How To Sell Low Ticket Ecommerce On Facebook & Instagram (NEW 2022)

Hey guys. This week on hey Subway, I'm going to be answering Idris Farhad's question. He's written, hey Sabri, how can you sell low ticket items to cold audiences on Facebook and Instagram? So this is a great question and there is a lot to unpack. So there's a reason that I don't talk a lot about low ticket and e commerce products and whatnot on my YouTube channel is because, you know, typically and even in our agency, you know, 70% of the work that we do is for Legion. It's for people selling high ticket services. And the thing is, with E commerce products and selling low ticket e commerce products, realistically there is a little that can be done with the way that you say things and how you present things. And a lot of it is based on what is it that I'm getting, what are the features and ultimately what is the price, right? So with high ticket services and lead gen, as a marketer, there are a lot more things that you can manipulate and that you can work with to basically present that offer in a more compelling way. So realistically, when you're operating in those markets, your headlines, your copy, your funnels, everything, the way that you deal and you treat those leads is a lot more impactful. Not just impactful, but you can manipulate them more. Right? You can change the price of an offer a lot easier or the way that you structure up the value and price of that offer. It's a service based business where it's a low ticket a com product. There is little movement that you can have on there depending on margins and bringing stock in and all of those kind of things. I'm not saying that copy and your funnels and stuff aren't, you know, as important because they're probably even more important because the margins are so thin that you absolutely have to be on the highest level to be able to make those things stack up. But the thing is, with eecom, if the product isn't great, then the marketing doesn't really work. You can't just go out there and sell crappy products that no one wants and put together the best Facebook ads with the best targeting and expect to make that work. That's not how it works. So realistically, if you are selling e commerce products, first of all, you need to make sure that you've got product market fit. It's incredibly important because you get that that feedback loop of finding out whether or not this is going to work is a lot shorter with eecom than it is with Legion. If you've got a landing page and there's an opt in or you're going for a call funnel or whatever it might be, you can finesse the offer on those pages and find out what it is that you would need to say in order to get somebody to become a lead and to raise their hand and say yeah, I'm interested in what it is that you've got. And then the real feedback loop then becomes when you're on the telephone and you're trying to close these people is what is said on the telephone and how is that presented to actually get that transaction to, to close and for that full loop of feedback to go through where if you look at the E Comm environment there is not that lead gen component. So you're putting a message out there to your marketplace, you're sending them to a product page, a landing page, you know, whatever it might be, a pre sale page and then you're directly seeing the results of that. What's the cpa? What's the return on ad spend and what is happening here? What's the conversion rate? So you might be asking, well, how do I know if, if this is a good product or it's a product? Well, the way that you know is by first buying the data and finding out what those baseline conversion rates are. So first of all you want to be able to look at this product and be proud of what it is that you're selling. You should be happy to put your name behind it. It shouldn't be a pump and dump drop shipping econ businesses that a lot of people run. It's like some ghetto leggings or stockings and it arrives in this crappy packaging and they wouldn't be happy if they bought that. So the first thing to do is say like, is this a product that I'm proud of and that I think has some kind of unique selling proposition or solve some problem in a unique way. I'll give you the benefit of the doubt and say that it is. Then the way that you find out whether or not you have product market fit is by putting your absolute best effort together by creating a long form E commerce product page. And then after you've done that is buying the data, running some ads, finding out what the unit economics are. We know that the average conversion rate is between 1 to 3% for E commerce sites worldwide. So if you run this and you're at a 0.5, 0.4, 0.2% conversion rate, you know that you don't have product market fit because less than one out of every hundred people that see what it is that you've got that you've enticed to click on it, buy it, right? So there's obviously, you know, you don't need to go ahead and like, okay, let me opt, optimize this now, right, because it's so low and the number that you're converting, you're so far away from hitting product market fit that it's going to be an uphill battle. Right? So that's a very quick way for you to test things and it's a lot easier and quicker than traditionally running a business and buying all the stock and bring it into your warehouse and doing a fit out and putting all your products on display and then waiting for people to walk into your shop and buy. Right. That is an expensive exercise. What isn't expensive is setting up a basic Shopify website with a good product page, getting somebody you know off Craigslist or the Gumtree to take some nice product photography for you for very, very cheap and then putting it up there and spending, you know, 2, 3, 4, 5 grand on ads to see whether or not this has any merit. And then once it has merit, that's when you're going to continue to go and really optimize the unit economics. And the unit economics a lot smaller and are a lot sharper when you're selling e comm products. And that's the reason that you see a lot of these big e commerce businesses, the Daniel Wellingtons and