What if you could build your own personal ATM where you would insert $1 and get $2 out the other end? How many times would you insert $1?
All the time right!
My goal is that by the end of this article you’ll understand what it takes to build your own “personal ATM” for your business, and how to use the concept of Growth Ladders, to consistently generate leads and sales on demand.
So what makes this different from all the other content out there on how to sell more online? Who am I by the way?
Well, I’ve generated well over $80,000,000 online for my employers since 2014 and spent well over seven figures on ads while doing so. And I’ve done this in some of the most competitive niches out there such as the travel industry, fitness niche, and telco software as a service market. I’m also self taught so believe me when I say that if I can do this, then so can you.
Being self taught and ending up generating millions of dollars in online revenue obviously means that I’ve done a lot of things right. But, I didn’t have success straight away and in the process of figuring out what works, I also did a lot of things wrong. And after doing this for about 10 years now is that you can’t skip the fundamentals…ever!
You need to have a strategic Growth Ladder in place in order for this to work. And you can’t rely on the latest tricks and tactics to become successful in this business. I discovered this the hard way, but the good news is that you get the cheat sheets so you don’t have to make the same mistakes I did. How cool is that!? 😉
The hard way is when you try to:
- Buy PPC ads, where you bid on a bunch of broad keywords somewhat related to your niche…
- Drive those visitors to a generic page on your site, hoping that they will see something they like…
And on top of that you don’t collect their email or contact information so you can follow up with them again.
What all this does is that it drives your click costs through the roof, and since the traffic is mostly irrelevant to your offer (since you’re targeting too broad), your website conversion will be poor leaving you with a high CAC (customer acquisition cost). This is not a good foundation to build a business upon and not what I want you to do, okay?
Now let me ask you this: Can you imagine just activating your Facebook and Google ads and once those visitors hit your site, you’ll know for sure that people will opt-in for your offer? And you’ll know that your automated sales process will turn those leads into sales like clock work, all day every day. What would you do with your life if you were making sales “on demand” like that…?
What are your friends and family gonna think when all of a sudden you start making twice what they do…?
Completely on autopilot…
I’ve done this, and I’m going to tell you what’s worked for me in the past and what I believe will continue to work years to come.
The secret to making this work and to create an on-demand leads and sales generating machine is to use a Growth Ladder.
What is a Growth Ladder?
The growth ladder is all about guiding your customers through a sales funnel with different steps that presents something of high value on each and every one of them. That way you can extract maximum revenue from each of your customers while providing them with extremely high amount of value.
The three parts of a successful Growth Ladder campaign consists of:
- The Profit Formula – How to set yourself up for success BEFORE you start running ads
- The Growth Ladder – How to consistently generate leads, and turn them into customers at a profit
- Consistent Traffic
1. The Profit Formula
The reason we set up our Profit Formula before we start running ads is to make sure we know what to benchmark against once you activate the traffic campaigns. The way we do this is by reverse engineering our the KPI’s (key performance indicators) we need to hit in order to achieve our desired ROI.
If you don’t do this exercise before you run traffic then you won’t know where you need to tweak in order for the campaign to work out the way you want it to. However if you understand this formula, and manipulate your Growth Ladder to hit those KPI metrics, you’re basically “guaranteed” success.
First of all, credit goes out to Jason Hornung who originally taught me this formula.
The KPI’s we’re going to look at are:
- Cost-per-acquisition (CPA)
- Cost-per-lead (CPL)
- Average order value (AOV)
- Cost-per-click (CPC)
- Conversion rate (CR) to lead
- Conversion rate (CR) from lead to sale
The most important KPI is the sale so when we’re establishing these numbers we want to start with the sale and then work our way backwards. Let’s say we have a $1,000 product and want to get a 2-to-1 return on our ad spend. This means that our AOV is $1,000. And since we’re looking to achieve a 2-to-1 return, we divide the AOV with 2 in order to figure out how much we can pay maximum to acquire that sale.
$1,000 / 2 = $500 CPA
Now we have established that we can not pay more than $500 for a sale if want to achieve our 2-to-1 return. So our CPA is $500.
Next up, conversion rates.
Sales conversion rates varies a lot but are often somewhere between 1-5% so let’s be conservative and say we have a 1% sales CR. That means that we need to have 100 leads in order to make one sale. Like this:
1 sale / 1% CR = 1/0,01 = 100
Now let’s work out our max CPL. If our CPA is $500, we take that number and divide it with the amount of leads necessary to make one sale.
CPL = $500 / 100 leads = $5 CPL
This means you CANNOT pay more than $5 to acquire a lead.
When it comes to opt-in pages it should convert at a minimum of 20% which means that 1 out of every 5 people who visit your website will opt-in. If it’s below 20% then work on split testing your landing page to get that number up.
If we need to get leads at $5 or less (our CPL), and we need five clicks to get one lead (give our landing page converts at 20%), we need to get those clicks for $1 or less. Makes sense? So now we have established our max CPC, $1.
So to recap, now we know that you need to hit the following KPI’s in your funnel to make your desired 2-to-1 ROI on your $1,000 product:
- $1 CPC
- 20% CR on opt-in page
- $5 CPL
- 1% sales CR
- $500 CPA
So when you start your traffic campaign you’re going to track all of these statistics and measure against the benchmarks that you just established. And when you’ve worked out the numbers that applies for your business, you can now start run ads (given you have set up your Growth Ladder properly) since now, as you follow up and optimize your campaign, you know exactly where to tweak and make changes in order to achieve your desired ROI. Pretty cool huh?!
