David A. Hanson

Written by Dave on January 4th, 2010

What is a Multi-Tiered Direct Sales Funnel?

3 Comments

A multi tiered sales funnel is a powerful marketing concept that can dramatically improve your chances of optimizing your sales and marketing creative pieces, improve your conversion rates, and return on investment and ultimately selling more high value high profit products.

So what is it exactly?

It’s a marketing model that integrates a series of upsells to move your existing customers from some entry level product that sells for a very comfortable level usually less than $50, to your ultimate high value product, that usually sells for several thousand dollars, in a methodical, scientific manner.

Say for example, you are marketing a product that retails for $10,000.

How in the world are you going to set up and optimize your sales letter and get enough visitors to your creative so you can start to see some return on investment?  Is it even possible to make sales online for products that cost several thousand dollars?  Well the answer is yes, it’s possible, and in fact it’s happening every day, just not directly.

Let me explain.

Most entrepreneurs realize it’s much easier to sell a related product to an existing customer than to sell to a stranger.  That’s why the infomercial guys are willing to “lose” money on their front end product since they know, statistically, that a certain percentage will order some of their other products.

You can do the exact same thing online.

Another observation that most successful marketers recognize is that in the mind of the customer, once they’ve purchased a product, their thermostat has been raised and any other product in the range of 2x to 10x in price is often times still in their financial comfort zone.

This is an emotional response, but it’s very real.

For example, if you paid $50 for a dvd course, or ebook, or online resource, and liked it, an expanded course for $400 feels like it’s still in your range, right?

But how about going from $50 to $2,000?

I don’t think so.  It’s too big of a step.  A much smaller percentage of people will  be willing to make that jump. The upsell conversion will be too low to gain sales momentum.

To make the $2,000 sale, I would structure so that the first product is around $50, the second related product is around $400, and then upsell to the $2,000 product. As long as you optimize the sales letters, it’s reasonable to expect at least a third of your customers for a product will upgrade to the next in the funnel.

Repeat this process as many times as it takes to get to the product you’re trying to sell.

Can you start lower?

Certainly, but I would be sure to test it.  I know a lot of marketers like to start with a product around $7, basically adding a stage before the $50.  I think it will depend on what the price point is of your high end product.  I think it’s best to keep the number of stages to five or under…