SFB Newsletter # 12

Hey 👋

I just finished reading a fantastic book called ‘The Man Who Solved the Market’ by Gregory Zuckerman.

I received some great advice a few years ago to read more biographies by and about billionaires, so in terms of my business reading I’ve been doing that almost exclusively. Anyways this book is about Jim Simons and his company, Renaissance Technologies.

Here’s the low down: Jim was a 'once in a generation’ mathematician - he started off working for the NSA cracking codes during the cold war. Then in 1988 he assembled a team of mathematicians, and other genius level scientists to ‘crack the code’ of the financial market. They started off with a $20 million dollar fund called ‘Medallion.’

Now, as some context, using hard data and machine learning algorithms simply wasn’t done at this stage. They were laughed at, ridiculed even for many, many years. This largely allowed the company to fly under the radar.

Jim had an underlying belief that there was a hidden order in the financial market and if they had enough data they could find the signals, and create an automated trading machine that was exponentially smarter than any individual human.

Today Jim is the 25th richest person in the world with a net worth of $30.6 Billion USD, and his company Renaissance has completely changed the way the financial industry functions. He’s a true innovator at the highest level.

It’s a fantastic book - I highly recommend reading it.

I wonder if you could guess their net annualised return over the 30 year period from 1988 to 2018..?

From 1988 to 2018 they achieved:
39.1% Average Annualised Net Returns.

They were able to generate $104,530,000,000 ($104.53 billion) in trading profits over the 30 year period, from just a 39.1% net average return, and that’s just from one of their funds.

They also have 3 other funds, that manage hundreds of billions of dollars.

Medallion in particular is the most successful fund every created, pulling more annualised % returns than Buffet, Ray Dalio and George Soros over the same period. Today the ‘medallion’ fund is closed for entry - only available to staff members of the company - they kicked out all the other investors (pretty badass.)

Another interesting point is that they were only successful (profitable) in just over 50% of their trades. Those tiny percentage points were enough to generate over $100 billion in profits.

So why am I bringing this up?

I believe there is a hidden order in business, and I also believe people massively undervalue the power of this.

That’s what I’m trying to share with you in this newsletter and inside my new book. Just as Jim Simons and his team have analysed thousands of data inputs to find signals and similarities, I’ve spent the last 10 years analysing thousands of businesses to find the signals…

What are the patterns in the winners and the losers?

I do this because I enjoy finding hidden laws and principles that make life easier and more productive.

Once I find a signal - I test it on the market - If it works repeatedly for myself and others, I build a model/system around it and share it with more business owners.

That’s what my models are; They are signals. 

When my clients work with me - they are making a commitment to ‘join the fund,’ tap the algorithm and use the proven signals we’ve found to scale up their businesses.

Even if you’re not a client, you can benefit - as I candidly publish my models and systems in my books and here in the newsletter.

Overall every single one of the models comes down to one thing.

Can your turn $1 into $2 - whilst building something you love?

Do you have a system to do that at scale?

All of the component parts: your mindset, sales system, product, your marketing, operations and your team will add up to create that.

And look, the two most important functions for this are; Product Innovation and Marketing.

Sales funnels are a nice middle ground between the two, because you have to come up with a cool product idea that is, in some way just slightly innovative and then I can help you to build a marketing system to profitably sell it.

That’s the current topic in this series on sales funnels within a series on marketing.

During each edition of the newsletter I’ve been building on previous concepts, so the people who follow along get the added benefit of compounding these signals into some kind of master business algorithm.

My intention is to add as much value to your business as possible, but I do require some time for you to read along to ensure you get the most out of it.

If you’re not up to date… Here’s the first newsletter, start there - catch up on anything you’ve missed and meet me back here…

Let’s keep moving…

In the last edition, we spoke about the general strategy of sales funnels and I gave you the pieces of the puzzle you can use to build your landing page. This exact landing page is the page I first observed in the market that was converting for 7 figure funnels.

I then tested it for myself and was pleased to find I could produce the same or even better results after a few years of testing.

Your success in the use of the ‘Systems for Business Signals’ will be purely based on your ability to test things. The best clients I’ve ever met are those who are constantly testing. If you’re not willing to test, you may as well revoke your entrepreneurship card - and head back towards the masses.

How to Use Upsells to Turn $1 into $2.

One of the amazing things about sales funnels is that you can easily present relevant offers during the checkout process that a percentage of people will take you up on. This allows you to Double Your Average Order Value.

In terms of the numbers… These are the KPI’s you’ll want to hit to build a 7 figure sales funnel. (with some slight shifts depending if you’re B2B or B2C - the data below is B2B)

The key to the whole system is to get the AOV beyond the Cost it takes you to acquire the customer and the cost of goods you sell. 

If you can do this you’ll be profitable.

But here is the problem: Over the past 10 years ad costs have been rising with the increased competition. The average CPA is higher now than it was 10 years ago - that trend is likely to continue. 