whatnot, they rely off influencer marketing is because they can't make the unit economics stack up on paid advertising to make it all work. Yes, it is a different channel. Yes, it has other, you know, pros and cons to it. But ultimately, you know, when it comes to running paid ads, you know, a lot of these businesses, they rely on influencers to do all of the heavy lifting because by the time that they pay Google or Facebook a $2 a click, they've got 1 to 3% conversion rates. You know, their customer acquisition cost is usually as high as what their average order value is. So if you look at the real big players that are selling low ticket ecom at big, big scale, you know, these people aren't on their first order. Realistically, when you've got an e commerce business, you're going to be looking at the customer acquisition cost, you're going to be looking at day one average order value and then you're going to be looking at lifetime value of a customer, right? So if your opera, if you're got, you know, an average of, say, an order value of $100, right? And your margins on that product are 50%, meaning that your AOV day one is going to be $50. If we look at that and then we go, okay, it's basically we make 50 bucks in profit on day one. And then we have a look at, okay, we need to pay for, you know, the staff salaries to run the traffic. We need to pay for the traffic itself to then find out what our actual customer acquisition cost is. And at, you know, a 1% conversion rate, or let's just say that it's 2% and it's a dollar as a cost per click, you're going to be paying for 50 bucks to acquire a customer, right? So there goes all of your margin. If you really want to go aggressively, you might find, okay, well, in order to really scale this thing up, we're going to need to basically go out to colder audiences and buy more traffic. And our customer acquisition cost is going to go up because the colder audiences that we go out to, the lower the conversion rate is going to be on our landing page. So instead of getting a 2%, it's going to drop to a 1%, right? So instead of spending 50 bucks to acquire a customer, now it's 100 bucks to acquire a customer, right? And then this starts to change things, right? Then you're like, wow, well, I lose money. Like, day one, I'm in the hole 50 bucks. But then you might find out that your LTV is $300, right? And you might collect that cash over 12 months, over 36 months, over 24 months. It all depends on the business that you're in. Unless you really understand your numbers and you really understand this stuff, then you're just going to run the normal unit economics and you'll be like, hey, I'm selling bikinis. I'm selling widgets or phone cover or watches or whatever it might be. And then you run paid ads and you don't really have the back end of your funnel dialed in. And you're like, why would I continue to do this? Like, I'm not making any money and I'm spending all of this effort and I'm shipping out products, and then I've got returns and I've got merchant fees and all the other things that add up, right? And then you run it and you're like, okay, well, I'm not really making money there. That's what most businesses do, right? And that's the reason why they don't run Paid ads on low ticket, or they try it and they say that it doesn't work. It does work, but you have got to have your stuff together. You got to be buttoned up. You've got to understand your unit economics and you really have to know copywriting, conversion rate optimization. You need to know about upsells, down sells, contingency. There's so much other things that go into it. So realist. I've got another video, you know, on this channel where I go through what is the highest converting E commerce funnel. So I'm not going to go into the ins and outs of it. But if you know that you've got customer acquisition cost, right, your cpa, which is dictated by your conversion rate, that's one of the little dials that you can turn. Then you know about average order value. You know that's going to be a key building block in order for you to run paid advertising. That's another little dial. And then you've got ltv. And that is also another building building block and another little dial. And you break those down into different areas. And let's just say that you look at your customer acquisition costs and you say, okay, let's try to get this down as low as we possibly can. And this is where Most people spend 80 of their time. And that is a fool's errand because your customer acquisition cost is typically, with all other variables intact, only going to go one way, and that is up. And the reason for that is CPMs on Facebook alone last year has gone up by 50%, right? Meaning that you're spending 50% more to reach the same amount of people, 50% more as a cost per click as well. So you know that that's just gonna slowly inch up as competition continues to rise. So if you spend all of your time and energy on that, like most people, then you're always swimming against the raging river that is the current in your marketplace. Instead, realistically, what it is that you want to be focusing on is the average order value piece, right? But before I dive into that, let me unpack this CPA thing. I'm not saying there's no merit at all in trying to get a higher conversion rate. There is a lot of merit in it. You're looking at the 8020 analysis. People are spending 80% of their time on that when it should be inverse. You should spend 20% of your time on lifting the conversion rate and bringing down the app, the customer acquisition cost, and 80% of your time on lifting the AOV. And I'll get to why in just a moment. So in terms of optimizing your conversion rate, this is where your headlines come into place. This is where your offer, right your design, the speed of your pages. There's so many things that I can't go into in great detail to optimize the conversion rate of a landing page. But you don't do a typical two step funnel in that scenario. That is sending them to an opt in page and then arriving them on like a long form landing page. And the reason why is that the unit economics just don't stack up. You're not