What is a Sales Funnel? (Offer Creation and Value Ladder Included)
Now it’s time to explain what a funnel is. Funnels are an important part of ClickFunnels and need to be explained before we go further in this ClickFunnels guide. Before I can tell you what a funnel is, I want to explain what a value ladder is. No, it’s not so complicated as it seems.
- The value ladder
- What are a sales funnel and how does it work
- How to create an offer
- The different funnels
- Russell Brunson’s Main Funnels
- The frontend funnels
- Middle of the value ladder
- The backend funnel
- Ryan Levesque’s Funnel Matrix
The value ladder
A value ladder is a system that you are recommended to have in your business. You can see the picture below that shows you the principle for this.
If you want to grow you probably need more new customers. So how do you get new customers? The best option is usually not to sell them something expensive. The reason is that they don’t know you or they don’t trust you. They don’t know if you can deliver the value you are promising. Another thing is that they might not even know they need that service.
So the best option is to sell them something cheap, then your audience don’t need to take a big risk when they are buying from you. Most people can pay $47, but they are more hesitant to give you $997. This product should be priced so low that it barely makes you money, but you get a customer, or you get a lead so you can contact them. Now you want to deliver value to them and show them that they can trust you. This is called a front end offer.
You can also give them something for free as lead bait to lure your visitors to your business. The lead bait can be a report, a blueprint or something else that is easy to create.
So now you have a customer, and you deliver the value to them. Hopefully, your customer will soon trust you and be happy with the product they have received. Now you can introduce them to the next product you have that is natural for them to buy. This will be in the middle of the value ladder and is a product with a higher price where you deliver more value to your customer. This is the product that will make you money.
Then you need to work with a backend offer. This is a product that is high priced and will earn you more money but from fewer customers.
As long you are overdelivering on every step, it’s natural that the customer is happy and want the next product you have for them.
If you want more information about the value ladder, I recommend you to read more in Dotcom Secrets.
What are a sales funnel and how does it work
I think I first I want to define what a website are. A website is where you have a front page with a lot of pages linked from this front page. The different pages can be linked together or out to other websites. You have a lot of information and many exit points away from your site.
Funnels are when you lead people through a step by step process where the visitor has only a few choices, usually yes or no to your offer. This way the visitor can’t be distracted, confused or maybe bored so they leave.
This process can be a sales funnel where you have a description and pictures of the product you are selling. If the potential customer chooses to buy and give you their credit card information, then they will be taken to a new page where the customer has presented a new offer that is adding value to their newly bought product. With one click the new product is purchased, or the customer can choose no and is perhaps taken to another offer.
I can tell you a quick story to illustrate this process. Let’s say you need a pair of new pants. You walk into a store, and a helpful seller is approaching you and ask you that if there is something you need help with. You respond that you want a pair of new pants.
The seller asks some questions and gives you a couple of pants for you to try. After some tries, you tell him that you like one of them and asks for the price. You are lucky, there is a sale on those particular pants, and you receive a 20% discount! What a bargain!
Then the seller asks if you also need a belt to your new pants, they also have a sale on belts this weekend. You accept the offer since you also could use a new belt.
After that, the seller asks if you also need a shirt. You have some shirts and also don’t use them often, so you decide not to order more.
You walk out from that store happy with new pants and a new belt. The store is happy since they made a sale and they also made another sale that you didn’t think about in the beginning. They made more money from you, you received more products that you needed, and you got them on a sale.
So what happened here? You just went through a sale process, and I’m sure you have experienced something similar.
You can have a funnel for each step in your value ladder, or your funnel can be your value ladder. This is probably the easiest to start with, and you can expand later as you see it fit.
So a short explanation is a funnel is a process a business wants to guide you through. This can be a sales funnel where you are offered several products. A funnel can both be online or offline, so this is not only for the online world.
The process can also be a more simple one with a page where you are collecting emails and a thank you page after you receive the email.
