On my previous article, I was attracted into funnels for making a huge difference on my online business. The arguments I raised in this article doesn’t cover it all. So for those who need some more practical and down-to-earth approach, I’m going to take you through figures and KPI of how a funnel can increase your Return On Ad Spend drastically.
But first, what’s ROAS?
Return On Ad Spend is one of the greatest KPI that you should monitor whenever you decide to use paid advertising. Simply put, one can summerize it this way:
If you spend 1$ on advertising, and that it can help you generate 5$ sales, then your ROAS is 5. The higher your ROAS, the better. A few caveat though, this KPI needs to be considered along with the charges you incur for producing. But you get the point. So whenever your ROAS is negative, or not so high, you may conclude that you are losing money with your ads. This means that either you should shutdown the ads, or reconsider some parameters.
Case Study
I assume you already know how to setup tracking and analytics for your website/e-commerce store. Which means that you know how to read the right KPIs. Along this case study, I’ll talk about some of the KPIs that matter.
For the purpose of this little explanation, let’s assume that you are a fitness mentor/coach that sell different services. So your high-ticket offer would be a one-to-one coaching program sold at $1 997. This may include a whole package: membership to your gym, DIY at-home video series, nutrition indication, monthly checkup with you and doctors. That’s the full-blown offer. With some experiences, you know that not everyone would convert into a paying customer, especially at that price point. In order then to bring your customer to your “world”, you have published a series of videos describing easy exercises that educates your target customers with your technique. This is a kind of “discovery” package, priced at $17.
See,on this previous paragraph, I’m already bringing you into the world of funnels. While most coaches would only have the $1 997 program to sell, I’ve just shown to you what is called “the value ladder”. This means that you, as a coach, is bringing the customer through a journey where he climbs the value ladder so as to get into the $1 997 coaching program. Not everybody would buy that program, and that’s fine.
But hang-on, I’ll show you how you add more ingredients to this funnel later on this article.
The usual approach (the one that need to be challenged)
Most of the times, you would be considering paying for some online ads so as to get some leads, hoping that they would convert to your $1 997 offer. But the fitness industry is a very competitive one, and even with the best online advertiser, it’s going to be very difficult not to lose money on your ads.
Most people would do the following:
- create a landing page that directly sells the $1 997 offer, with all the arguments and testimonials that are shown on that landing page
- create awesome Ad creatives (graphics, videos, text with great copywriting)
- decide on the Ad platform to use: Facebook Ads, Google Adwords, Youtube Ads, Pinterest, …
- set on a budget ant then run the ad.
What’s the issue with that approach?
Let’s say you want to spend $1 000 on that ad. And let’s say that out of this ad campaign, you have generated 30 000 views to the offer on your landing page. Out of these 30 000 views, you “only” need one person to buy the $1 997 offer, and let’s assume you break even (you have some charges for producing your offer too). But this is cold traffic, and converting cold traffic has a very low ratio. Moreover, since there are a lot of similar offers out there, it’s pretty random that you’ll convert. After all, you haven’t build any rapport with your target customer yet, why would they buy from you. In the online business industry, it is assumed that one person will only follow-up with you after seven touchpoints. Have you deployed what it takes to get to those seven touchpoints? Will your potential prospect trust you enough so that he will give you his attention? Given the short attention span that we all face in the internet world, it’s not sure that you have build rapport with a 30 seconds ad, along with a two minute reading on your landing page.
What should be done then?
You should deploy funnels. So let me take you through it. Let’s get back to the assumption that you put $1 000 ad budget, and get 30 000 views to your ad.
Let’s say that out of these 30 000 views, 20% percent clicked on the URL of your landing page. This makes 6 000 people who arrived to your landing page. If your ad is more effective, you can get higher than 20% conversion, but for the purpose of the exercise, let’s assume these are the reference figures.
