Ryan Deiss's Biggest Breakthrough in Years

That's why you have AMG for Mercedes. That's why even though you can buy a Rolls Royce, there's a nicer Rolls Royce called a Black Badge Rolls Royce. You can buy a Bugatti for a couple million dollars, and that's a Veyron, or you can buy a Chiron for, you know, for 3 or 4 million or 5.

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Hey, everybody, Roland Frazier and Ryan Deiss here with another episode of Business Lunch. And today we're, we are going to talk a little bit about a marketing breakthrough that Ryan just had over on the Scalable side.

Was it scalable Digital marketer, hopefully across everything we're doing. Yeah.

Okay. All right, what you got? What did you discover?

Well, kind of back up where this all began. It's safe to say that Traffic's gotten more expensive. Right. The cost of acquiring customers have gone up through like iOS 14 and all that. Anybody who's out there in the media buying space, it's steady, been getting more expensive. It only got even more expensive for. And so I've got a theory, and I'm going to talk about this at Traffic and Conversion Summit, but I've got a theory that, that basically the days of subsidized CAC are over. In other words, like the big behemoth new media companies, namely, you know, Google and Meta, that is Facebook, Instagram, they have essentially been subsidizing CAC, subsidizing the customer acquisition cost for about the last 15 or so years. 15 to 20. You know, if you're factoring Google. Right. And, and kind of the analogy that I would use there is we, we had a guy that, that worked for us a couple years ago and he moved to Austin and he didn't bother to buy a car because, like, why would I buy a car? I can Uber around for, you know, less than it would cost me to have a car. Well, recently he's like, I gotta buy a car because Uber has gotten a lot more expensive. Well, what was happening? Right, what was happening? The cost to transport a human from point A to point B is what it is. Okay? Uber didn't magically solve that. What they were doing is they were subsidizing rides, they were subsidizing the cost of transportation because they were operating under a growth at all costs mindset. Literally growth, no matter what it costs. And at some point that has to change. And so like in Uber, no more subsidized rides. I think the same thing has happened in the media space. So people are blaming iOS 14 and inflation. I really think it's just they don't have to subsidize the cost of acquisition anymore. Google and Facebook, Google and Meta, they basically own it. They're going to set the price and we're going to pay it. If that's true, if we're going to acknowledge that that is true, then what do we do about it? One solution is you can go out there and raise a bunch of money, go negative for an extended period of time, hope that it works out. Not really a strategy we get excited about. So what you got to do is say, one, how do we increase the value of our customers? And two, how do we pull forward as much of that value as possible without damaging the relationship? Right. So I'll just say that was kind of the theory and the thought experiment and the questions that we asked to come kind of to this discovery. Does that generally make sense? You want to keep going? Any insights, follow up questions, anything?

No, that all makes sense.

Okay, so we want to increase the average customer value. We want to pull it forward. And so what we realize is that we need to have higher ticket stuff. And you've talked about this, I think we did a show on it, you know, an episode on it. Like you got to raise your prices. Right? You know, full stop, everybody should raise their prices, but also we should all be offering higher ticket versions of whatever we had. Right. Just, it's just something that, that we got to do. And frankly, your customers are probably going, going to appreciate it.

Just to be sure that people understand that applies across all industries. So that's why? You have AMG for Mercedes. That's why. Even though you can buy a Rolls Royce, there's a nicer Rolls Royce called a Black Badge Rolls Royce. And then there's. I don't even know what it's called. There's one that's on top of that that they only make like 5 of and they're $10 million or $30 million. You can buy a Bugatti for a couple million dollars or you can, you know, that's a Veyron, or you can buy a Chiron for, you know, for 3 or 4 million or 5. And so like, no matter where you are, that's stuff. IPhone has the iPhone 14 that just got released as we have this show and they've got the iPhone 14 Pro. So it where whatever you're doing, what Ryan's talking about, you can go high ticket.

Everybody does an organic bananas. Yes, an organic bananas. Like double, triple the cost of a banana.

