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Facebook ad costs continue to skyrocket over time.
Competition on the Facebook ads platform is at an all-time high. This is especially true now that Facebook’s newsfeed algorithm has changed, leading to users spending less time on the site.
With more advertisers flocking to the platform, it's natural that the increased competition leads to higher costs.
The good news is Facebook ads are still an amazing tool for generating traffic, leads and sales. And as long as you're smart, they will stay that way for a long time to come.
So how can you continue to create profitable ad campaigns in a world where costs are continually on the rise?
The best advertisers understand that they need to be fighting this battle on two different fronts in order to win. You need to not only focus on keeping your Facebook ad costs down, you also need to work to bring your revenue per lead and customer lifetime value UP.
That's how you continue to create highly profitable Facebook ad campaigns and blow away your competition. While they are battling to against a rising tide to keep their costs down, you'll be able to afford to absorb the higher costs and continue to profit because every lead and customer will be worth more to you.
Keep reading to learn how to increase the amount you're earning for every dollar you're spending on Facebook ads so you become more profitable now, and stay that way for years to come.
The Difference Between Revenue Per Lead and Customer Lifetime Value
It’s important to understand the difference between your revenue per lead and your customer lifetime value (LTV).
Customer LTV is how much, on average, a customer spends with you over their lifetime as a customer.
Average Revenue Per Lead (ARPL) is how much revenue you generate per lead (email subscriber) in your business.
How to Calculate Your LTV
Let's say you have a subscription service and on average, a person stays for about six months. The service costs $50 a month, so the customer lifetime value is 6 x 50 – $300 dollars.
Let’s look at another common example:
If you just have one course and it's priced at $997, then your customer lifetime value is simply $997. Because people can only buy that one thing from you over the lifetime of them being a customer.
Customer LTV only looks at buyers in it's calculation. You're determining how much a person will spend with you after they become a customer.
How to Calculate Your Average Revenue Per Lead
Revenue per lead means the average amount of money that you generate per email subscriber.
The really simple way to calculate your revenue per lead is:
- Take a period of time, let's say one month.
- Count how many email subscribers you added over that period. Let's say you added 1,000 subscribers over 30 days.
- Next, look at how much revenue you generated from that time period. Let's say you generated $10,000 from those 1,000 leads over 30 days.
- Then you just divide $10,000 by 1,000 leads, which means on average, you generate about $10 per new email subscriber.
These are totally fictional numbers, of course. Yours might look completely different, but that’s a really simple way to calculate your ARPL.
Now we'll look at how to increase that number.
How to Increase Your Revenue Per Lead for More Profitable Facebook Ad Campaigns
In this section we'll discuss four ways to increase your ARPL.
#1 Always Pitch Your Leads More Than Once
The first way to increase your average revenue per lead is to always pitch your leads more than once.
Something I see often with both clients and students is that they'll run Facebook ads to an evergreen campaign, collect leads, and then forget about them.
In case you’re not familiar with an evergreen campaign, it’s one that runs all the time. It's constantly generating new subscribers, putting them through a sales funnel, and trying to sell them a product or a service.
Most evergreen sales funnels look something like this:
- You buy a new subscriber on Facebook by getting them to download a lead magnet and opt in to your list. This enters them into your sales funnel.
- They receive a series of emails over a period of 1-2 weeks.
- They see your sales pitch, and either decide to buy or not.
- You add them to your main email list and never show them that sales pitch again.
This is a huge mistake.
It’s easy to become focused on bringing in new leads all the time. You start looking at monthly spend and revenue, and you forget about those leads who didn't buy initially.
But think about that. It's a huge ask to bring someone into a webinar or email series, and then after a week, ask them for $500 or $1,000 dollars.
The Key to Selling Online is Building Trust
If you want to generate more sales, take time to build trust before pitching your leads a second time. Building trust in your sales funnel is often more crucial than we realize to drive sales.
Brian Casel of Productize and Scale increased his conversion rate for a free email course from 5% to 35%, because he added his opt-in where people trusted him most — in his blog posts.
His lower conversion rate came from his paid traffic (AdWords). This makes sense, because people coming from an ad are rarely primed to buy. They don't know or trust you yet.
The same goes for people who opt into your Facebook ad offer. Even after a week, some people just don’t know you well enough to spend $500-$1,000.
Here is how you can add in the trust factor for leads who aren’t interested in your product or service the first time around.
The week after they don’t buy, put them into a follow-up sequence where they're getting an email once a week with valuable new content. After a set period of time, you can pitch your product or service again. I recommend waiting 30 days before pitching them your offer again.
My preferred funnel is a webinar funnel. They watch the webinar, go through the follow-up sequence, and if they don't purchase we continue to send them regular emails just giving value.
You’re not selling, you're just teaching them something, giving them value every week. And then after 30 days, you can start promoting the webinar again via email, and start adding them to that sales sequence a second time letting them know your offer is available again.
An important thing to note here is that if you're opening and closing the cart to your service or product, it needs to be real.
You can’t tell them the cart is closing, and then in 30 days offer it again, when really, the cart never closed. You need to really close the cart and make the product unavailable to them for that period of time.
