Nehal Kazim: Hi, this is Nehal from “Ad Tips for Ad Pros.” Today we have my good friend Alon Shabo that’s going to come on. We’re gonna be talking about introducing new offers into a market where you already have some sort of list that you’ve been developing, you have a customer list that you’ve been acquiring, and then now you want to provide them a high-ticket offer to [inaudible] attract more value and increase the lifetime value from your overall list. Alon’s going talk about how he did that and how he added $400,000 in revenue from a relatively small list of buyers [inaudible] specifically. Looking forward to it, Alon. Thank you for coming on, man.
Alon Shabo: For sure. I’m excited.
Nehal Kazim: Sweet. If you can tell us what is the offer and what was the end result from the offer that you guys created. Then we can talk about, first of all, how you defined it, how you validated it, and then how you promoted it.
Alon Shabo: Damn, no small talk. I like it.
Nehal Kazim: Not messing around.
Alon Shabo: Let’s get some background so people have context, because I don’t think this is applicable to people selling $7 e-books or something. I work primarily in personal development, a lot of seminars. This specific client had a membership program, probably similar to what you have with your advertising stuff. It was a monthly membership. People paid every month, but people would drop off. The average lifetime value was about three, four months. The problem we were trying to solve is how do we get people to stick. Just based on preliminary discussions, the solution was we need to sell people on a yearly thing.
I actually learned this from Russell Brunson. We had dinner with this specific client. He’s like, “Dude, people don’t want to see their credit card charged every month. That means you have to resell them every month.” It’s much more effective to charge someone 12 grand once when they’re excited versus 1,000 every month. It’s much easier to do it first time and one time. That was the problem we were trying to solve. Should we get into solution, or do you want to talk about more stuff?
Nehal Kazim: Let’s go through that, because there’s a big difference for a lot of people when they’re trying to make even a one-time $1,000 sale. The approach you had was, “We’re just going to go straight to 12K.” With that, is that 12K if they pay upfront, or how does that work?
Alon Shabo: First off to prefix, they’ve already paid money to come to an event. This was a sales letter distributed at a live event, for example. I mean, this kind of offer, you for sure need someone to spend money first just to build that initial trust and to understand that you’re legit and what you give them is good for them. I think it would be quite difficult to convince someone, “Commit to me for a year,” without giving them at least a day of seeing what this is about and what the future may look like.
Nehal Kazim: This is so important for advertisers who are already having momentum in their business. What happens is that majority of advertising campaigns is, “I’m going to spend a dollar. If I can make more than a dollar, I’m super happy.” But there are levels to this. What ends up happening is that if you just have a front-end offer or maybe a secondary offer, there’s still so much money left on the table, because there are people who want to give you more money. If you could talk about even just the psychology of how you approached this when it comes to people wanting to give more because they’ve already invested a little bit, but there wasn’t a high-ticket.
Alon Shabo: Just to prefix what you said about making money on the front-end, that’s incredible, because the e-commerce business I’m involved in right now, we’re losing money on the front-end, but we’re profitable. That’s something to keep in mind as well. A lot of people understand sometimes you can’t profit on the front-end. Anyway, not to get off subject. What was the question again?
Nehal Kazim: Pretty much, there is the approach when it comes to paid advertising, which is, “How do I spend a dollar, make more than a dollar?” That initial transactional mentality only gets you so far as a business owner, because there’s a lot more money to be made after that first purchase, after that first transaction. What was the mindset going into getting more revenue from the existing buyer list?
Alon Shabo: The first purchase is nothing. You don’t have a real business if you don’t have multiple levels and long life cycles and you have a grasp on that. The purpose to solving the problem of how do we get people to stay, why are they leaving after three months, how do we increase this was, why the hell are they here in the first place? We serve people, so we need to figure out how to serve them more. One second. Cut this part out, ’cause my laptop’s being trippy.
Nehal Kazim: That’s all good.