Right?

Like so. So, yeah. So this exists everywhere. You need to offer it. So what we said, our question is, okay, how do we flip the funnel? How do we flip the funnel? Because traditionally, the way the value ladder would happen, the way that kind of we taught it, everybody taught it, is you started low. So somebody comes in for free, you sell them a, you know, a low ticket offering, a tripwire, self locating offer, entry point offer, whatever. If they buy that, you offer them something more expensive than something more expensive and more expensive. And that's the basic idea. So we're just going to march them up the stair step value ladder, to mix metaphors. And so what we were saying is, how do we flip it? How do we get the people to just say, like, here's the most expensive thing, do you want it? And the risk of this is always. And the reason we told people not to do this is if you just show people like the most expensive thing you got. It's a bit like proposing marriage on a first date. Right? That's what I've always said. The reality is though, within some circles, there's people who are totally fine and they are ready, they want to sprint into marriage. So there's always these people in any customer group, and I think these are the two categories that you want to look for, right? People who are both qualified. And this is a biggie. This is the one that we forgot about the first time we did this test. Ready. So they need to be both qualified and they need to be ready.

So we found this. Like we saw people who were having success with the flipped funnel. Our Friend Russ Ruffino sells start like starts with a higher end product and goes down. A lot of sales assisted programs where you have a sales team start with the highest thing and then downsell as opposed to starting with the lowest thing and upsell. And I think that the, the thing that we realized was that, and this was back with you and Perry, right? Was that, well, if somebody buys a inexpensive thing, then they're multiple times more likely already being a customer, already having made a decision to be the customer, they're multiple times more likely to buy the next thing than if you start at the higher thing. So it's just easier to get them in. And if you do the math and say, well, I've got 100,000 customers that came in and those a hundred thousand customers are this much more likely to buy the next thing, and the Next thing is 10 times more than the first thing they bought and it was inexpensive, that first thing, then you'll ultimately make more money. But it doesn't. And that's a good theory. And I think in some businesses it probably still works. It's just that when you can have a higher thing to start with, that can be really good. It also can give perspective in the pricing studies that they've done where it's like, well, if you give them a high thing and a lower thing, they're much, much more likely having been exposed first to the higher thing to then want to buy the lower thing. And then in the readiness date before you get married thing, and then I'll shut up. Is that we found that in selling masterminds at Traffic and Conversion Summit that, you know, our Perry was selling and I was selling one day in the booth years ago, and we came at the end of the day and said, you know, I was like, hey, how'd you do? And he's like, you know, yeah, I got one. I was like, cool. And he's like, how many did you get? You know, how'd you do? And I said, I got 19. And he's like, what? How the hell did you do that? And I said, I said, what's the first thing that you asked them? And he said, you know, how can I help you with business? Tell me a little bit about it and all that. And he said, what's the first thing you asked? And I said, so is this something that you already know that you're ready to do? And if they were, then I just sent them to go ahead and pay. Because like you and me, Ryan, we generally self educate about whatever we want to Buy, and we go in ready to buy. Like, I don't need to be sold. All you can do is mess it up. So just, like, I think being aware of that, that there are different buyers at different levels and being able to identify if somebody's ready to do the high ticket thing right off the bat, let them do it. That. That to me, is part of this, too.

Yeah. Well, it's worth the dating analogy. And again, I'm the one that popularized it, so I can. I can also, like, like, you know, acknowledge where it's flawed. I mean, I think where this dating analogy is a bit flawed is that your prospects are essentially dating you without you knowing it.

Yes.

Okay, now, in. In actual dating relationships, that's creepy. That's called stalking. So I'm not. Again, this. This metaphor breaks down. But the real. The reality is we had plenty of people who would just show up ready to buy because they had heard about it, saw it, and if you got a big enough, you know, brand that's been around you, you're going to get that. And so, yes, I think it's important that we acknowledge that. I also would say that there's probably a good chance that if you start kind of low and, you know, you give people, you know, you build up a large customer base and you add value for a little, that over time, there's a good chance that those people will be worth more over time than the people that you just come right out of the gate and say, do you want to buy this expensive thing now?