I like deadline funnel for this. It’s a great tool to use for opening and closing your cart at various times. And it's a good way to add user-based urgency.
You can also start to get creative. If you've shown them the same webinar twice, maybe the third time you put them through an email training series. The idea here is to show them something different.
Get creative with different teaching styles, nurture your leads, and continue to offer them your product or service at different points in time. Maybe they're just not ready to buy the first time around.
At the end of the day, you'll have much more profitable Facebook ad campaigns if you can follow up with your leads at least once, twice, or more over the course of a year.
#2 Add in a Downsell Offer
The second thing I would recommend for increasing your revenue per lead is adding in a downsell offer.
A downsell offer is a product or a service that's priced lower than your core offer. You show it to people who don't purchase the core offer, and it’s positioned a little bit differently.
For example, if you have a $1,000 course, service, or product, and your leads go through your sales sequence but don't buy, you can try and entice them with a downsell offer.
The idea of the downsell is to present an offer that's enticing to people who weren't quite ready for the core offer. Maybe they were interested, but it wasn't an exact fit for them at that point in time.
So you want to offer them a downsell that appeals to them right now AND helps prepare them for your core offer the next time you offer it.
Audible does this all of the time. If you try to cancel their core membership service, they’ll try and entice you to stay by offering you one month for free.
Here’s an example of a downsell on LinkedIn when you cancel their premium service. They try to entice you with a 50% off deal for two months when you sign back up.
To create a good downsell, you need to consider a common objection or a common reason why people don't buy the core offer.
Common reasons are:
- They're not quite ready for whatever the core offer is.
- Their business isn't in the position to take advantage or get the full value out of your core offer.
- It could be a cost issue, they might see certain parts of the core offer that they want, but they don't want other parts.
A good downsell addresses those issues.
How to Use a Downsell in Your Online Course
The majority of the clients I work with sell online courses. Here are a few ways you can use a downsell if you fall into that course creator category as well.
Let’s say you're selling a complete blogging course for $2,000. It teaches everything about starting, growing, and profiting from a blog. It teaches everything from setting up a blog, to SEO, to how to write posts, and how to monetize, for $2000.
You pitch them on the core product, but people don't buy. One of the core objections you'll find there is that a large course can be overwhelming for people who are just getting started.
If people haven't even started a blog, they don't even know if they like writing regularly. This course could be overwhelming for them.
So you would offer them the $2000 product, and then if people don't buy, you offer them a downsell. The downsell presents them with something a lot smaller.
For example, you could show them an offer for a 30-day course on how to set up their blog and get their first 100 email subscribers. You might price this at say, $499, which is much cheaper. It's a much shorter course and it's just for them to dip their toe in the water and get started.
The whole goal here is to still create new customers with your Facebook ad campaigns, and serve them. Even if they aren’t ready for your core offer, we’re giving them a product that they need at a lower price point. Because maybe they weren't in a position to buy the core offer.
And remember, we're putting them in a position to succeed and start to grow. This way we can eventually upsell them into the core offer.
In this example, the goal is to help them get their first email subscribers and start generating a bit of revenue from their blog. Then they’re in a position where they’re ready to buy the full course.
A real world example is Scott Hallman, who used downselling as a way to sell his high-ticket coaching services and trainings at a lower cost. This was for those people who never would have purchased his one-on-one training. After he implemented his downsell, the result was a 125% increase in conversion rate in the first month.
If you've got a course and you're wondering what to add as a downsell, here's a quick tip for you: sell the course without the community. Sell it without the coaching calls or anything else. Just sell it as access to the video files only.
We've seen that work well. You can jump in and cut the price by half and sell it as a self-study version.
To summarize, a good downsell has these elements:
- It addresses a key objection.
- It still helps your audience and gets them to become a customer.
- It gives your audience the opportunity to experience the quality of your products.
- It gets them to a point in their business where they're ready to upgrade to your core offer at a later date.
#3 Add a Tripwire Offer
The next thing I'd recommend for more profitable Facebook ad campaigns is a tripwire offer.
You may have heard of a tripwire offer in the past. It's often used to reduce your customer acquisition costs or your cost per purchase (how much it costs to acquire a new customer).
The idea with a tripwire is, you put it on your Thank You page after your audience downloads a free offer.
For example, you might offer them a cheat sheet or a checklist for free as your lead magnet. Once they download that, they go to a Thank You page where they're immediately offered a limited time product or service (your tripwire).
Here’s an example from Meera Kothand.
This is a page that displays after someone has downloaded a freebie on Meera’s site. She offers a complete email marketing template bundle for $17.
Usually, I price tripwires between $7 and $47, and it has to have a time limit (as you can see with the countdown timer in the example above).
Deadline funnel is great for this one as well. You can tell them that for the next 30 minutes, they could buy your mini course for $7 or $47. Then you use Deadline Funnel to enforce that deadline and automatically remove the offer for them when the timer expires.
Now every time you buy a lead, a certain percentage of those people are going to buy your tripwire offer. It can help liquidate your advertising costs because you've got people spending money with you up front.