Alon Shabo: Okay, we’re good. We’re in business to serve people, so we figure out what the hell do they want. “They’re here in the first place. What do they love about this?” It’s almost like making your customer a part of your business by really understanding, “How can we make this more valuable for you?” I mean, I have a specific seven questions that I usually do. I don’t want to regurgitate them right here, but I’ll throw a PDF or something after this. You want to understand them. You want to know, “What made you join in the first place?” That’s incredibly insightful. You want to know their biggest doubt about joining. You want to know what they were attempting to solve by enlisting your services. You want to know what they’ve got so far. “How did joining help you overcome that obstacle? What do you like most about this? What’s stopping you from telling your friends?”
With that, you should get enough information if you just have a basic understanding and knowing the biases that are pretty apparent in focus groups and things like that. Maybe read a blog post about how to take a survey properly, because a lot of the time, your customer has a lot of biases. You have to be able to see those and say, “What he really meant by this is this.” You have to have that creativity and foresight to do it successfully.
Nehal Kazim: And have enough experience so you can spot those biases, for sure. Otherwise, you take it at face value.
Alon Shabo: Absolutely. They say the customer’s always right, but I like to say the customer’s full of shit.
Nehal Kazim: That’s a very different approach. If you look at even that process, I think when you say all those questions that you have that you were laying out … we’ll attach a PDF for the people who are listening to find afterwards. With this process of you’re spending money on advertising, whether it’s on Facebook or other channels, you get a customer, and then the goal is, “How do I just get more customers in that same funnel?” What you’re saying is, once you have that customer, are you able to extract information and knowledge or any kind of actionable data that you can use, not only to go back and fix and optimize your cold advertising but also come up with different offers on the backend? How do you know if you’re on the right track when you’re asking those questions?
Alon Shabo: On top of building trust and demonstrating value to your customer, you want to kind of incentivize repeat behavior. It depends on your business model. For example, the e-commerce business I’m involved in right now, we started incentivizing people right off the bat. Immediately after purchase, “Refer your friends. We’ll give you money.” 10 days later, “Leave a review, we’ll give you a discount and we’ll [inaudible]” get into being involved with us and also pushing them to purchase more by incentivizing them. Again, it depends on business models. [inaudible] talk about a certain one, it may be more productive. If you have milestones like customer makes a repeat purchase or customer signs up for a monthly program, how many months are they staying? The more they engage with you, it’s like a relationship. It kind of deepens. You want to form habits with your products.
Nehal Kazim: The offer that you developed and that you were working on is primarily a transformational high-ticket offer?
Alon Shabo: Yeah, you can call it live coaching. That’s basically what it is.
Nehal Kazim: Majority of people who come into that funnel, they see a bunch of education and a bunch of content that eventually they go into a low-ticket product or a high-ticket information product of 1,000 or $2,000 and eventually get to a point where they’re seeing an offer of 5,000 to $25,000.
Alon Shabo: That’s one funnel. We’ve also found it very profitable and more so than the previous value ladder that’s pretty typical. We found it almost more effective to right away gauge the problem and then promise the solution. But it requires good salesmanship and a good sales team and that kind of infrastructure. It’s not really possible through email and content and stuff. It requires hustlers, basically, to take a cold lead Facebook ad and turn them into a thousand a month person and then a month later, turn them into a $12,000 a year customer. We get customers with both, but I think the latter has been more effective, just ’cause it’s a shorter life cycle from lead to customer.
Nehal Kazim: We have clients right now that are going straight from Facebook ad to a webinar funnel and selling a $6,000 program because the pain is so deep and because the solution is so … the gap is so big that it’s pretty obvious that the investment is a no-brainer. For every business or from-
Nehal Kazim: … investment is a no brainer, but for every business or for a lot wider scope of businesses, that’s not always possible. So, assuming that we’re working with an education company or a transformation company where there’s information and coaching involved, how would you go about that first step of defining a potential offer that you can even introduce?
