How to Increase Your Revenue by 20% or More by Tweaking Your Sales Funnel

by Deepak Kanakaraju on February 16, 2014

funnelA bird in the hand is worth two in the bush. A buyer in your CRM is worth two prospects in your email list! A buyer has proved that he has an intention and the capability to buy and will buy further if he is presented with an offer that makes sense.

If you build a list of people who are just curious about your product but have no intention to buy anything, you are never going to have conversions from this list! So the whole idea is not just to get more people into your sales funnel but to get more buyers into your sales funnel to whom you can present great offers and convert them to premium customers.

Getting more buyers into your funnel is easier said than done. But with some counter intuitive techniques there is a possibility to increase the number of buyers and revenue. You just need to make a simple tweak in your existing funnel. To illustrate this let us take an example of a typical sales funnel with prospects, a $10 front-end product and a $50 back-end product. 

Case 1: $10 front-end, $50 back-end

salesfunnel-1

Case 1: You build an email list of 100 people and present them with a front-end product worth $10. Let us assume you have a 10% conversion ratio and 10 people buy that product. Let us assume that you have a 10% conversion ratio again on the buyers list and 1 person buys the back-end product for $50. Now your total revenue is $100 + $50 = $150.

Case 2: $1 front-end, $50 back-end

salesfunnel-2

Case 2: You can price the front-end product for a ridiculously low price such as $1 and you will have a higher conversion ratio. Let’s assume 30%. Now instead of 10 people being in your buyer’s list, you have 30 people in your buyer’s list.

If you apply the same conversion ratio for the back-end product, 10% then you would end up selling 3 units of the back-end product. Your total revenue would be $30 + $150 = $180. So with a simple tweak, we have increased the total revenue by 20%. (The numbers may differ across markets but the logic is the same).

Will they convert at 10% again?

The hesitation about this tweak for many marketers is that they assume people will not convert at 10% on the back-end when the front-end product is priced very low. But in my experience (and fellow digital marketers’ experience), a $1 buyer is not very different from a $10 buyer.

Really? How? Let’s explore…

When someone pays $1 for a product he becomes a qualified buyer even if the transaction value is very low. More than him becoming a qualified buyer, we have just disqualified 70 people who are non-buyers. You can be quite confident that they are never going to buy your back-end product for $50 when they have not shelled out $1 for a $10 product.

So let’s forget about those 70 people who have just qualified themselves as non-buyers. Now this frees up your time and resources to focus on just these 30 buyers to convert them again into premium customers.

Will these 30 buyers convert at 10%? In fact, they may convert at a percentage more than 10! How?

In Case 1, when they buy a front-end product for $10, and they got $10 worth from it, they may or may not buy the $50 back-end product. The second sale solely depends on the cost-benefit ratio of the back-end product. There is no extra push coming from the front-end sale.

However as in Case 2 if you sell a $10 worth product for $1, they are getting a huge bargain and will be very happy that they got so much for such a low price. This builds trust and reciprocation.

You may not be making any profit from this front-end product and sometimes you may even have to incur some losses on this transaction, but in the end you have earned something priceless: Trust and the Intention to Reciprocate.

Now the buyers will be quite confident that they can trust you with their money again and you WILL deliver HUGE value.

So, this low pricing of front-end not only puts more buyers into the funnel but they are more likely to buy your premium back-end product because now (a) they trust you and (b) they would want to reciprocate the good bargain they’ve got. This will result in a higher conversion ratio!

What better qualification a lead can have than becoming a qualified buyer! Why focus your energy on converting leads into buyers when you can convert qualified buyers into buyers of premium products?

This tweak can be applied in any market, any price range, in any geographical location and it would still work because this is not a tactic based on a marketing fad but a strategy that is based on human psychology that has remained consistent throughout centuries.

Got some ideas spinning? Share your thoughts… leave a comment.

{ 5 comments… read them below or add one }

Karthik February 16, 2014 at 12:44 am

One of the best strategies I have heard about in recent times! If the product is really good, the buyers will also refer other people to buy the front-end product which gives even more buyers in the sales funnel!

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Deepak February 16, 2014 at 12:45 am

Agreed! But in information products that chance is less because they would just share it with their peers. But for SaaS and other products, it definitely would bring more buyers!

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Shabbir February 16, 2014 at 9:01 am

I did not understand the meaning of the following line

If you build a list of people who are just curious about your product, you are never going to have conversions from this list!

Also I don’t agree on the fact that if you sell your price at a discounted price, they have more trust and reputation. In fact people start thinking it as some cheapo product.

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Deepak February 16, 2014 at 3:38 pm

That line means that people who are “just curious” may not become paying customers. It is like a teenager drooling over the website of Ferrari. I cannot completely disagree with you, in some contexts what you say might also happen. Only testing different models can give us the answer.

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Sanjay January 12, 2016 at 11:46 pm

Worth a Read! Really Insightful! Thanks Deepak.

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