How to create an offer ladder.

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.
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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.
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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.

Transacting with someone is about building rapport, trust, and a relationship. The more money something costs, the more rapport-building you must do to get the transaction. Your goal is to shorten the path to purchase as much as possible.

When you start with a smaller transaction, there is a lower barrier for doing business with you. The customer doesn’t have to think as much about the value, consider risks, and compare to your competitors. If the cost is low enough, they are willing to take a chance on you to determine if there is a future doing business with you.

Think about retail. You may buy a shirt or accessory from a store first. Wear those items, see how they make you feel, determine the quality, and then settle on whether or not that is a store you like. If it is, the next shopping trip may result in a complete outfit or just more items in general because you trust that the purchase will meet all of your needs.

Once you’ve shopped there several times, if there is a sale or you are hankering for a shopping spree, you will have no hesitation to open up your wallet for the larger spend.

This leads to the next point.

2. People spend more money once they have trust and confidence.

Sales comes down to two things: reducing risk and building confidence. The higher the price, the lower the risk needs to be and the higher the confidence needs to be.

The best way to reduce risk and increase confidence is to produce results. The proof is in the pudding, as they say. And the best way to do that is to get a customer to pay you for something and then you meet their needs.

The first step of the offering ladder does just that. The customer can test the waters with you. Once the customer has invested a small amount with you and is satisfied, they are willing to spend a little more and a little more and a little more.

It’s about building trust and confidence with the customer, and when you do that, they will follow you on the journey.

3. Buying bite-sized purchases is easier than buying the whole package upfront.

Sales comes down to two things: reducing risk and building confidence.
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