Alon Shabo: Okay. Let’s get creative and actually walk through this. Tell me an example of a business so I can paint a picture for the listeners.
Nehal Kazim: So, I’ll give you example which is I’m one of those people that is in the educational space and then there’s a coaching offer on the backend which is Media Buyer Accelerator, so there’s a bunch of information like this podcast, fast tracks and different smaller information products, but all of it leads to high ticket coaching.
Alon Shabo: Got it. So, your target is media buyer/entrepreneurs who want to use Facebook ads.
Nehal Kazim: Correct.
Alon Shabo: So, that’s always step one is who the hell are we trying to reach? What level are they at? Are you trying to hit up the newbie who wants to launch some ads so he can travel? Does he want to be a consultant? Does he want to build his own business? Getting incredibly specific is a good start and then figuring out what’s the quickest way you can demonstrate value and I think in my experience, the ads that have crushed it are the ones that are just valuable in their own as an advertisement. People read them and they’re like, “Fuck yeah.” Without signing up, without anything. They got value just from reading your stuff. That makes them more curious to see what’s next. What happens if I give this guy money? So, were we talking about just hypothetically starting a funnel for your stuff?
Nehal Kazim: Even for information and coaching programs, if you look at them, the first part is actually defining what is it that I could offer these guys? So, from your standpoint, you’re doing it for this client at that point, how did you start that process? Because you were making an offer to them. So, there’s already momentum in that offer where you were saying we usually charge $1000. Let’s see if we can charge $12,000.
Alon Shabo: Okay yeah. Okay. Got it. I got off track a little bit. So, we surveyed those customers. The client flew me to one of his events and basically my job was to talk to all his customers. I asked him those series of questions. I literally put together a survey and then after I had hundreds of responses from different people and we had an overwhelming thing. It’s like what do people love about this? They love the friendships and brotherhood they develop right? That was more valuable to people than the content [inaudible] and all the million perks that we try to offer to make things Look attractive, nobody really gave a shit. They were like, “These are my friends. I love doing stuff with them.” So, the two things we concluded was okay, these guys like cool experiences and they like the friendship.
So, we created this new tier of membership where it’s like you need to commit to a year if you want to be a part of this. The way we kind of positioned that was this is a brotherhood. We don’t want you to come and dip. Everyone trusts each other. These are deep friendships and we need to know you’re committed. So, that’s the way we structured the offer. It wasn’t like, “Hey, sign up for a year and give us a lot of money.” It was more like we need to know you’re a serious person and you want to be a part of this, so we didn’t really change the offer. We just sold it as a special surprise trip for people who committed to the year. We kind of promoted that, but the main thing was that we created separatism.
It’s like are you seriously invested in this or are you one of those guys that are going to leave after two months? We’re all in it for the long term.
Nehal Kazim: Right. So, when you’re listening and surveying all the people, were there any answers that could potentially take you off track because I know I’ve done these type of surveys and some of them are very seductive and it’s like the siren song where you think that that’s actually what people want, but that’s not the truth. So, how do you make a decision of those are the only two things that mattered and everything else was just a nice to have or cherry on top?
Alon Shabo: So, that requires creativity and foresight and also a little bit of an analytical mind. I think that’s why a good copyright or consultant charge a lot of money because it’s not a thing you can kind of pull out of a book or follow script. It’s more like assumption on human nature and you can be wrong obviously. It’s kind of like being a stock trader almost.
Nehal Kazim: Gotcha. So, at that point, you get all this structure and you’re asking all these questions, but at the end of the day, it’s a guy thing. You know when you have it.
Alon Shabo: A little bit yeah. It’s just a mix of creativity, analytics, foresight, and human nature and your best guess really. I think some of the most successful marketing campaigns of all time are just some guys best gut feeling like, “Fuck it. This will do good.” Beyond all the analytics and research and everything else. That’s always the foundation.
Nehal Kazim: Right. When that happens, you figure out that it’s these two things that they care about so immediately you guys change the offer in terms of just reposition the offer. The actual core offer stayed the exact same.