Who.

If they say no, they're probably gone forever over time. In the aggregate, it may be that starting low, going high.

I don't know, man. If you're downselling, I don't think so.

No, I agree. But let's say that it does. Right? Let's give that argument. Let's say, fine, you can have it. That over time. The reality is, today we don't have time. We can't wait forever for this to work out. But the question that we asked is, how do we make sure then if we're going to flip the funnel, how do we make sure that we only show the flipped funnel to the people who are qualified?

So you have to keep listening to.

Our wonderful sponsor, oh, Sneaky.

Who's about to share some great stuff with you. And then, cliffhanger, we're gonna come back, and Ryan will solve all the mysteries of the universe and this breakthrough. Okay. All right. So this is a big one, because we have really built this up. This could be the Titanic reveal of.

Marketing so it sinks to the bottom of the ocean. I don't want that hashtag run fourjack anyway. So if we're gonna flip the funnel, how do we only show the flipped funnel to people who are qualified? That was the first question that we asked. And we realized the simplest way to find out if somebody is qualified is just to ask them. Okay, now there's a couple of ways that you can do this. So if you know, for example, like we, we know at Digital Marketer that if someone is a marketing agency or consultant, that they are qualified to buy one of our higher ticket programs, which is our certified partner program. And so we can simply ask, are you? Anytime somebody opts in to any lead magnet that we have. So any lead magnet, any webinar, anytime anybody is giving us their name and email address, whether it's for the first time or for the 400th time, we can ask them right there on that form, yes, no toggle. Are you a marketing agency or consultant who serves small businesses? And if they say yes, then we know that they are qualified to see our higher ticket offer. If they say no, we know that they are not qualified. Similarly, at the scalable company, right, in general, you got to be doing a million dollars a year to qualify for founders board. Right? Now if somebody's doing over a half a million, but they're scaling quickly, they got million dollar momentum run rate on their side, okay, we'll consider that. But definitely if you're under a half a million, you simply don't qualify. It doesn't mean we don't love you. I mean we're not rooting for you and this is important. It doesn't mean we won't still look to serve you. It simply means we're not going to show you the flipped funnel. And so the first test that we ran, anybody who was qualified just through basically a dropdown on a form or a toggle. And so that's the first question you ask is like, what is one simple question that I can ask that will get qualified people to raise, to raise their hand? And it could be, by the way, something as simple as are you interested in seeing a demo, a live demo, live, one on one per customized demo of our software? Yes or no, Right. I mean, yeah, I want to, you know, I want to see that. It could be, you know, any number of things. Right. Once you're clear on what your high ticket person is, you know, figure that out. So when we had people note that they were qualified and we were sending them to the flipped Funnel, everybody who is unqualified, they went through the traditional funnel. And we were pretty excited because what we found, and this is really, really, really cool, the unqualified people, we were able to generate, depending on the funnel, anywhere between a 50 and a 75% return on ad spend. So 50 to 75% of the ROAS return on ad spend was generated by the quote, unquote unqualified. And the cool thing is we never really gave the qualified people a chance to scratch the rich. They never saw the lower ticket offer now it still didn't work. So the first test didn't work. It worked for the unqualified, the qualified people. Conversion rates, engagement was still too low. And so I was listening to a buddy, mutual friend of ours, Dean Jackson, and he was talking about how at any given time in your market, in your database, there's people who will buy never, there's people who will buy later, there's people who will buy now. And the trick is, how do you figure out who wants, who's ready to buy now, and how do you only show your offer to the people who are ready to buy now? So the theory that we, that we went with, which seems to be holding true, is the ideal combination is qualified plus ready. If you have qualified and you have ready, these are the people who you show your flipped funnel offering too. This can seem a little bit like terrifying because you're like, oh, gosh, you know, but there's all these qualified people. Maybe some of the people who say they're not ready yet, you know, maybe they would have bought. But what we found is that there was far more risk in showing the people who are not ready to buy now the big ticket offer because they were essentially saying, no, no, I'm not ready. And so what we did is we would simply have a readiness offer on the thank you page. So the people who are qualified, instead of sending them down the normal channel, the normal path, the linear upward ascension, they went down a different path. And it was a video or a page that was basically like, hey, if you got this thing, that probably means that what you really want is this big end result. And so now we're not selling them on, you know, a splintered piece of it, we're selling them on. What you want is this big result. And so in the case of scalable, it's, you want to systemize your business so you can exit, achieve your ideal exit in three years or less, right? For, you know, digital marketer, certified partner, it's, you know, what you really want Is you want to generate six figures a year, passive recurring, you know, through your agency or consultancy, right? Like that, that kind of thing. Like it's what you really want is this big thing. If you want it and you know, you want it now, then go and take this additional step. And that additional step could be to book a call. That additional step could be to register for another webinar, to register for a mini webinar, to register to watch a video. The point is we're going to put some gating in front of, you know, we're going to put some gating in between the qualification stage and the let's show them, you know, our big ticket thing. So we're going to qualify, we're going to basically qualify them based on, you know, do you just match demographically? And then we're going to qualify based on readiness. Only the people that are ready see the big ticket offering. When we did this, we lost none of the big ticket conversions. All the people by the way, who indicated that they were qualified but not ready, they saw nothing. We literally didn't attempt to monetize them at all because they're not ready. So they go back into our email list, we'll send them, you know, opportunities to opt in, they'll go back through, have a chance to indicate if they're qualified, have a chance to indicate if they're ready. And so far that we found has been the kind of ideal combination of showing a flipped funnel to only the people who are qualified and ready. And the beautiful thing is the non qualified people are offsetting 50 to 75% of the acquisition cost campaign wide. So pretty slick.

