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What is a value ladder? It’s a method of offering value to your clients along every step of their journey and a way for you to maximize the lifetime value of each customer.
The way it works in a nutshell: you start by offering something of value for free and then increase the price and value with your subsequent offers.
They’re usually discussed in the context of sales funnels and it can sometimes sound like: “get as much money out of them as possible for as long as you can!”
But a business’s first imperative is not profit, it’s to get and keep customers⸺profit is the result. So it’s important to make that your primary objective when creating a value ladder.
A value ladder, when executed correctly, is actually interlinked with your brand strategy. You can use them to build trust and ultimately, inspire brand loyalty. In other words…
You use a value ladder to get and keep customers
Before we get into the details about how to create a value ladder, let’s first take a look at how this all works from the perspective of your customer.
Your customer’s decision-making process to make a purchase
Your brand strategy is simply the way you’ll go about convincing your potential clients to choose you instead of the other options they’re considering.
Having offers that meet people where they are―in their decision-making process and readiness to commit to making a purchase―simply helps them make that decision.
Their process of becoming a customer and the things you need to do along that journey looks like this:
When businesses forget that potential clients are going through this decision-making process, they do things like drop a bulleted list of capabilities on their services page and call it good.
A value ladder, in contrast, takes prospective clients by the hand from the very first interaction and walks side by side with them as they grow to trust you.
A value ladder guides your clients toward purchasing your premium offers by providing them with smaller offers along the way
How your bulleted list of services may be turning away customers
One of the most common ways service-based businesses present their offers is to create a services page that includes a bulleted list of capabilities. Here are a couple of problem with that…
They’re focused on the external problem
Say a potential client lands on your services page thinking something like: “I need social media management” or “I need content written for my website” or “I need help getting more traffic to my blog.” They see your bulleted list and it looks like this;
- Social media management
- Website content
- Search engine optimization
Perfect right? If what they need and what you sell are aligned, they’ll reach out and get a quote.
But here’s the problem. Your bulleted list has missed the opportunity to sell the solution to their internal problem, which is far more valuable to them.
They may not understand exactly which service will get them the outcome they really (really) want–which is probably something more like “I need more consistent revenue” or “I need more client leads” — they just think they know.
They put you in the position of being an order-taker rather than an expert
Your customer reaches out to you and says, “I need this, and this, and this… how much is that going to cost?”
That puts them in control of the process right from the get-go. Your job is just to give them a price for the service they asked for and if they accept, execute it. How that project’s going to go for you will depend largely on them.
Remember too that they’re going to go out and ask a few more service providers–whose “this, and this, and this” looks exactly like yours–and if they can’t tell the difference in value, they’ll make their choice based on price.
Selling your services like commodities–which is how they’re perceived when you have a bulleted list of capabilities–will always put you in the position of competing on price. Not only that…
They put you in the position of recreating the wheel with each client
During your discussions with your potential client, you discover that what they need is a little bit different than what your other clients have needed so you ask them lots of questions, get on sales calls with them, and prepare a custom proposal for them.
You know that this is expensive for your business because it eats up your most valuable business asset–time.
They give your customers a binary choice
When they get your proposal they have a choice: it’s either a “yes” or “no.” If it’s a no, they go away forever and you’ll probably never hear from them again.
Why you need a value ladder instead
A value ladder focuses on solving the internal problem your potential client faces and provides them with options to solve that problem based on their budget.
Because you’re the expert, you’ll create service offerings that are focused on the outcome they’re after rather than what they think they need (the external problem).
No recreating the wheel figuring out what each and every potential client wants and preparing time-costly proposals–instead, you’ll identify the problem they need help solving and have solutions to offer them all ready-to-go.
Because it’s your process, you’ll be perceived as the go-to expert (rather than an order-taker) and people will come to you to follow it because you’re offering the outcome they want. Make sense?
Customer psychology and retention
Let’s talk about customer psychology and retention for a second because if you’re not convinced, consider this…
Customer trust can only be completely established after they make a purchase
One of the biggest reasons to create a value ladder is that it’s a well-known law of sales that once someone makes a purchase from you, no matter how small, they’re exponentially more likely to purchase something else from you again–even your highest-ticket offering.
If you’re only offering custom-designed projects or high-ticket service packages, you’re missing an opportunity to build trust and create a customer with a low-ticket offering.
It’s less expensive to keep an existing customer than to get a new one
The cost of acquiring a new customer is exponentially more expensive than retaining an existing one. If you’re only offering custom services or packages and you have no offerings designed for them after those services are complete, you’re missing an opportunity to maximize the lifetime value of that customer.
You can constantly pitch your clients more services from your bulleted list of offerings, or, you can create packages and programs that are focused on:
- Solving their problems
- With an outcome that’s easy to understand
- Priced according to the value of that outcome
- Based on the trust you’ve established as an expert who solves their problems
How to create a value ladder
There are many ways to go about it, but here’s a formula you can use to create a basic value ladder. Some value ladders have three steps and some have eight, it really all depends on what you’re offering.
If you offer more than one service line–for example, say you offer web design services and social media management, you would create a separate value ladder for each.
Again, you must know who your customer is and the problem you’re going to solve for them before you get into any of this. You’ll want to spend some time getting clear on this or you’ll be just winging it with your offers.
Step #1 Free Offer
Definition: The purpose of the free offer is to generate sales leads. Once you’ve identified your ideal client’s problems, you’ll demonstrate your expertise (you’re the one to solve it) by helping them solve their problem (a little bit) with a free offer.
