MBA2076 Is Selling a Lifetime Deal a Good Idea?

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Hey oh. Welcome to the $100 Business Truths delivered every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja and in today's lesson you will learn Is selling a lifetime deal a good idea? Whether you're thinking about selling a lifetime deal to your software, your membership, maybe even your group coaching on your own website through a deal website like Groupon or Appsumo, we're going to discuss if this is a good idea. Is it smart business? Is it a good move for the long run? Or is it just a cash grab? I'm going to outline all the things you need to consider as well as some examples of some businesses that do this really well. So let's get into it. Let's get down to business.

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Today'S lesson I wanted to say that I've run several lifetime deals. I've seen them go really well and I've them not do so well at all. And I want to share the factors that dictate your success with a lifetime deal. It can be a very compelling idea to offer a lifetime deal on your website or especially with a deal site like AppSumo, who has literally over a million subscribers on their mailing list, or Groupon with millions. And I know firsthand because I've done deals on both platforms and I'll share with you if I would do it again. But first, let's address what are the factors you need to consider before deciding on doing a lifetime deal. And the first and most important factor is your costs, your ongoing costs. When you give a lifetime deal, you're basically saying, I will take care of this customer for as long as they live or as long as you live, whatever comes first. So if you have reoccurring costs, you have to factor this in. Whether it's a software you're going to use to host your trainings or your courses, whether you are selling a lifetime deal to software and there's a cost to running that software for that user, even if that cost is very minimal, know the cost so you can calculate an roi. You may think, oh, it's nothing. It doesn't cost me anything to serve a customer. You might think, oh, it cost me like 25 cents a month to serve a customer on my site. And if that's the example we're going to use, 25 cents over 20 years is $75. So if you sell your lifetime deal, let's say for $75, you're going to break even on your 20, and then you're going to be at a loss beyond that. So as little as you think it's going to cost you or as much, do the math. That leads me to the second factor, how much you're going to sell this lifetime deal for. This will allow you to see your roi, how much money you're going to make on each customer, the lifetime value of the customer. Third, are you able to support. I'm talking about customer support, an influx of a lot of new customers. Given how lucrative and how tempting this deal is going to be, especially if we're going to put on a platform that has reach like Groupon, because if you have poor customer support because you just don't have enough people to answer all the support tickets, it's going to reflect poorly on your brand, on your business, is going to create A bad reputation that you cannot reverse. It's very hard. Once people start talking bad about your customer service or start complaining or giving bad reviews online, you got to be ready for that kind of traffic. Just to give you an example or just to give you some idea, when we ran our appsumo deal for the first two weeks, I'm not joking, for the first two weeks after that deal, and the deal was only for a week, by the way, we had an average of 400 conversations every single day. 400 support tickets. At the time, we had two support agents plus myself and my co founder. All four of us handled 100 conversations a day for that first two weeks so that we can make sure our customers are happy and we have a great reputation. In hindsight, I would have hired more support agents to buffer that blow. Even if it was temp work to buffer to help with that traffic, with that influx of new customers, even if it was just temp work, is your infrastructure able to handle that kind of traffic? I remember when I ran my deal with Groupon for the hundred RMB program. Groupon sent so much traffic to my website and luckily I had an idea that this was going to happen because I spoke to one of the the representatives and they recommended it. So I actually bumped my website to a dedicated server, made sure it could handle all the traffic. Because if you're on a shared host and you get 10,000 visitors in one day, your site's going to go down. And the last thing you should know or just really think about is when you make a lifetime deal, you're going to attract a certain type of customers. They call them deal chasers. People that love a good deal and they're often high maintenance as customers. They're going to ask a lot of questions, they're going to ask a lot from you, they're going to want a lot from you. They're going to be very needy. So that's going to put a, you know, a strain on your customer support. But it's also just not going to be a fun community to be around. Remember, you are building a business around a community of people that you're going to be serving. I'm not saying all the people that you're going to gain from a lifetime deal are going to be like that, but in my experience, a lot of them are. Now, I've seen businesses that actually run a lifetime deal for their content, for their coaching. It's not cheap, but it's a lifetime deal. The one that comes to mind is wandering aimfully by Jason and Caroline Zook, they sell their unborn coaching for a fixed fee I believe is around $2,000. They have two options. You can pay $400 five times five months or $100 for 20 months. And once you pay those payments, it's over. That's it. You don't have to pay anything else. You get lifetime access to all their training, all their coaching for life. And I spoke to Jason about this some time back and basically they did the math. They realized the lifetime value of their customer with selling one off courses or training is just around that point anyway. So it just makes things easier for their customer, makes things easier for them. And their costs are not much because most of what they're offering is course material and training. And they do have a software that's bundled in a couple softwares, but I'm pretty sure Jason has that cost pretty low. And this business model works for them, their lifestyle and the way they want to do business. So it can be done. But what I really like about what Jason and Caroline do is that they charge for their lifetime access. They don't just give it away for free for a hundred bucks. They did the math and they know how much they need to charge to make it worth their while. Also, it's really kind of compelling for a customer to hear that, oh, after I make these payments, I'm done, I don't need to pay anymore and I can continue to get all this amazing material and coaching for as long long as I live. So would I do my lifetime deals again? I would, I'd probably do a few things different. I would say if you're in software, it's very important if you are going to offer a lifetime deal is to make the deal or to craft the deal so that they join on a plan that they can easily upgrade to or they're highly encouraged to upgrade to or basically they'll need to upgrade to very soon after they get started. In SaaS world, a lot of people call this a faux free plan where you charge for it, but it's so low cost and it's so kind of limited that it kind of forces them to move up a plan after they've been a user for a bit and they've gotten the value. So if you're going to do a lifetime deal around software, build out a plan and offer that kind of plan so that they get good value, but they feel that they'll need to upgrade soon as they use the product. I got more on today's topic, but before that, let me Give love to today's sponsor.

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So is a lifetime deal a good idea? Well, you got to know your numbers, you got to know your costs, how much you're going to charge, your roi, and I would just add your why? Why are you doing this? Are you just trying to make some money really quickly or do you have a long term plan? The best scenarios where I see people doing lifetime deals properly is when they have a strategy where it's like I'm doing this to get customers to get a taste of what I have, earn trust to build credibility and be able to offer them more. I don't recommend you trying to do this just to get a sort of instant cash injection because that cash will run out and you'll still have to serve those customers. Thanks so much for listening to the $100 MBA show. If you love what you hear, hit subscribe so you don't miss an episode and you get all our episodes automatically on your favorite podcast app. Hit subscribe, hit follow on Spotify on Apple Podcasts and Stitcher Radio on whatever app you use. Before I go, I want to leave you with this. There's one scenario I really do recommend thinking about doing a lifetime deal and I would limit it to a certain number of customers. Like the first hundred customers get lifetime access at this price. Why? Because you can offer lifetime access in exchange for lifetime feedback and lifetime input from your customers so that you can improve the product. It can give you some injection of cash to fuel the growth of your business, but also it gives you loyalty. It gives you people that are invested for a long period of time to see you actually improve and pull off an amazing product. Thanks again for listening and I'll check you in tomorrow's episode for our Friday. I'll see you then. Take care. Foreign.

Knows anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work from HR to payroll. ADP helps businesses take on the next anything. ADP always designing for people.