Nice. I love that.

Very cool.

So that's our big win, that's our big takeaway. And yeah, Shameless plug. We're going to be breaking that entire funnel, that entire process down for all of our founders board members as well as all of our new M3 members.

What the heck is an M3? Yeah.

So M3 is the modern marketing mastermind. It's the brand new mastermind we just launched over at Digital Marketer for marketers, growth professionals, growth minded entrepreneurs. And we're pretty excited because now we've got, you know, we basically have a mastermind for entrepreneurs who want to grow. We've got a mastermind and mentorship program for entrepreneurs who want to scale and exit. That's founders board. And then we've got a mastermind mentorship program for entrepreneurial investors who want to invest like an entrepreneur after they've scaled and exited. And that's Obviously Epic board. So shameless plug. But I think that's pretty cool and exciting.

I like it.

Is there a singular place to go.

For all that stuff or is the. Is it basically there's three different places to go.

There's basically three different places right now. But we should definitely create a singular place.

But yeah, right now ring to rule them all. No, I'm sorry. We should have one site that has all that stuff. But so where do people go to find out about that stuff Now, Ryan, that if they're curious.

If you go to join M3 and that's M the letter three, the number. So join M3.com that'll take you to get some information about the marketing mastermind. Founders Board.com is for Founders Board and what is it for EPIC? Epicnetworknetwork.com epicnetwork.com so sweet. So, yeah, wherever you are kind of in your entrepreneurial journey, we're here to serve. But yeah, those of you who are founders board members and or M3 members gonna be excited to share the detailed behind the scenes, you know, down to dirty nitty gritty of that new funnel. But it's one of the biggest breakthroughs we've had, probably not exaggerating in years. So I'm pretty excited about it.

I love it. Awesome.

Cool.

Well, thank you guys for joining us today. If you enjoyed this, please share it with a friend. If you're interested in all of the cool that Ryan talked about or any of the specifics, go check them out at that website. All that should be in the show notes and we'll see you next time on Business Lunch.

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