Ground rules: It has to be valuable. Your free offer is going to take the place of you getting on a sales call with them to demonstrate you’re trustworthy and an expert at solving this problem. Just because it’s free doesn’t mean it shouldn’t be valuable, quite the opposite.
Examples: Blog posts, a free e-book, how-to videos, audio exercises, a free introductory course, a webinar
This is how you’re going to get people to your website, but keep in mind that as people are going through their decision-making process and figuring out whether you’re the one to trust, it may take interacting with your brand 15 times before they’re ready to commit.
Having free content as an incentive to interact with you isn’t a magic sales bullet, it’s used to build trust. Make it valuable and focus on solving their problems, and when they’re ready to commit with dollars, you’ll be the one they trust.
This is called reciprocity. The idea is that when you’re providing value for free, your audience will begin to feel grateful for your help and even indebted to you. When deciding who to choose, they’ll be much more likely to go with you because you’ve already helped them solve their problem part of the way for free.
Step #2 Tripwire
Definition: A tripwire is a low-priced offering that solves the problem a little bit more than your free offering
Ground rules: Again, it must be valuable. You’re still nurturing trust and establishing yourself as the go-to expert. Make sure it solves a specific problem and you’ve clearly articulated the outcome they can expect when they purchase it. The price should be set somewhere between $7-$50. Important: it should not require your time working 1-1 with clients.
Examples: eBook, paid workshop/webinar, an email challenge, a mini-course
Your tripwire isn’t designed to make a profit, but rather, to offset the costs of creating it and promoting it. The goal is to create a customer as quickly as possible so you can lead them to the next step, which is…
Step #3 Initial Offer
Definition: Your initial offer requires a larger financial commitment but it includes a much greater value. Here, you can begin offering 1-1 services that require your time, or, if you’re selling digital products, it will be a higher-priced offering than your tripwire but still less than your high-ticket offerings. This offer should be designed to be profitable.
Ground rules: Focus your initial offer on a specific outcome or “quick win” you can give your clients.
It must solve a problem and not create one. For example, an “audit” creates problems (here are all the things you need to fix) whereas a road mapping session solves one (here are your biggest opportunities and next steps).
You should strive to create a service that allows you to replicate the process you’ll guide your clients through (no re-creating the wheel). This way, you can become better (more expert at solving this problem) and more efficient (and more profitable) the more you do it.
Things to consider:
- What aspects of your process are you currently doing for free that you can monetize instead?
- Is there an aspect of your larger high-ticket services you can “break apart” as a first step?
Examples: Road mapping session, a done-for-you playbook or strategy, an introductory course, 1-1 coaching/consulting to achieve a specific result
Step #4 Signature offer
Definition: A signature offer (or a “core offer”) is something I go into more detail about in The Brand Story Blueprint, but basically this is where you pull out all the stops and do whatever you need to do to solve your customer’s biggest problem.
Ground rules: It should be priced based on the value of the outcome and really, the sky’s the limit. It’s your process and ideally, should utilize your zone of genius, the expertise you want to become known for. It must also be something your dream clients already know they need. (See Brand Strategy Basics.)
Examples: This is a high-priced offer–either a more comprehensive course or done-for-you 1-1 services.
Guiding people to a signature offer is where most people call it good, but to maximize the lifetime value of a customer, you can also create a…
Step #5 Loyalty offer
Definition: A loyalty offer extends the value of your signature offer by offering on-going or ancillary services and digital products that continue to help them solve their problems.
Ground rules: Your loyalty offer provides you with on-going revenue and allows you to create an on-going relationship with your customers. These may be priced lower than your signature offer, but extends value over time.
Examples: On-going done-for-you services, a mastermind group, weekly group-coaching calls, private paid Facebook group or slack channel, a membership site, subscription-based content, additional digital products and courses to help them continue on their problem-solving journey, annual workshops or retreats.
Create a value ladder that makes sense for you
Again, the above is just an example to get you thinking about offering value along your customer’s journey. Every business is different and you may find that creating three steps is enough — maybe a freebie offer, an introductory offer, and a premium or signature service offering.
Maybe you’ll want six or seven steps in your ladder. You might decide to create two or three signature offers and a value ladder for each. Maybe you won’t have a signature service at all, maybe it makes more sense for you to create multiple introductory offers and then get people right into a loyalty offer.
Upselling and Downselling Service Offerings
Once you have the steps of your ladder in place, you’ll upsell along the way. For example, when people buy your tripwire, you can pitch your introductory offer as a next step. Then, you can present your signature offer and so on.
You can also experiment with the order. For example, you might offer something for free — let’s say a webinar — and then pitch them on your highest-ticket offering. For those customers who don’t buy your high-ticket offer, you can “downsell” by offering them an introductory offer instead.
By having different offerings at varying degrees of value, you’ll have something to offer people based on what they need and how much they’re willing to spend.
A value ladder helps you move away from selling your services like a commodity
A commodity is defined as a product or service that has no differentiated qualities. A brand is the opposite of a commodity and focuses on the value your customer can expect when they choose you.
By creating different degrees of value-based offers corresponding where your customers are at in the decision-making process, you’re not only better positioned to get and keep clients but to maximize profit and lifetime customer value as well.
If you’d like some help creating a value ladder for your business, I invite you to book an empowerment session with me. We’ll take a look at your current offerings and create a plan for restructuring and describing them.
If you have any questions, hit me up in comments!
Taughnee Stone is an award-winning designer, brand strategist, and location-independent business owner for over 15 years. Originally from Anchorage, Alaska, she now lives in Croatia with her husband, energetic Samoyed, and three bossy cats.