First of all, on that landing page where you send your ad traffic to, DON’T put yet your $1 997 offer. Instead, put up an opt-in page. An opt-in page is a page where you put a video or an interesting hook with a lot of curiosity that will invite your target prospect to give you his contact so as to know more. This contact can be one, or both, of the following:
- first name and e-mail address. This way, you can fire an e-mail sequence once you get the e-mail address. This will allow you to build rapport. Your e-mail sequence can be as frequent as you want, but most people use a 5 day sequence (in the jargon, it is called the “Soap opera email sequence”)
- facebook messenger chatbot: if the person uses facebook messenger, you can invite him to join your chatbot, and do the education within the messenger bot,
At this stage, let’s say that you have an opt-in conversion rate of 20%. This means that out of 6 000 people who arrived on your landing page, 1 200 gave you their contact, so that you can follow-up with them either via e-mail or via Facebook Messenger.
Now, let the funnel do the work
In your e-mail autoresponder, or with your Facebook messenger bot sequence, you’ll need to mix content that bring value (and build trust) as well as sales pitch. But here again, the goal isn’t to be pushy yet with the $1 997. Remember, we need to bring them along the value ladder. Very few people will directly buy the $1 997.
Instead, bring them to your world and have them get the credit card out with a tripwire offer. A tripwire offer is one that doesn’t cost too much. But it has a very effective result: it’s the first time the prospect commit with you. And as it is always said in the sales field: the first sale is always the toughest
So let’s say that, out of the 1 200 people that gave you their contact, 10% buy the $17 set of educational videos. That’s 120 people at $17 each: which makes a total of $2 040. Remember, our ad budget was $1 000. So at this stage, our ROAS is 2: which means, for every $1 put in ads, we get $2 sale. This isn’t enough yet, as you may still be losing money if you add your different charges.
Now that the prospect has agreed to give you his credit card information, you can make what is called an “order bump”. An order bump is an impulse buy. Think about it as the products most supermarket put next to the cashier desk. For our case, let’s propose to the prospect a $97 nutrition pack book that goes along with the exercises. Out of the 120 people who bought the $17, let’s say that 10% bought also the $97 order bump, that makes an extra $1 164. At this stage, we now made $2 040 + $1 164 = $ 3 204. It’s getting better, isn’t it? Now our ROAS is 3.
But you may be wondering when are we going to sell the $1 997 offer. Well, we can attempt a first try at this stage. Remember, the checkout process isn’t over yet at this stage of the funnel. Now is the time you put out what is called a “One Time Offer”.
Let’s say you’ve already communicated, and prospects know, that your coaching program costs $1 997. With the One-Time-Offer (aka OTO), you can prompt the buyer at his checkout process the THIS TIME ONLY (he can’t find it anywhere else), instead of $1 997, he can get your coaching program for $1 497 (for example). This is what is called the FOMO (Fear Of Missing Out). Let’s say that, out of the 120 persons who’s buying the product, you get a 3% conversion rate, that means that 3.6 persons would buy it. Let’s round it to 3. That means an extra 3* $1 497 = $ 4 491.
After the OTO, our sales is now $3 204 + $ 4 491 = $7 695
This means that, for $1 000 ad spent, we have generated $7 695 in sales. This means that our ROAS is 7,6
We can stop here. But remember, at this stage:
– your prospect have been in touch with your message through multiple touchpoints (ad + remarketing ad, landing page, Soap opera sequence for 5 days inna row)
– some have given you a mean to contact them later on (via email or facebook messenger)
Even after the five soap opera e-mail sequence is over, tou can still continue to nurture your relationship with your prospect by sending other e-mails or facebook messenger. You can also use some follow-up funnels, but that’s another top
Do you see now the power of funnels? Instead of random, unpredictable results with the old approach, you can now have a more predictable result. Now you can work on improving the KPI at each step of the funnel to get even better results. I’ve learned these techniques with Clickfunnels. You can too.
Growing, sharing in the digital era 