How to create an offer
This is a ClickFunnels guide and not an offer guide, but I want to mention how you can design your offers since this is important when creating funnels.
You want your first offer to be a lead magnet where you are giving away something for free. This can be a cheat sheet, blueprint or something similar.
The first paid step on your value ladder can be a do it yourself offer.
The second paid step can be done for you offer.
And the last step can be a done with you offer.
Then you need to set your price. To find the correct cost is something you also want to test. A rule of thumb is:
- Your first offer is priced X, and let’s say 100% of your customers accept this offer.
- The second offer is priced 10X, and 10% of your customers accept this offer.
- The third and last offer is priced 100X, and 1% of your customers accept this offer.
X can be everything below $100. $7, $17, $47 and $97 is popular price points. The higher the price, the more value you need to deliver to your customers. Also, remember you want to overdeliver. That way your customer wants to order more from you because they know you will provide massive value.
The different funnels
I will go through the different types of funnels here and where they belong in the value ladder. There are more funnels type out there, so this is not a complete funnel guide, but I will explain the most used funnels.
Russell Brunson’s Main Funnels
I will begin with Russell Brunson’s main funnels from DotCom Secrets. This is a summary, and you will find both more details in Russell Brunson’s book DotCom Secrets.
The frontend funnels
First I will go through the funnels at the beginning of your value ladder. This is funnels where you want to get email subscribers and customers so you can do more marketing to them.
The tripwire funnel, also named Cart Funnel
This funnel is great to use to collect leads. You are putting something cheap as the first step of your funnel. Then you are using upsells and downsells where you are offering something more expensive.
Some pro tips are to offer something for free, but the customer needs to pay for shipping and handling. For this to work you need to send something physical, what’s good with physical products is that they are easier to sell. The perceived value is much higher than digital products.
Another pro tip is to use a 2-step order form. So on the first step, you are asking for the shipping information and email. That way you are collecting email addresses. So when they land on step two, they need to enter the payment information. Since they already have filled in the form, they are more likely to fill out the next one. If you had everything on the same page, the step would be bigger, and they need to invest more time to fill out your form. You will not receive their email address and a possible sale in the future if they choose to leave.
Self-Liquidating Offer Funnel
This is a funnel that in many ways is similar to the cart funnel. The goal here is to collect email addresses with paid traffic and get your cost back.
Hopefully, you will earn a little money also, but the goal is to get leads and customers for free. The first offer is usually a lead magnet.
Hopefully, you manage to do it with your first offer, but an offer bump and a upsell is usually needed to get your advertising cost back.
When this is done, you can promote more to your customers with email marketing and receive a profit without advertising cost. When you have managed to make this funnel successful, you can scale your business very fast. This is the most important funnel to create, so you don’t need to be reliable on free traffic that is hard to create and even harder to scale.
This is the funnel you will learn to use in One Funnel Away Challenge.
The Continuity funnel
A continuity program is a great offer that everyone should try to create. A continuity program gives you a reliable income each month and will pay your bills. If you do this correctly, your customer will also give you all the information you need so you can create your continuity program after your customers desire. That way you hopefully will create something that gives you money for years each month.
Other products with one payment are important, but they are not a stable income like a continuity program is.
Since most people don’t stay forever in a continuity program, a pro tip is to offer a yearly membership at a discount. Let’s say the average member stay for 5 months, offer an annual membership to the price of 7 months. If you receive too many yearly memberships, increase the price. If you receive too few, lower the price. The correct amount is something you need to decide, but you want to have a monthly income that pays your bills.
Middle of the value ladder
If you have done the frontend funnel, it’s time to create a funnel for the middle of the value ladder. Stephen Larsen that have worked at ClickFunnels recommend you to build this step first and then break it up and create the frontend funnel. I understand his process, but I find it much harder for a beginner. Especially if this is a side hustle while working, your time is more limited.