Alon Shabo: Oh yeah. Absolutely.
Nehal Kazim: Okay.
Alon Shabo: This was a new offer being introduced for the first time.
Nehal Kazim: Okay. So, what did you-
Alon Shabo: [inaudible] upsell.
Nehal Kazim: What did you do differently to actually present the offer because once you’re able to figure out all these other things are cute, they’re nice to have. These two things are what they’re willing to pay for, now what? How did you implement it?
Alon Shabo: We wrote a sales letter. Old school style.
Nehal Kazim: So, what did you change in the sales letter?
Alon Shabo: What did I implement? I made it all about brotherhood. We positioned it as an invite to a special event. So, a good sales letter, it doesn’t read like a pitch. This was positioned as an invite to an event. Any time you are creating some kind of sales letter and it’s salesy, you trigger this alarm in someone’s brain and they get defensive. They’re like, “He’s trying to sell me. What is this guy trying to sell me?” Their brain is trying to just protect them the whole way through. They may buy, but you don’t really want to be up against that. You want it frictionless like, “Oh cool, an invite to an event.” You want it to just kind of glide.
So, yeah. That was the main focus of the sales letter. It was brotherhood event. That’s it. That’s all we talked about. We positioned it as an event invite. Then just in small print at the end it was like, “Oh, by the way this is only available for yearly members. Sign up for your yearly membership below.” We almost made it a no brainer by kind of building the desire for the event and then saying, “Oh, by the way.” In this case it was fucking crushed it. Yeah. It was the first time he presented it was like 75% conversion. Most of the room ended up converting. Similar numbers they run it annually every year now. Similar numbers so it’s held up.
Nehal Kazim: So, to say that brotherhood is important versus actually communicating it, that’s a challenge.
Alon Shabo: Yeah.
Nehal Kazim: So, how do you communicate something intangible like brotherhood?
Alon Shabo: Well, we paint the picture in their mind of what an amazing event they’re going to have and the things they’re going to experience and how they’re going to feel after. One of the biggest appeals that I like was you’ll have something you can talk about for years and years to come. So, you want to paint the picture. You don’t want to convince someone why brotherhood. We already know that these guys value that. If we tried to lecture them on the importance of brotherhood and studies show that men with … No. They’d be like, “What the fuck man? Don’t lecture me on this stuff. I already know.”
Nehal Kazim: Right.
Alon Shabo: So, we pretty much positioned it as a pretty awesome event tapping in to their desire for brotherhood and experiences with their brothers.
Nehal Kazim: Right. So are there any triggers or are there any ways that you are able to call that out because with something like brotherhood, it’s very easy to say it like I’m saying, but to actually get emotional reactions from that it sounds a lot more difficult. Is that the case?
Alon Shabo: I’m just looking. I’m skimming this letter. I haven’t seen it in a while. I don’t know. I think the emotion it solicits is basically excitement and exclusivity. I think part of the reason it was successful is people didn’t want to feel left out because they already had these relationships with all these guys. So I think what it created is if some guys join this higher tier and get separated, these guys are going to get left behind.
Nehal Kazim: Right.
Alon Shabo: It’s kind of preying on some weird stuff a little bit.
Nehal Kazim: But that’s just almost [inaudible] Alon Shabo: Oh yeah. Absolutely. Absolutely.
Nehal Kazim: You guys create scarcity out of that too. So, that was one of the elements you were mentioning. One it’s invite only and then I’m assuming everyone doesn’t get accepted. So, why do you think that part of it worked?
Alon Shabo: The scarcity?
Nehal Kazim: Yeah.
Alon Shabo: Well, it’s just like any scarcity. Especially in this which is a come to this event. You can get invited. Nobody wants to be left behind. That’s about it. What ended up happening with this offer because obviously we exceeded the scarcity is we ended up just creating more trips which was kind of determined while we were already planning the whole promotion. Like, what happened …
Alon Shabo: … determined while we were already planning the whole promotion. What happens if 75 people join and we say there’s only 25? Well, shit, I guess we gotta make another trip for the new guys.
