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Written by Dave on January 5th, 2010

Why Use a Multi-Tiered Sales Funnel?

2 Comments

If you are marketing a high value and presumably high profit product or service, a muli tiered direct sales funnel may have strong benefits for you and your bottom line.

A multi-tiered sales funnel is a strategic marketing model that guides customers through a series of upsells that culminate in your ultimate high value product.

First recognize that selling a several thousand dollar product online is something that happens every day, but very rarely is it done directly. I know because I do it all the time with the use of a multi-tiered direct sales model.

It’s a simple fact that making a sale to an existing customer is many times easier than making that same sale to a new prospect, especially if the new product is related to the one the customer already purchased.

What isn’t so obvious is that in the mind of the customer making another purchase, an upsell on your part, that is in the same price world, is a manageable hurdle; a price point somewhere around 2x to 10x of the previous product seems to work well.

So combining these two observations, we can migrate customers from a $50 entry level product to a $400 mid level product to a $2,000 product with relative ease, since at each step, we’ve provided exceptional value, and kept the next “step” in the same price world as the previous… this multi-tiered sales funnel is easily expanded to even higher priced products.  I’ve personally used it to sell $20,000 training programs with ease, just by adding a $9,000 step up from the $2,000 product.

So, why do it this way?

A couple of reasons. The first we’ve already hit on a little, and it’s because making repeat sales is so much easier to do than making the first sale, as long as you’ve provided real value and treated your customers well.

Secondly, and equally important, it is much easier to optimize the early stages of the sales funnel since the first step into becoming our customer is a product for less than $50.  You can start making a little bit of money while developing your customer base.  And then move on to optimizing the creatives in the next tier of the funnel and so on.  This fact alone enables a much more methodical and strategic optimization plan, that will allow you to profit while getting to the point of making the high end sale.

Of course the upsells will not be 100%, but if you do a good job of writing your sales copy, it’s straight forward to upsell at least a third of your customers over time to each next stage in the product pipeline.  And since you’re making money, improving each stage is much easier and fun to do!

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2 Comments at "Why Use a Multi-Tiered Sales Funnel?"

Traffic2.me March 10th, 2010 (#)

Many thanks for discussing such an topical article with all of us. Keep up the good work.

Ontarian Hawkins August 16th, 2010 (#)

Hey David,

I love this explanation here.

A sales funnel is critical in

the world of business, especially

in Network Marketing where a lot of it

is lacking. Simple marketing psychology

tells us that when a customer makes a

first purchase it’s easier for them to make

the 2nd, 3rd, and so forth.

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