Sales webinar funnels or Presentation funnel
Webinars or presentations as its also named is a popular method to sell your product. This is usually a product that cost a little money. The product can cost from $200 to $5000.
The webinar funnel is usually a registration page and a confirmation page. After they have registered for your webinar, you need to create more interest by sending an email and explain to people what a great experience they will receive when they join. There are many methods to do this, but again I will recommend Russell Brunson’s method.
This webinar can be done manually or automatically. Russell highly recommends you to do the webinar weekly for one year before you automate the webinar. The reason is that if you follow Russell method, you will sell more when you have done it multiple times and perfected your presentation. Then you can automate the sequence and do replays only.
If you really want to go all in on this, you can order the 10X Secrets where Russell Brunson shows you how and why he structured his live presentation where he sold for $3million during a 90 min presentation at 10X Growth Conference run by Grant Cardone. This is for stage presenting, but will also work for online webinars.
Lately, Russell has renamed this funnel to presentation funnel.
Invisible Funnel webinar
This is a funnel where you are doing all the teaching in the webinar, or presentation. This presentation can be 2 to 5 hours long, and you set your price and collect payment information from all the attendees before they join.
One sales page and before you start your presentation, you need to tell them how this presentation is working. If they are not satisfied or don’t think this presentation is worth the money, they can email you during the day, and you will stop the payment. That way they don’t need to pay if they are not satisfied.
This is a method that has worked for a lot of people and what is a genius with this funnel, is that you remove all the risk from the attendees. So if you deliver what you promise, most people will be satisfied and will give you the money. Remember you need to provide value and you should overdeliver to keep most of the money.
After the training, you can send them to an application funnel if they want to work with you.
The experience from Russell Brunson is that they get more people to their webinars, and only a few people want to stop the payment. So overall, they make more money.
The Product launch Funnel
A product launch funnel is a popular method, and I have seen it used several times in different variations. This is a sales webinar delivered during a 4 day period, where you are giving training away for free. During the training, you will also do some soft selling of what you are promoting where the final part is where the hard selling is done. This funnel works best on an audience that knows you or is promoted by affiliates that recommend it to their audience.
This funnel is used to launch a new product, but I have also seen it ran automatically to those who optin to the funnel. Since you need to create 4 videos, this is some work, so I advise you to use it when you have some experience.
- Day 1: You send an email where you are linking to a video you have made. The video will create some excitement about the training and shows some teasers on how this is done.
- Day 2: You send a new email with a link to an email where you walk through the process with your audience.
- Day 3: Now you send an email where you link to a video where you explain the benefits from the training or method after they receive what you will sell them.
- Day 4: New email with a link to a video. Now you do a summary of what you have taught them and what you have to offer them. This is the selling part of the product launch.
The backend funnel
The backend offers is offers where you are charging $10.000 or more for. The price makes it hard to sell on conventional methods like sales funnels and webinars. The best approach is with the phone, and you have given them value before so they know you and trust you.
High ticket three-step application funnel or Phone Funnel as Russell named it lately
This is an advanced funnel that requires 2 salespeople. This is explained very good in DotCom Secret and is for experienced people that probably will not google this subject and read my blog. I just want to mention it since this funnel is described in DotCom Secret.
Ryan Levesque’s Funnel Matrix
Lately, I have bought some of Ryan Levesque’s stuff, and I have to add his funnel matrix to this guide. Ryan is a likable person, and I like much of his teaching. His funnel matrix was something that made me think how easy things can be done when you systemize it properly.
I will give away information that is not available for free on the internet, so I hope Ryan Levesque will not be too mad on me. And if you like what I have written, buy his stuff. Ryan is a good guy with a lot of experience and information to teach you.
Ryan loves quizzes and surveys, and there are some theories behind his surveys so you should read his book ASK before you add this step. If not done correctly, the survey will not add value to you or the customers, and you should skip that step in the funnel. Again, for more information about surveys, you can buy his book Ask.