This gives you cash flow to spend on more leads and more actual customers, resulting in more profitable ad campaigns.
There’s a psychological thing here as well. It's proven that it's easier to sell to an existing customer, even one who's bought at a low price, than it is to a new lead. Digital Marketer has said that when someone takes a $7 “front end” offer (a tripwire), they are 10X more likely to buy your core offer.
Make Your Tripwire Offer High-Value
The important thing to mention with your tripwire is, whatever you sell, it has to be damn good. Whether it's $7 or $47, the goal here is to blow them away with value and quality.
That way when you pitch them your core offer, they've seen the tripwire and they know how good your stuff is.
They're much more likely to then purchase your core offer, or whatever you're selling, if you exceed expectations with your tripwire.
If you put in a crappy tripwire, you’ll end up cannibalizing your back-end sales.
Quality is important. Don't get into the mindset of thinking that just because it’s a $7 product it needs to be simple.
If you sell a $7 product, sell something that's normally worth $100. Then they'll absolutely love your stuff and they're much more likely to purchase your higher ticket products or programs.
Just remember that this isn't about a quick money grab from people who just joined your list.
This is about an opportunity for you to demonstrate value. It's where you demonstrate what the experience is like when they do join your paid programs or services.
After you implement this, you’ll be generating more actual customers (which are easier to sell to). And it’s an opportunity for you to demonstrate the value you offer inside your paid programs.
Is there any part of your main product or service that you can splinter off and offer up front at a lower cost tripwire offer?
#4 Offer an Upsell
The upsell is all about increasing the lifetime value of your customers by getting them to spend more with you.
An upsell is an offer that people see after they buy your core offer.
Let’s say you're selling a $1,000 product. An upsell is a complementary product or service that you offer immediately after they purchase.
Example: Have you ever been to McDonalds and been asked ‘would you like fries with that?' That’s an upsell.
A great example is Amy Porterfield’s upsell for her Webinars That Convert course. On the path to checkout, she offers done-for-you slide deck templates students can use to help save them time when creating a webinar.
This is a classic example of using an upsell that saves your students time.
What Makes a Good Upsell (And How to Price Them)
Now, let's talk about what makes a good upsell and how to price them.
First of all, your upsell offer needs to do one of three things:
- It needs to save the new student or new customer time (as you saw above)
- It needs to save them money
- It needs to make the whole process easier
For example, let's say I'm selling a course on Facebook ads. I want to find an upsell that fits into that offer category. So I would think about things that would save my students time.
If you're running Facebook ads, one of the most time-consuming things you'll do is create your own Facebook ad images or graphics.
I could help them save time by offering a pack of templated graphics and landing pages. That would save them time and money.
They don’t have to pay a graphic designer, and now they've got templates to get them up and running quickly.
You could apply the same thinking to that blogging course example that I mentioned earlier.
If you teach them how to get up and running with a blog, you could save them time or make the process easier by offering an upgrade. It could be a $200 upgrade to have an expert set their blog and hosting up.
That way you can just hand the keys over to them, so to speak.
In terms of pricing, the pricing that I like to go with is about one-third of your core offer price. That seems to be the sweet spot for an upsell offer. It seems to be where people are most likely to take the upgrade.
If we're selling a $1,000 product, selling a $297 upsell at the end tends to be a good price point.
And the probability of an existing customer buying from you is high. The authors of Marketing Metrics say that the probability of selling to a new customer is 5-20%, while the probability of selling to an existing customer is 60-70%.
Upselling is much easier when the customer is already in the middle of buying something from you, because they already made the decision to trust you. Especially if that something is of value to them, and it complements the core offer.
Lastly, the upsell is a one-time offer as well. They see it after they purchase the initial product or service and have a limited time to purchase (30-60 mins).
The beauty of an upsell is, you've already got their credit card details and their payment information. Because they've already bought your core offer. It's seamless for them to click the upgrade button without having to enter their payment details again.
A Quick Recap on Creating More Profitable Facebook Ad Campaigns
Here’s a quick recap of how to increase your customer LTV and average revenue per lead. These tactics will help you create more profitable Facebook ad campaigns with more room to scale.
- Always pitch your leads more than once. If you're bringing new leads into your sales funnel, don't just go silent and never talk to them again. Make sure you have a sequence to continue to nurture, and email them on at least a weekly basis.
- Add in a downsell offer. Not everybody is going to be ready for your core product straight away. If people don't buy the core offer, have something smaller that they can purchase as a downsell.
- Offer a tripwire on your Thank You page. This is what your audience sees after they download your lead magnet or free offer. Price your tripwire between $7 and $47 dollars, and blow them away with value.
- Offer an upsell. Increase the LTV of customers by offering them additional products and services after they buy your first one. The key with your upsell: it needs to save them time, money, or make the process easier. And normally I like to price those at about one-third of the cost of the core offer.
I recommend you start by implementing one or two of these things, and then add to it.
You don’t have to implement them all at once.
Which of these tactics are you thinking of implementing? Are you implementing any them already?
Let me know in the comments below!