going to get enough people down to the bottom of the funnel where you're actually asking them for their credit card. And it's a game of getting as many eyeballs in there as. But this is where most people get it wrong. They send people to a generic crappy product page with like five or six images on there, like 250 words of copy. The headline on the page is the product name. If they've got their head screwed on right, you know, they have a couple of like reviews and plugins, a yacht PO or whatever, trustpilot getting reviews like that, maybe some UGC content or an Instagram grid or something like that. And then that's kind of like they're like, yeah, that's best practice Ecom. And then these are the people that can't run paid ads. So you don't want to be looking really at what they're doing. You want to be looking at the people that are running like a serious amount of paid traffic or you want to look at the big, big pros of the game. And it's like no surprise that every single time somebody like Apple for instance, launches a new product, their product pages get longer and longer and longer and longer and longer. That's not because there's more new stuff to talk about in every product, it's because it converts better, right? And Apple's not the best example in terms of from a paid traffic perspective. But you can bet your bottom dollar that they have a team of data scientists and people looking at their conversion rates of different pages and drop offs and all of those kind of things. And you can see the like, it's just long pages, right? That is a brand driven company. The look and feel of their product alone tells a lot. Like that is their unique selling proposition, right? And yet they still have long form copy, super, super long pages, like some of the longest E commerce pages that I've ever seen. So there's a hint there, right? If you're driving traffic even to a product page, you know, what I have found is the longer the copy, the more that you tell, the more that you sell. But it has to be engaging. It can't be long form just for the sake of being long form. You know, you imagine sitting down in front of somebody and selling the product to them face to face and think about all of the questions that would come up. You need to answer all of that stuff in the product page, right? The biggest needle movers on conversion rate is price, right? There's nothing really that you're going to be able to do outside of price that is going to impact the conversion rate more. What I mean by that is that like you know, once you've got your, your price dialed in and you've split tested different pricing and which of the price is going to get you the best earnings per click, not the highest conversion rate, but the highest earnings per click, that is the golden metric when it comes to E commerce. Then you want to split test the price first, right? Find out the variables where you get that trade off between highest conversion rate and highest APCs. Then once you've done that, then what you want to do is then start introducing other variables. That's when and only when you want to start putting more copy on their longer headlines and really kind of justifying that price point. And then because you, you've basically separated out the price variable and now it's the persuasion mechanism, there's a lot more to unpack on conversion rate. But to keep this video brief, I will keep it at that because that's not the main thing. The main thing is optimizing your average order value. This is where fortunes are made because your average order value is going to determine how much that you are able and willing to spend in order to acquire a customer. And if you have a higher aova, then of course you're going to be willing to spend more to acquire that customer. So the higher your aov, the more money that you can spend. The more money that you can spend, the more customers that you can get. If you can go out and get all the customers, you win the game. It's over. Done. Right? So with that being said, what are some of the ways that you can impact day one? Average order value? Great question. I'm gonna put a link to the other video that you can go watch that whole funnel. But in summary, what you can do is look at your average product. You your say your average order value right now is $100, then you know, you really want to be having express and a non express shipping option. You want to have extended warranties added to them. Then you want to. And that's all throughout the checkout. Then after the checkout is done, then you want to have upsell number one, right? Where you upsell based on what other customers have bought. Or you've got something that's anywhere between 10 to 30 times what you asked on the initial sale. So you should always be trying to upsell higher value goods off the back of the first purchase. Then you have down sell number one, upsell number two, down sell number three and other options in that funnel, which you can again check out that video. But these are the things you really want to be mucking around with. You want to be testing, you know, how much you're charging for shipping, what the threshold is for free shipping, not having shipping at all. A lot of people, they look at their unit economics and they're like this product's $100 or this product's $50. I have to charge 5 dol. $10 for postage because it costs me 5 to $10 to ship this product out. And I can't absorb that because it kills my margins. So I will charge that to this person. But what they don't realize that even if you don't charge shipping and handling, you pay for shipping and handling, Right? So what do I mean by that? Well, if you, if you're not offering free shipping and handling and you're making people pay and you think that you're recouping that $10, guess what? If you didn't charge them, the conversion rate on the, on your landing page or on your website would, would be substantially higher, maybe 30% higher, meaning that it would reduce your customer acquisition cost by 30 up to 50% just by not charging shipping. But you're forgoing that by not wanting to pay $10 shipping and handling, so you've paid, right? You're