Pricepoints, Cold Leads, & Customer Quality

Mar 11th

It is much easier to get people to impulse purchase a one time $79 product than it is to get people to join a higher value but higher price-point recurring program. When I changed my business model the sales rates changed significantly. Just before changing the model the sales rate for the ebook peaked at an all time high. And just after launch the sales rate for the membership site was even greater than my best sales rate for the ebook, but then sales slowed down a bit. As I refined the some of the marketing strategies, order volume has picked back up again.

The area where sales really dropped off was the areas you would expect to fall most - cold search leads and affiliate traffic. It makes sense too, because when you are selling a membership site you are largely selling trust in your brand, and building trust is a process. It requires more of a presell. Those who are unfamiliar with you will take a lot more to convert than those who have grown to know, like, and trust you over time. Those who have read this site for a long time are much more likely to become members than less qualified prospects who just discovered this site today.

I still have a bunch of ideas for warming up cold leads which I will get to try over the coming months, but some of them requiring sourcing from other providers, and that is a process. The cool thing about changing your business model is that you learn a lot about different sales strategies...it also shows you the different strategies needed to sell different ideas. And it is a bit of a thrill to one day just pull the plug and switch everything. You can try to predict what will happen, but your predictions will usually be wrong. In the shift there will be hidden good deals and hidden bad deals. Just to highlight a couple, out of dozens of them...

  • Hidden good deal: when setting up the ability for SEO Book buyers to get a free trial my programmer turned that free offer process into something that required setting up a Paypal subscription. That prevented many non-committed people from joining. Which works out nicely for me as I don't spend more time servicing people who were not really interested in the first place.
  • Hidden bad deal: when I emailed affiliates about changing my business model, many affiliates that had no sales or traffic were demanding and rude. A single sentence in that email probably wasted over 10 hours of my life.

I theorized before changing my business model that as a result the customer quality and value of customer interaction would sharply increase while my frustrations with the worst customers from yesteryear would diminish. That turned out better than expected as well.

Some of the people who bought my ebook in the past would buy it but then be lazy, see no results because they did not read the book or do any marketing, and then basically try to get $20,000 worth of consulting out of me for their $79, not listen to my advice when I give it, and then do a reverse charge after sending me a few 15 page emails and wasting hours of my time.

The problem was that there was no recurring opportunity cost to customers, so many of them felt it was their job to abuse me and treat me like a machine. And so then I started thin slicing to guess "is this a person who I can help or a person who will just waste my time?" but that thin slicing turned off some customers. My wife thought I was slow to respond and I sounded a bit like a jerk when we first spoke. :(

The nice thing about my current price point and member registration is that it is just beyond the impulse purchase range, so I am selling to the right customers. And since it is an ongoing training program, it attracts the type of customers who want to do work vs those who want a free ride or a person to outsource the blame upon. The community has been both fun and rewarding. I have been surprised at how well it has worked out. I just wish I would have been a better listener when NFFC gave me so much great advice back in 2005!

One huge disconnect I still have is that many people who reference this site today are still referencing how great the book is (but it no longer exists as an individual entity, only as part of the training program). The domain name, years of content creation and market participation, and all the money spent on advertising all work to make that well remembered, and I need to work on shifting that...which is probably a lot harder that it sounds.

We spend so much time worrying about public relations, link building, and all kinds of external stuff...that we do not set our businesses up to establish and build relationships, and get the most out of what we are already doing. If you do well with the traffic you already have then you can always invest more in public relations, ppc, advertising, and link building.

Published: March 11, 2008

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Comments

March 13, 2008 - 1:25pm

Hi Aaron

You're absolutely right. We had an SEO book in a relatively narrow niche (the Joomla! CMS). In October last year we moved to a subscription format, put the content online instead of in a PDF and started a members-only forum.

The results?

1) PayPal Chargebacks dropped from 5% to 0%. Not one in the 4 months since we launched.

2) Members are far more willing to contribute and help each other. The number of problem customers shrank very rapidly.

3) We're able to experiment more with the training materials (PDF checklists, videos)

4) Our book isn't on warez sites any more.

5) I enjoy the business a whole lot more.

March 13, 2008 - 9:55pm

Seems there is more respect built in the relationship if there is more interaction and people are asked to attach themselves to their actions in a more meaningful way.

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