large one-time payment, due to customers' preference for manageable cash outflows.

High Cash Upfront Service

  • Introduces the concept of a high cash upfront service.
  • Discusses the strategy of using a high-priced initial offer to create perceived value for a subsequent, lower-priced offer.
  • Emphasizes the psychological impact of offering a more affordable service after a high-priced one, making the second offer seem like a bargain.
  • Suggests that businesses can benefit from structuring their services in a way that makes the downsell appear more attractive.
  • Encourages providing more value for less money to enhance the perceived deal quality.

"So we might sell this thing for $6,000 and this thing for $18,000, but this was six, and this only feels like $1,500 a month. So people will be like, oh, wow, this is a steal, especially if you actually give them more than what they currently just got for less."

This quote outlines a pricing strategy where a lower monthly cost is presented after an initial high-priced service, creating the illusion of a better deal for the customer. It's relevant as it demonstrates how businesses can use pricing structures to influence customer perception and increase the attractiveness of their offers.

Business Growth Invitation

  • An invitation is extended to business owners interested in scaling their businesses significantly.
  • The speaker provides a call-to-action for business owners aiming to grow their companies to reach revenue milestones.
  • Emphasizes the desire to engage with businesses looking to expand from a "big old business" to much larger scales.
  • Provides information on how interested parties can reach out for assistance in achieving their business growth goals.

"If you are a business owner that has a big old business and wants to get to a much bigger business, going to 5100 million dollars plus, we would love to talk to you."

This quote is a direct invitation to business owners with substantial businesses who aim to scale up to even higher revenue brackets, highlighting the speaker's interest in aiding such growth.

Building Continuity

  • Discusses the concept of building continuity in business through strategic pricing and service offers.
  • Highlights the importance of creating a sense of continuity between different service levels or products.
  • Suggests using the pricing strategy as a way to establish a long-term relationship with customers.

"That is how you build continuity."

The quote succinctly summarizes the speaker's point on using strategic pricing as a method to develop ongoing customer relationships and recurring business.

Onboarding Costs and Over-Delivery

  • Explains the benefits of charging more upfront to cover the costs associated with onboarding new customers.
  • Discusses the high costs and effort required to bring new customers up to speed with services and products.
  • Advocates for making a profit from the onboarding process rather than incurring losses.
  • Suggests that over-delivering to customers can be a strategic move when the initial cost is higher.

"It costs more to onboard a new customer. New customers require more attention, they require more effort. You have to get them up to speed, hire systems, you have to teach them how to be a customer."

This quote explains the rationale behind charging more upfront, as it compensates for the additional resources and efforts needed to integrate new customers into the business.

Customer Commitment and Prospect Quality

  • Discusses the correlation between pricing and customer commitment.
  • Suggests that higher prices can lead to more dedicated customers.
  • Proposes that improving the quality of prospects can elevate the quality of the product offered.
  • Emphasizes the importance of targeting the right customers to enhance overall product quality.

"The more you raise the price, the more committed they will be to executing it. And also, if you can raise the quality of your prospects, you will raise the quality of your product."

This quote highlights the speaker's belief that higher prices not only increase customer commitment but also that attracting higher-quality prospects can lead to improvements in the product itself.

Raising the Barrier to Improve Outcome Quality

  • Raising the barrier of entry for a service can lead to higher quality outcomes.
  • Higher quality prospects are more likely to achieve the desired outcomes.
  • By increasing the barrier, the service itself becomes more valuable.
  • The counterintuitive approach to raising the bar enhances the deliverable quality.

"Because if I had an identical product or identical service and I had a very able person go through it and a very unable person go through it, or a disabled person go through it, the likelihood of achievement of the outcome for the high quality prospect is much higher."

This quote explains that the success of a service is often dependent on the capabilities of the user, suggesting that targeting more capable individuals can lead to better results.

"And so by raising the barrier, we increase the likelihood of achieving the outcome that we're shooting for, which means that by its very nature, our service becomes more valuable."

The speaker is indicating that by making a service more exclusive or challenging to access, it inherently increases its value due to the higher probability of successful outcomes.

"And so by raising the bar, we actually raise the quality of our deliverable, which is crazy and counterintuitive, but that's why most people don't make money."

This quote summarizes the speaker's argument that improving the quality of a service by making it less accessible is a strategy not commonly used, but it can be effective in enhancing profitability.

Strategies for Selling Continuity Services

  • It is recommended to sell an upfront program to acquire customers rather than a continuity service.
  • An upfront program is easier to sell and can cover the cost of customer acquisition.
  • The upfront cost creates a price anchor, increasing the perceived value of the continuity service.
  • Raising the price on continuity services is possible when the initial program is more expensive.
  • Onboarding costs are covered, and customer experience is improved.
  • Higher commitment from customers leads to more value in the marketplace and increased profits.

"All right, so I'm going to bring us home here. So right now, in your current service, if you sell some sort of continuity, I'd highly recommend you not do that and instead create the upfront program that creates customers."

The speaker suggests shifting from selling ongoing services to selling an initial, more expensive program that can attract and create new customers.

"All right, this becomes the program that you sell in order to acquire customers because it's easier to sell because they understand it's the fined end. It will cover your cost of acquisition and probably profit from it."

Here, the speaker is advocating for an upfront program that has a clear end, which is easier for customers to grasp and can also cover the costs of acquiring those customers, potentially even generating profit.

"You will have a price anchor for your continuity that will make it more valuable and the perception of that more valuable."

The speaker is explaining that having an initial, higher-priced program sets a reference point for pricing the continuity service, making the latter seem more valuable in comparison.

"And you'll actually be able to raise the price on your continuity because the cash flow on that continuity be less than what they were required to pay up upfront, you'll be able to cover your onboarding costs and create an amazing customer experience so that you get them super up to speed, really believing that your business is amazing and can deliver on the promise you've made."

This quote explains that by charging more initially, a business can afford to enhance the onboarding process and customer experience, which justifies a higher price for the ongoing service.

"And then finally you'll have more committed customers that are higher quality that will ultimately mean that you're providing more value to the marketplace and you will be rewarded by dollars in your pocket."

The speaker concludes by stating that this strategy leads to more dedicated and higher-quality customers, which translates to more value being provided and, ultimately, more profit for the business.

Encouragement to Subscribe and Assurance of No Sales Intent

  • The speaker encourages listeners to subscribe for more valuable business insights.
  • Assures listeners that there is nothing being sold to them.

"And so if you found this interesting or you found this valuable in your business, click the subscribe button. I have absolutely nothing to sell you. I just want you to make money in your business."

The speaker is wrapping up the conversation by inviting listeners to subscribe for more content, emphasizing that the purpose is to help listeners make money in their business, not to sell them anything.

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