actually more out of pocket than you would be if you just gave them free shipping. And that's what most people don't understand. Even when you're asking somebody not to pay for shipping and handling, then usually that you're going to be making way more money by having a much more compelling offer. So these are all factors when you're looking at average order value, conversion rates and understanding these things. Now moving past the second pillar, which is aov, then after that we've optimized for day one aov, right? So then the order has gone through. Then typically what you want to do is send out an email and also a text message saying, like, hey, we're just packing up your goods. Would you like to add this additional product for no extra shipping costs or at a reduced discount before we dispatch your order? You'll get a big percentage of people that take you up on those offers. Now, once we've closed the chapter on that and it's done, that wraps up our optimization of day one AOVA, then we move on to LTV. Now, LTV, as we said before, let's just say that day one AOV is 100 bucks and LTV is $300. Now it's about how do we increase that LTV over the lifetime, how do we increase consumption of our product or cross sell other products that we have? So if it's consumption, then it's looking at, you know, the data and looking at the buyer behavior of, you know, what your repurchase rate is, and not only the repurchase rate, but the frequency and when that second order takes place. If you know that on, let's just say that you're selling protein powder, and you know that on average on one kilo of protein powder, that it's eight weeks later somebody buys the second kilo, right? So what you want to do is make sure that your funnel is architected towards that. It goes out on week seven, for instance, and it's prompting a lot of those people to reorder that. It just slips their mind, like, oh, I know how to get that. It's a prompt to do that. And then looking at other complementary products that people would be buying that would be buying your core product. A great place to go and a little hack for you is Amazon. You can go look at products and it says people that bought this also bought this. So you go to the Amazon, you look at the protein powder, and you find out on the biggest ecommerce website on planet Earth what other people are buying that are buying your products. And then you start to sell those other products and that will increase your ltv. It might be they're buying protein bars. They're also buying protein shakers. They might be buying like gloves or dumbbells or, you know, stretch bands or resistance bands or workout clothing or whatever it might be. You know that your customer that is buying your core product is buying these other products. So you just go and get those. Or you find other companies that you can drop ship for and that will increase your LTV. You might get your LTV after optimizing it from 300 bucks to $600. And if you're able to do that, that's when you start to get to a place where you're not looking at day one AOV to determine how much you can spend to acquire a customer, but you're looking at the percentage and attributing a percentage of that to the customer acquisition cost, that is the customer is worth $600 to you over a 12 month period. How much are you willing to spend in order to acquire that customer? The answer better not be 50 bucks. Because what you'll find is that the people that think about day one AOV and representing a percentage of day one AOV to what they should be willing to spend to acquire a customer, they're the people that limit their growth. Because let me give you an example. You might be able to go out there and get a hundred customers a day at a $50 customer acquisition cost. Then as you start to go out to colder and colder, colder audiences, as I mentioned before, the conversion rate goes down, the customer acquisition cost goes up. So that person might say like 50 bucks is the absolute maximum that I can go. I can't go any more than 50 bucks. So then their business is constantly capped out at a hundred customers a day. Now there might be another player out there who really has their stuff together and says, well, I know that my average customer is worth 600 bucks to me, so I'm willing not to spend 50 bucks. I'm willing to spend $100. Right? So instead of getting 100 customers a day, the difference between the 50 and 100 unlocks a whole different pool that you can go fishing in and they might be able to get 500 customers a day. So who do you think is going to win that war? The person that can buy a hundred customers a day or the person that can buy 500? Right. And this is why it's really important not only to know your ltv, not only to have optimized the living shit out of your ltv, but then also understand the numbers and what that threshold is of the maximum that you're willing to spend in order to acquire a customer. The number one reason that I see E commerce businesses fail, they shoot themselves in the foot in understanding the unit economics and what they are willing to spend in order to acquire a customer. So I know that I unpacked a lot as there is a lot to unpack, right? I have scaled E commerce businesses and clients, businesses, you know, from doing a hundred bucks a day to doing a million dollars a day, right? And there is a lot of nuance in between those different things. And there are a lot of things that you need to look at. And the number one thing that allows those businesses to scale up to those crazy, crazy heights is their ability to spend more than anybody else to acquire that customer. You drag your competitors underwater, and you are the only one wearing an oxygen tank, and they all run out of air. And there you are, breathing comfortably underwater and acquiring all the customers. So I hope this gives you the answers that you're looking for. Hey guys, if you're enjoying these videos, please, like, subscribe and hit the bell button as we're dropping a video like this every other day on YouTube. And if you've got any questions, just leave a comment below with heysubree and I will do my best to get to it.