2. The Growth Ladder
Let me ask you this; why is it that some people can drive traffic to a page, where they give away something for free, and still make money? The answer is that they use a strategic growth ladder.
What this means is that, after someone opts-in through the list, they are presented with a number of offers related to the information or bribe they just opted in for. At the same time, they’re put into a marketing automation sequence that will up-sell subscribers on the backend. Typically you’ll need three things for this to work.
- Opt-in page
- Front end offer
- Back end offer(s)
The opt-in page is where you give away something of value, for free. As soon as they’re opted-in they’re added to a marketing automation flow and presented with the front-end offer.
The front-end product is typically a low ticket offer, say between $1 – $50. So the primary objective here is not to make a million bucks on the front-end, it’s to change the relationship from a lead to a customer. That way they are more likely to commit to buying your back-end products when they have made that small commitment beforehand. The revenue you make from these sales will go to recoup and reinvest in your ad costs.
After you presented the front-end offer, now you offer them your back-end, and this is where the magic happens. After someone buys your front-end product, your back-end product can be presented as an up-sell, but most of the time they’re sold via the automated email follow-ups. The way you want to structure this product is as something that complements the initial front-end product. You don’t want to sell more of the same thing, you want something that complements the initial purchase.
Think about what would be the next logical steps for this customer to take? If you sell a product on how to drive traffic, your up-sell could be on how to increase conversions, and yet another up-sell on marketing automation and so on.
You with me so far? Good.
If your ad costs have been recouped at the front-end, all the revenue generated from these back-end profits will be pure profit. Just a little caveat here, it doesn’t always just take the front-end product, usually a portion of the back-end revenue will be used to recoup the initial investment as well. That’s why you want multiple back-end products to sell them in your follow-up sequence, since the costs of acquiring a customer has already been absorbed when they became a customer.
3. Consistent traffic
There’s really two types of traffic, there’s paid traffic, where you pay to get someone to get to your site and there’s organic traffic, like SEO, where you optimize towards certain keywords and themes and slowly you get traffic from search engines. Content marketing and social media marketing are also things I would consider organic traffic.
The reason we are focusing on paid traffic is that it’s instant. And it’s scalable, so you can literally set up an ad account now and start to see traffic come in to your site within hours. I would argue that the ability to turn paid advertising into profit, like we discussed in this video, is the only way to build a predictable profitable business online.
“But KJ, isn’t ppc traffic expensive as h**l?”
Well, it can be. However if you do it right, paired with a strategic growth ladder, you can get leads and customers for “free”. So how do you do it?
Let’s start to look at your opt-in page. Let’s say you’ve done a really good job on your opt-in page so it has a conversion rate of about 30% or more. You turn on your traffic campaign and send 100 people to your site. 100 visitors per day at 30% conversion rate means that you will get 30 new subscribers per day..
900 subscribers per month…
10,800 subscribers per year… which is not bad.
But let’s crank it up, so let’s say that you get 500 visitors per day at a 30% conversion. That equals to, 150 new subscribers per day… 4,500 subscribers per month and… 54,000 subscribers per year.
Which should generate a very nice and steady revenue stream, given that you nurture those leads properly.
Let’s crank it up one more step, 1,000 visitors per day at the same 30% conversion rate. That equals 300 new subscribers per day… 9,000 subscribers per month and… 108,000 subscribers per year!
These are figures that should get you really excited because, a list of over 100,000 equals potentially a multi-million dollar a year business.
The question is, how do we get 1,000 visitors per day?
The answer is, we buy it!
Let’s say you spend a $100 to send people to your opt-in page, and you get 20 new email subscribers. That means your cost per lead, or you CPL, is $5, and let’s say we do this for 30 days. Well, 600 subscribers is a good start to build a list, but, you would probably go broke pretty soon if you haven’t done so already as you have to pay three grand to acquire those leads. So far we haven’t sold anything.
Now bare with me, because we have a solution to this. It’s what we mentioned before, the strategic growth ladder. The big difference from just driving traffic to a generic landing page is that we present the visitor with our front-end product as soon as they have opted-in for our bribe, like we mentioned before. If you get this to work, your entire business will change dramatically.
Let’s do some math. Let’s say every day you spend $100 in advertising and you get 20 new email subscribers. When those 20 people join your list, they’re offered a chance to buy your product for, let’s say 50 bucks. Out of 20 subscribers, three on average will buy your product, so $50 times three equals $150 in sales. Now what this means is that you’ve spent $100 and you have gotten 20 new subscribers to the list, three new customers and $150 in revenue means that you have made a $50 profit. Do you realize what just happened here? When you spend money, you make money.
Let me ask you again, if I were to give you $2 every time time you give me $1, how many times will you give me a $1? You would just keep doing it, right? Over and over and over. Let’s crank it up and say you spend a $1,000 per day in ads. That would give you 6,000 new subscribers per month, 900 new customers per month, and you will make $36,000 in revenue per month, which equals to a $6,000 profit.
With this method, with the help of the strategic growth ladder systeml like this, you’re able to systematically make calculated profits whenever you spend money. This is how you scale a business exponentially and is basically the only way to build a predictable profitable business online.
Are you using a growth ladder in your business? Leave a comment and let me know 🙂