Nehal Kazim: Right.
Alon Shabo: That’s typically baked into a lot of offers. Some people think it’s kind of unethical or fake “scarcity.” It’s like, there’s levels and it depends what kind of marketer you are and what kind of business person you are.
Nehal Kazim: At that point, this was sold in person, right? So, they got a physical letter at the event?
Alon Shabo: Yup.
Nehal Kazim: Okay, so they got a physical letter, and then how do people actually redeem or claim their spot?
Alon Shabo: We already have their credit card information and payment stuff on file, which is … I’ll just back track, it’s also why sometimes we charge money for webinars, just to attend, because it’s much easier to, if we’re selling something on the webinar, just get the okay from someone on the phone and say, “okay, we’re gonna charge you.” But, we already have their information and the offer just glides them through to a check this box, sign right here, confirm a few details and we bill them.
I think, usually, in those cases, people get swept up in the motions and they may regret it later. We did have a few refunds like that. They were just in the moment, but the majority went well. Just back to a good sales letter, there’s no frickin’ friction, right? If I was like, “Enter all your credit card details here,” that creates friction. It gives people reasons to start doubting things. But, if it flows, it sucks you in, starts painting a picture, all your designs are flowing and then it starts reaffirming your beliefs and letting you know this is legit and just kind of quelling your doubts while you’re reading it, but not directly, because you never want to trigger somebody’s, “Oh shit, someone’s trying the same move.”
The best advertisements don’t look like advertisements.
Nehal Kazim: Right.
Alon Shabo: So, it just flows, check this box, yes I would like to attend, sign some things and that’s it. Yes, I authorize you, please charge me $12,000, that’s about it. I’ll attach it to the PDF. It’s everything. The forms are on it, check box, all that stuff.
Nehal Kazim: Perfect. So, if you’re listening to this, if you go to, we’ll make sure to give access to that in the group and so we’ll put it in there. So, when people are going through this process, so they get a letter and then they are signing a document, or maybe it’s digital, and so they’re saying yes and that’s it, right? There’s not a sales process, per se. They’re already emotionally at a peak. They’re at the event. They see an offer and they just claim it. Is that right?
Alon Shabo: Yeah, pretty much. For live events, you always want to get people at peak excitement, so sometimes we would schedule … this happened during the kind of salesy part, the kind of pitch part of the converse, but right before we scheduled the peak emotionally experience, just so people are feeling good, and you see this at conferences when you have people, “Come on guys, let’s stretch. Come on, let’s jump around.” It to elicit positive emotions, because nobody wants to buy something if they’re bored and tired and dehydrated and hungry.
Nehal Kazim: Right, I got you.
Alon Shabo: Nobody likes to buy a negative space, unless you’re selling something to fix their problem.
Nehal Kazim: Right, but even then, if you can paint that pain and the gap and then actually show them that it’s possible and give them an offer at that point, it’s a lot easier.
Alon Shabo: For those kind of offers, I think it’s totally understanding. It’s like, “I understand you. Let me explain this in your shoes so you can be like, ‘oh, you get me, that’s exactly what I’m going through.'” Because, that’s the biggest disconnect, when your ad is not genuine and someone is like, “This guy doesn’t know what the fuck he’s talking about.” I see weight loss … I see ads targeting gym bros and I’m like, “Dude, no gym bro talks like that.” It’s alien to them, you know?
Nehal Kazim: Right. So, can you walk through the numbers, just so it’s clear to people if they were to do an offer like this or just based off the results that you got, how many people were at an event at that point and then how many people took up the offer? I’m just going through the document you sent here as well.
Alon Shabo: Let me pull up the details because this was years ago and I didn’t think we were going to dive that deep into it.
Nehal Kazim: No worries.
Alon Shabo: I think this was 2016.