Offer creation – The In, Up, Max Model
I have written before about offer creation and how to price them. This will be similar since I used the picture below as blueprint, but now you also get the picture.
If you are new to funnels and internet marketing, here you want to start. The simplicity is just genius. This funnel requires very little work from you, and you should start here to gain some experience.
This funnel can be done as easy as this: You find some PLR products and then offer an affiliate product on the thank you page.
The UP offer can be the same affiliate product or a different one.
The Application funnel can be that people send you an application to work with you. You can be a coach or do a mastermind. This service is also something that is easy to create but require you to be confident that you can deliver value.
The Mindmap funnel
This funnel is made to collect leads where you are giving away something for free. The free offer can be a mindmap, but a blueprint, cheat sheet, and other info products can be given away.
The 4DFC Funnel (4 Day Fast Cash)
This funnel is not a traditional funnel, but something you are sending out by email. For 4 days you are sending an email promoting an offer where you write your email based on the four buyer persona.
- Day1: Spontaneous buyers. This is people that love a good offer and is spontaneous.
- Day2: Methodical buyers. This is people that need more information before they buys.
- Day 3: Humanistic buyers. This is people that love stories from other people. So send them some testimonials to make them buy.
- Day4: Competitive buyers. This is people that wait to the last day, maybe the last minute to buy. So this is the day you set a deadline to get those people to buy.
This is how you structure your emails, and if you want more information, you need to be member of The Ask Academy.
Ryan recommends you to create a funnel like this and run it one time every month to your email list. If this is an affiliate offer, try to offer additional products if they buy through your link. This will increase the chance for them to purchase, and they will contact you afterward for the bonus. That way you can tag them and send another 4DFC for those who have already bought the first one.
This is a funnel where people sends you an application to work with you and is similar to the backend funnel from Russell Brunson. This service can be a coaching program or a mastermind.
This is funnels made for more experienced users and takes a bit more time to create.
Free Plus Shipping Funnel
This is a popular funnel since you are giving away something for free. People love free stuff, and a physical product also has higher perceived value. Two good arguments for you to use this funnel to increase your sales.
A popular product is a book, but it can be any physical product as long it’s easy and cheap to send. You can try to make a bit of money on this product, but it’s recommended to go for break even. That way you will get more leads, and you will build a bigger email list faster that you can promote to.
This is a funnel similar to the sales webinar funnel, and probably don’t need further explanation. Can be run weekly or monthly.
This is a funnel to create false scarcity and high demand. People optin for your service, and you set them on a waitlist. During the wait, you are sending emails to create excitement about your service. Then you open your service for people to join. This period should be short before you close your service again.
The service can be a coaching program or a mastermind. A great way to do this with a mastermind is that you have limited spots and you open up your mastermind to fill available spots.
The funnels below is for advanced users and should not be something you do early.
The quiz funnel
This is a funnel where you can target broad niches and segment the leads based on the answers they give in the quiz. Let’s say you have several products and services you are selling in a niche. Then you can use the quiz funnel to send your leads to the recommended product based on their answers. That way the lead will get the best experience, and you will hopefully get some more sales.
The big bonus from this funnel is that you also will get some answers that you can create more products to your audience.
The Launch funnel
This funnel is similar to the one described earlier, but Ryan recommends this actually to be for a product launch you are doing. This funnel is made to create a buzz about your product and only works when you have a big audience. It’s advised to create some scarcity by having the offer available for a limited time. You don’t need to close the whole offer, but remove the bonuses after a set time.
To run a live event is hard and not for everyone. One thing is to organize it, but you need to fill the event also.
Live events are often used to sell high ticket offers since you build high trust by meeting your audience and giving them high value. An example of events is Russell Brunson Funnel Hacking Live events run every year.
So do you have any questions about funnels, offers and value ladders? And have you created some of the funnels?