3 min read
Would you like to sell every customer on your highest-priced product or service? Of course, every day would be a great sales day. But as you well know, it rarely works out like that. What if I told you that there is a very specific pricing strategy that the best marketers use to achieve high-ticket sales on a regular basis. Enter the offer ladder.
In this article, we are going to explain what an offer ladder is, how it works, WHY it works, and how you can create your very own offer ladder.
You can't sell someone on a million-dollar purchase if you can't get them to spend $100.
What is an offer ladder?
You can think of an offer ladder as a sequence of your products or services based on price point. The offer ladder is simply the order of offerings you want to sell your customers. The secret to the offer ladder is that the order increases the value of your customers by increasing:
- Conversion rate
- Purchase frequency
- Average order value
Think of each sale you want to make as a step on a ladder (or staircase). Each sale takes the customer one step higher, increasing their spend with your company. Your goal is to get the customer as far up the ladder as possible.
By organizing your products/services in a sequential order, it helps you and your team focus on selling one thing at a time and know where in the customer journey each of your customers is. So you know what they have purchased and what the next purchase should be.
An offer ladder takes the guess work out for both you and your customer. The easier it is for both parties to understand where to go next, the easier a sale becomes. This means your offer ladder also informs your marketing.
You can setup automated rules in your CRM, email marketing platform, and digital advertising platforms to deliver specific ads based on customer data and user behavior. That’s a bit complex for this article, so we’ll cover that at a later date.
Price is the number one indicator of quality.
How does an offer ladder work?
As mentioned, an offer ladder creates an intuitive path for the customer and your sales team. It creates the sequence for what she be purchased in order. Now this may seem odd at first and you may be thinking, “why can’t I just sell the customer anything? Can’t I just sell the highest priced item?”.
The answer is you can try, and most people do. But if your goal is to improve your conversion rate and the lifetime value of your customer, then the offer ladder is the better path to take.
Here’s the Cliff’s Notes version of how an offer ladder works:
At the bottom of the ladder is the lowest priced offering. You can think of this as the base model, an assessment, one component–whatever you offer that is the starting point of a long relationship. Ideally, this offering should cost very little in grand scheme of things (that is going to depend on what your large offerings look like).
Each step up the ladder should have an offering that costs a little more than the prior. So if you start at $99, then next step should be $279 or something in the ball park. Then $549, $779, $999, and so on. Obviously, it will depend on what you sell, but you get the idea.
At the top of the ladder should be the Rolls Royce of what you offer. $10k, $50k, $100k, $1M.
Now are you starting to see how this works? It would be pretty difficult to sell that Rolls Royce right of the bat unless the customer was just begging for it, right?
If you’re wondering why this makes a difference, then continue to the next section where we’ll explain exactly why this works so well.
Why does an offer ladder work?
You’re probably wondering how this is any different than just selling anything and everything. But there are several important reasons why incorporating and offer ladder into your sales and marketing strategy is so impactful.
1. It makes it easy to buy from you.
2. People spend more money once they have trust and confidence.
3. Buying bite-sized purchases is easier than buying the whole package upfront.
Sales comes down to two things: reducing risk and building confidence.
How to create an offer ladder.
There are a lot of opportunities for you to sell additional products or services to customer who are buying from you already. It just takes a little creativity and, really, just offering the sale. I’m going to cover a few examples about how this relates to both B2C and B2B companies.