Nehal Kazim: Yeah, I 45 paying members at an event. Is that right?
Alon Shabo: Okay, got it. Yup. So, there was 45 people and 34 of them ended up accepting the offer, so something like 75% of people. So, that generated 408,000. Just for marketing sake, I would say in an hour, less than an hour, because we handed them out and we said, “If you’re in, please bring them to the front,” which also probably helped the sales process. Kind of like if you’re seeing all these guys excited like, “Yes. I’m in, I’m in.” And you’re sitting in your chair like, “Oh, well,” that’s the best social proof you can have. Every marketer uses social proof.
When you see a stampede of people, that triggers the most Robert Cialdini like influence principal. It’s like, “I want to go where the herd is.”
Nehal Kazim: Right, for sure.
Alon Shabo: “I’m gonna go stand in line with them.”
Nehal Kazim: It’s easier to make a decision, for sure.
Alon Shabo: Absolutely.
Nehal Kazim: So, with this type of offer, you’re mentioning that you can use this over and over again, and so, even from the next event, I don’t know how frequent these events were, but is that something that was easy to implement?
Alon Shabo: Yeah, this letter gets run annually and now the business model [inaudible] changed. So, for example, we understand and the baseline of about 75% conversion, it’s held up as far as I know, but I don’t know from this year because I don’t work with that company any more. But, it just changed the model, because it goes from a front end sales worth 1,000 to front end sales probably worth 12,000 for seven out of 10 leads. So, that kind of planning helped with our ad budgets and we could spend more. It got to the point where I’m like, “Dude, even if we’re spending 1,000 to get a customer to our events,” which was never the case, it was always much cheaper, “even if we break even on that acquisition, some of them are going to convert into annual members.”
Nehal Kazim: Right.
Alon Shabo: It just gave us a much better business model with bigger margins and just more room to operate, which I think every business should have. Like what I’m doing with eCommerce right now, sometimes I pay affiliates so much so we’re losing money on the front end, but I’m like okay, the typical customers spending like $800 with us, so it doesn’t matter if I use $50 to get a customer.
Nehal Kazim: Right. Got it. So, for people who have an information business or coaching business, what would be your recommendation to them when going through this process of adding a new high ticket offer?
Alon Shabo: Understand your customers, talk to them, survey as many as you can. Get in bed with them, really. Just find out how to make it much better for them.
Nehal Kazim: Right.
Alon Shabo: [crosstalk] of what they say.
Nehal Kazim: What we’ll do is we’ll add the questions that you had, because I think just going through different types of questions just to pull out the truth, or closest thing to the truth, from them and then reading between the lines, like you were saying, that goes such a long way in actually figuring out who they are in reality.
Alon Shabo: Yeah.
Nehal Kazim: Otherwise, you’re just making assumptions off of troll comments on Facebook or random emails that you get instead of a controlled environment where you can filter the input and then decide on what the actual output is.
Alon Shabo: Well, those seven questions will bring you a lot of insight into your business, not just for introducing [inaudible] to give more value, but just to figure out where you may have some issues with your perception, marketplace or positioning.
Nehal Kazim: Perfect. Awesome Alon. Where can people find you if they want to reach out or get in touch with you?
Alon Shabo: Facebook is the best. I don’t do any marketing services work anymore, but I have been playing with the idea of working with one person if they’re fucking awesome, that’s basically the prerequisite. So, just hit me up on Facebook, I’m sure my name will be linked or something. I’m not going to be like, “WWW. …” that’s so 2005, huh?
Nehal Kazim: That’s funny. Yeah, you’re already tagged in the Facebook group and I don’t know how many more Alon Shabo’s there are.
Alon Shabo: There’s one. He’s like a famous chef. He’s kind of ranking on SEO better than me.
Nehal Kazim: We’ll have to fix that. Awesome. Well, I appreciate you jumping on and I will see you guys on the next one.
Alon Shabo: Alright, bye Nehal.