For example, it costs me approximately $30 on average to sell a copy of my book, and I’m pretty good at marketing…

So… How it it possible to make the numbers stack if my book is sold for $30 and it costs me $12 to deliver it?

In this example I’m left $12 in the hole for every copy of my book that I sell. This might be ok for VC funded companies who can wait months or years to be profitable - but for bootstrapped small businesses, that’s simply not an option.

There’s a fork in the road here. We could decide that ‘advertising is too expensive’ or we could develop a strategy to turn that $30 AOV into $60, or even $90 with some relevant, well placed upsells.

The goal of using Upsells is to immediately turn every $1 you generate from customers into $2, and for this there are two specific types that I’ll share with you.

1. Bump Offers - These are offers presented at the time of checkout.

2. OTO’s - One Time Offers - These are presented after the checkout.

It’s probably easier with bumps to just show you what they look like. Here’s what the bump process looks like in one of my funnels…

The first stage is where you collect the details. As a note on this you’ll get twice as many leads as you do sales, so it’s important for your list growth to use a ‘2 step opt in process.’

Again this is a throwaway comment but this is the difference between a 10,000 or 20,000 person email list or a 500,000 or 1M person email list.

If you’re good at marketing you’ll be able to make more than $1 per month per person who is on your email list. So this simple strategy is the difference between an asset worth X and an asset worth 2X. (turning $1 into $2 every month)

Make sure to capture the emails of people on your landing pages before you capture anything else.

There is a hierarchy of assets in marketing… From the attention to the click, from the click to the email, from email to the phone number and address - from there to the credit card details. Break up this in your funnel and you’ll build more assets.

Once the lead has entered their details into step 1 of the form they are presented with 2 more offers at the time of checkout. These can be added or removed to the total order value easily with one click. And the key: They live between where the credit card details are entered and the complete order button.

Now I’d like to mention - this strategy is clearly one suited to the online space - however it’s origins are from physical businesses. All online strategies we now use, know and love - were once brick and mortar manual strategies.

All automation is birthed from work: I believe it’s useful to understand that.

In my funnels on average, over the past 7 years: 30% of people have claimed my bump offers at an average order value of approximately $25 each - to consider I’ve sold ten’s of thousands of these offers - This one simple strategic shift has added over $375,000 in pure profit to my business.

I mentioned in the last newsletter that it’s at least 5x easier to increase the AOV than it is to reduce your cost per acquisition.

This is infallible evidence of that. This is a strategic shift that is so easy to make, you could do it in 15 minutes if you understand the basic technical implementation of funnels.

The question is: Are you using 2 step order forms and bump offers?

If not it’s likely you’re leaving a lot on the table.

What sort of offers work well for bump offers?

The goal is to increase the profit as much as possible whilst delivering a great product to the customer - so, I usually will use some kind of online content. This way I’m not adding to the cost of goods sold.

Usually for a bump I’ll be repurposing products I’ve already created - occasionally I’ll also create new things. For example in the new book funnel I’m creating - I’ll be creating an accompanying workbook with all of the models printed out. I’m expecting up to 40-50% of people will take it because it’s so relevant to the book. I’ll also do it physically but just make sure I get the pricing right to make it profitable.

As you can see there’s no hard rules - The key is to test things.

My brother is very similar to me when it comes to business - he’s quite prolific always starting different businesses. One day he had a look at my funnel and suggested I test the pricing of my bump offers.

So I increased the price, without any other change in copy and I was surprised to see my conversion rate increased with a higher price as the only change. Without a doubt one of the most surprising outcomes of a test I’ve run.

I surmised the way you price things can impact the perception of it.

How to Create an ‘OTO’ to Sell Something 10x More Expensive to 10% of Your Customers.

It’s been my experience that in each segment of your business 10% of people will buy something 10x more expensive. 

I first learnt this from running events. In my second business that I ran 8 years ago now - this was our main strategy - we optimised our marketing and sales system to fill events. And at the end of the event we made an offer that was 10x more expensive, longer, more involved and more engaged.

We noticed that at least 20% of the room would take us up on the offer.

Here is a signal I pulled from this: There are always customers and clients at every level of the business. Within the customer base - there is a small percentage that want more and are prepared to pay more. (clients)

Perhaps the simplest way to think about this: Imagine if you were to call up 10 of your customers and ask them if they want to become clients. I’d be willing to wager, at least 1 of them would be interested in that offer. Most of the time we simply forget to ask.

Now , these people are going to go and buy these products from your competitors if you don’t offer it. So why not service your clients properly by offering it.

Again this is a strategy that has nothing to do with the ‘online business’ space - 10% of your customers will purchase something 10x more expensive if you offer it to them.

Most simply don’t ask.

Now this specific upsell lives on a separate page to your original offer. The OTO (One Time Offer) page in your funnel is a bit more complex than just simply adding a bump.

A bump can add $10 or so to your Average Order Value, but an OTO can add many more times that, so it’s simply more important in the funnel, it’s worth taking some time to get it right.

