Gary Halbert often taught that getting really good at marketing came down to two things…
First, you have to understand behavioral psychology. That’s the study of how people behave.
You know: Pavlov’s dogs, but with humans. You put a stimulus in front of people, how do they respond?
Not that you — or your prospects — are a dog.
Rather, we do tend to behave in rather predictable ways. And this applies even more so when measured in averages across groups. If 5% of a representative group of an audience responded to an offer, it’s pretty likely the rest of the audience will respond at a similar rate.
This is the essence of direct response. What works to generate response?
The second element to getting really good at marketing, according to Halbert, was math.
And we’re not even talking complicated math here. Mostly, the kind of math you need to know is pretty simple.
Statistics 101 is about the most advanced math that the average marketer needs to know. Especially today. Especially considering all the tools available today that do the math for you. (e.g. You seldom find a split-testing tool that won’t run the numbers to tell you that Version B will continue to outperform Version A with 99% confidence. All you have to know is that you probably want to keep running that test until it’s at least 95% and preferably 99%.)
There’s a new kind of math that’s even more important in 2019 — funnel math…
Gary Halbert — “The Prince of Print” — would have had a heyday in today’s marketing environment.
His students are creating these sophisticated multi-step online funnels with upsells and downsells and behaviorally-triggered follow-up sequences and more.
Gary made his riches when you had to make your direct mail campaign pay off in a single mailing. (Or at the very least understand customer lifetime value to the nth degree so you knew you could make back a 30% loss within 60 days by marketing to your recent buyers.)
Today, lifetime value is just as important. And all the top marketers understand that you can lose money getting a customer if you understand your numbers well enough to know you’ll make it up in an acceptable time period.
But there’s a number I hear everyone talking about far, far more.
Cart value is 95% of your success today…
At least in competitive markets.
Take two promos. They’re selling the same product. They’re being tested against each other. One gets a 5% conversion. The other gets a 5.5% conversion.
Which means for every 1,000 people who see Promo A, 50 become buyers.
And for every 1,000 people who see Promo B, 55 become buyers.
B is the winner, right?
Because the cart value on Promo A is $98 per conversion.
Whereas the cart value on Promo B is $72 per conversion.
Let’s say your traffic cost is $4 per visitor. That means it costs $4,000 to send 1,000 visitors to each promotion.
Promo A generates $4,900 revenue from that $4,000 investment.
Promo B generates $3,960 from the $4,000 investment.
In the long run, factoring in lifetime value, both are probably profitable and could be run.
But Promo A generates a $900 profit for every $4,000 spent.
Whereas Promo B generates at least a temporary loss of $40 for every $4,000 spent.
So even though Promo B has a higher conversion rate, Promo A is the winner.
Now here’s where this gets even more powerful…
Let’s assume these are NOT two promos being run by the same marketer. Rather, they are two promos being run by competing marketers, buying the same ad space and renting access to the same lists.
The marketer who has Promo A profits at $4 per visitor.
The marketer who has Promo B incurs a small loss.
That means the marketer who has Promo A could actually afford to bid up the price of the media. Instead of $4 per visitor, they could pay $4.50 per visitor.
They’re still making $400 for every $4,000 spent.
Whereas the marketer with Promo B is suddenly losing $540 for every $4,000 spent.
The economics have changed drastically.
The marketer with the better economics can price their competitor out of this market, by paying more for media.
NOTABLY: This is true even though they have a lower conversion rate on the front end!
Going back to Halbert’s lesson… You MUST understand math to be a great marketer.
Because most decent-sized markets with solid revenue potential are full of marketers who understand this stuff. And if you don’t build your business to compete, you face a much harder time.
Now: What works to boost cart value and maximize your funnel upsell revenue?
I imagine that’s what you’ve been waiting for.
And I want to share a really important principle with you.
Something that kind of goes against common sense. But something that I’m seeing and hearing is proving out in market after market.
Funnel upsell core principle: People are most likely to buy more of what they just bought.
I know, I know. Sounds a little crazy. Because you think, “They just bought that, why would they want more of it instead of something else that’s complementary?”
And this same logic has applied to how most marketers have approached funnel upsells.
So, for example, someone buys a monthly financial newsletter, and the next logical step would be to offer them a trading service focused on faster moving opportunities, from the same guru.
But in terms of cart value, you’ll likely find that actually upgrading them from a 1-year to a lifetime will be better.
If you’re selling supplements, you may get them in the door with a buy-one-get-two-free offer. You’re likely to find that another offer of even more bottles of the same supplement are your best upsell offer.
Doing coaching or consulting work? You could easily find that you increase your per-client value by immediately offering a bigger package deal (12 weeks of weekly coaching, for example) right after someone has purchased an hour of your time.
We can rationalize it, using hindsight.
They’re proven buyers for what they’ve just bought. They’re at their most “bought in” to the benefit of that product, in that moment. It would make sense that extending that benefit further into the future would be the most obvious next purchase.
But what if you don’t have a product that’s consumable like these? What if your product is a one-and-done?
Still, try to apply the principle as much as possible. Keep your second offer as close in type and benefit to the first as possible. Yes, it can be the next step.
But fundamentally, you want to make it faster, easier, cheaper for them to see the benefit of the solution they just bought to the problem they just indicated they had through making that purchase.
Give them more, even if it’s not quite of the same thing.
There are more considerations. Including pricing, packaging, and more.
But if you get the offer right — using the above — you will have taken the first, most important step toward maximizing cart value.
Yours for bigger breakthroughs,