In terms of pricing, the formula I use is the following:

Whatever the AOV is on the front end of the funnel with the original product, I times that by 10x and shoot for a 10% conversion.

If I can achieve this I can double the AOV.

For example…

If I’m selling a book for $30 - I could create an upsell OTO for $300 - if 10% of people take it the AOV is now $59.

If I’m selling a product for $10 - I could create an upsell OTO for $100 - if 10% of people take it the AOV is now $20.

That’s the general principle to test.

Now when it comes to the page itself, the asset that will do the bulk of the heavy lifting is the VSL (video sales letter) on the page. I’ve gotten many of these pages to convert with nothing but the VSL, and never without.

It’s by far the most important asset on the page.

Here is the script I use.

1. Congratulate and Confirm.

The first step is to congratulate the person and confirm their order. It’s simple intro but an important one. When someone buys something they do so to scratch at itch. Make sure you acknowledge that immediately.

2. Ask Permission.

Next, you’ll ask for permission to present your offer. The offer will take a few minutes to present in it’s entirety.

One of the most important principles in sales is to ask for permission. There is so much power in this.

Recently I’ve had two people attempt to sell me things with a strong range in pricing - however, neither of them asked for permission, and it left me with a strong sense of doubt.

Remember, your offer is not about you - it’s about the client.

Simply saying, ‘look, whilst I have you here, could I have 3 minutes of your time because I have a special one time offer I’d like to present that I believe will completely change the game for you,’ is enough to change the dynamic and warm people towards you.

3. 1 + 1 = 11

I learnt and then adapted my own concept from a mentor of mine who taught me about making OTO’s work well. This guy is a master marketer…

I was having a problem with my funnel and the very first thing he asked me to do was open up the statistics page on my OTO. I thought that was interesting - we didn’t spend time focusing on ads, or the landing page - he went straight to the OTO page… and he’s supposed to be an ads guy…

He proceeded to tell me that my OTO page that was converting at 5% (which I thought was awesome) was well below par. He told me that I could get the page up to 10% by shifting one simple thing…

‘The offer you’re making isn’t adding anything to the original purchase - they’ve just scratched an itch by purchasing your book - but you’ve created a new one by pitching something that is completely disconnected from it. Instead create a situation that’s 1 + 1 = 11.’

He gave me a script to use: ‘Once my best clients finish reading this book, the next thing they want is X - so on this page I’m going to present an offer to you that’s going to give you that now that will simply allow you to take these materials much, much further.’

My page immediately bumped from 5% up to 10% with this one shift, and it was just a language pattern.

4. 10x Offer

Here is where you present your offer. Make sure your offer worth at least 10x more than the value you’re asking for. If you have a course you’ve sold for $3k - turn it into your OTO.

For an OTO to work - you need to be perfect on the marketing front, if you take any of these pieces out the conversions will dip dramatically.

In regards to ‘Marketing Strategies and Tactics,’ I love what Jay Abraham has to say about this, (I’m paraphrasing) ‘If you believe your product or service is truly valuable and it serves the clients deeply - you have a moral obligation to use every strategy and tactic you can find to sell it.’

I love this concept as, so many business owners pull their punches with their marketing and sales.

As a general principle most marketing and sales problems stem from not marketing and selling hard enough.

5. 10x Proof

Social proof is an undeniable component of any marketing and sales campaign - the more social proof you have the easier your life will be.

Social proof comes in many different forms. It can come through your own successes, it can be through stories of people you’ve helped, along with the more conventional forms of video case studies and testimonials.

6. 10x Guarantee

Inside a sales funnels the guarantee could be the most important aspect of the whole thing. I’ve offered guarantees on all of my sales funnel products for years - the numbers of requests are incredibly low - using guarantee’s are an asymmetric opportunity, they’ll drive more profit that they cost.

If you can guarantee the client will get 10x the value that you’re asking - then give it.

7. OTO Urgency

One of the great things about OTO’s is that there is a real natural urgency built in. Because the offer is presented via a one click upsell - once they leave the page, they will no longer have access to the offer.

So at the end of the video you just say, ‘this is a special one time offer only available on this page - once you leave you won’t be able to claim it.’

** This script / a version of it can also be used on the phone.

Make sure to test it in the order above as each segment naturally leads into the next segment and creates a strong crescendo towards the close.

Just as my mentors have done for me in the past, one of the first things I do with my clients is to help them double their average order values.

After we’ve done that we get to work adding 4-5x the value over the ‘lifetime value’ to the client.

Once we’ve done this marketing simply becomes so much easier.

A mentor of mine Dan Kennedy once said ‘whoever can afford to spend the most to acquire the customer wins.’ What he’s really saying is the higher your AOV and LTV the more room to move you have with your marketing.

Now that we’ve taken a deep dive into Sales Funnels, and how to structure your upsells to increase the AOV - we can dive into ads a bit more.

I’ll be publishing that edition within the next few days.

Talk soon,

Ben Slater

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