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Using Bonuses to Increase Customer Conversions
Your website can have one million “eyeballs” checking it out, but if
the visitors don’t become customers, then those eyeballs are worth very
little. You must pay attention to conversions you’re your businesses to
survive.
In general, the basic ecommerce formula works like this:
Step One: Drive traffic to the website.
Step Two: Convert those eyeballs to leads.
Step Three: Convert leads to customers.
Step Four: Generate repeat purchases.
Bonus
products are an essential variable in this formula. However, offering
bonuses isn’t just putting the words “But wait – there’s more,” in your
offer. The key is to know what types of bonuses will have the strongest
effect on your prospects.
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1. The Eyeballs to Conversions Process.
As
a business owner, you have several tasks to make your business
successful. First, you must drive traffic to your website. In addition,
once you have website visitors, you must convert those visitors into
clients or customers. While a lead does not necessarily equal a sale,
it does equal a future potential sale. Once you have a prospect’s name
and email address, you’re able to move into step two – converting them
to customers and making sales.
Bonus products work very well
as a tool to build this opt-in list and free giveaways in exchange for
an email address are a common lead generating tool. What you offer and
how you offer it largely depends on your target audience.
In
cases where you’re selling an expensive product, a substantial bonus
product or a series of bonus products can help convince your prospects
them they’re making the right decision.
You can use bonuses to
build your sales in a number of alternative methods. Here are just a
few ideas to get your creative juices flowing:
One way to do
this is to tier rewards so that the more the customer buys, the more
bonuses the customer receives – for example, increasing membership
status from silver to gold and gold to platinum.
Consider giving
away bonuses to customers who help you build your opt-in list. For
example, you could reward every email a friend gives leads toward a
bonus.
Consider giving away bonuses to prospects and customers who are active and participate in your online community.
2. Why Do Bonuses Work?
In
general, bonuses are defined as products or services you give away to
incite a purchase, a subscription, a referral, or even an opt-in.
You’re probably very familiar with bonus items, so let’s take a look at
why they’re so effective. Bonuses tap into several psychological
triggers, including:
Reciprocity. Reciprocity is the tendency
we have as people to respond to something in kind. Bonuses are the
epitome of positive reciprocity. Customers receive a free guide, a free
video, a free e-book as an opt-in bonus, now they’re feeling
grateful.
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Here is the recipe: Commitment and Consistency. Psychologists tell us that
we’re more likely to say yes to something big if we’ve already said yes
to something smaller. In short, it gets your prospects in the habit of
saying ‘yes’.
Liking. Who doesn’t like someone who gives them
something for free? People buy from companies they like, and from
personalities they relate to.
Scarcity and Urgency. Use a
limited bonus or give an extra bonus to customers who act quickly. It
motivates people to purchase now rather than wait and possibly change
their mind.
3. How to Create Bonuses for Your Target Market.
Even
though your business may involve a niche topic, your customers are
probably diverse and have diverse personalities, interests, and
technological capabilities. We all have our own motivations and
behaviors influenced by our personality. Learning to meet the needs and
wants of the characteristics can help you create bonuses that cover a
range of personalities. Keep in mind that your customers will likely
include many or all of the following:
Emotional Personalities – Many of these people make decisions based upon their feelings.
Thinking Personalities – These are the people who like to plan, schedule and solve situations.
Extroverted Personalities – These are the folks who tend to be open and comfortable in new environments.
Introverted Personalities – These want to take it slower and make personal connections.
Intuitive personalities – They have a natural ability to think outside the box.
Remember
that each prospect has their personality. Give them options and
consider creating one great bonus to be packaged in a number of
different formats.
4. Creating Your Bonuses.
This is
where many people drop the ball – they throw together sloppy bonuses or
simply by resell rights to something that’s been distributed by a
million other websites – in short, they stop taking their prospects
into consideration.
Let’s take a look at three primary ways you can create eye catching and valuable bonuses.
Resell
Rights/PLR: The internet is full of companies and websites that
mass-produce bonuses for you to give away on your own website. Although
these can be beneficial, they can also be a slippery slope. You want to
have bonuses unique to your niche and specific to your products or
services.
Creating Your Own Product: While creating your own
eBook, video tutorial or software program can be a bit of work, it can
also be tremendously rewarding and you’ll be sure you’re creating the
quality products your prospects and customers deserve. If you already
have a stockpile of great content, you can repurpose it to create new
and valuable bonus products. Creating multiple bonuses from one packet
of information is a great way to accomplish that task.
Outsource
The Job: Hire A Company Or Individual To Develop Your Bonuses. When
outsourcing there are a few success tips: Determine in advance exactly
what you want the freelancer to accomplish. Outline your project in
advance – it will ensure communication is clear and the project is done
the way you want.
Armed with this information, you can start planning and preparing the bonuses that will give you more paying customers.
1
Use the Freemium Model of Membership Marketing For Business Success
Today, we’re going to discuss “membership marketing”, and how it’s almost a requirement for a successful website. If you’re selling anything online, whether it’s ebooks, digital products or anything of that sort, then the membership system we discuss below can deliver those products in the most effective and profitable way.
Business Success Means Avoiding Churn and Increasing Revenue Per Customer.
To be a business success, you’ll need to avoid is customer churn (or “turnover”). If you get 100 new members, but 99 of them quit after 30 days, it’ll be hard for your business to survive. In a membership context, it’s the period of time someone will keep paying their membership fees. So while it’s vitally important to constantly acquire new customers, it’s just as important to maximize the revenue of each customer you already have. So what we’re talking about is the backend, and the marketing funnel you have in place.
With a subscription membership model – where you have a recurring billing system in place – the backend is the recurring fee itself. The issue becomes keeping people as members of your membership sites.
Let’s see examine how this plays out in the context of three popular business models:
Traditional Product Sales
Let’s first consider the traditional Internet marketing (publishing and sales) model, which is used by most online business owners. In this model, you create a product and a sales page, drive traffic to that page, and hope the traffic converts into sales. The average for that conversion rate is somewhere around 1% to 2%.
Assuming you have a $37 product at a 2% conversion rate, it means that for every hundred people you send to that page you’re going to sell two of those products at $37 ($74 total), and you’ll have a visitor value for each of those 100 people of $0.74.
Recurring Membership
The average conversion rate for a recurring membership site is often less than the traditional one product sale model; it’s generally 1% or less. So let’s now assume now that you’re going to charge $17 per month, rather than the original $37 product price point. But we start to encounter churn with monthly billing. In our experience, the average membership stick rate is between three and five months.
So for every 100 visitors, we’ll get one membership sale, and that customer can be expected to stick around for approximately four months. That means you’re going to generate $68 in revenue from that one signup (four x $17 = $68). That gives you an average visitor value of $0.68. When you use the membership model, you can also put backend offers in place. So once you already have a paid member, you can assume additional backend sales and commissions from that member – around $5 per month.
Now you have that one member, and they’re paid the $17 for the first month – will likely do so for about four months – and they’re also worth an additional $5 per month over that same period of time. So now you have $88 from that signup, and the average visitor value for the 100 visitors is $0.88.
Single-Payment Membership
The next structure is a paid membership with a single payment. Your conversion rate will increase because you’re asking people to make less of a commitment, and a membership generally has a higher perceived value than a simple product sale. You can expect a conversion rate of 2.5% to 3%.
Because there is less commitment, you can charge more still keep the conversion rate up. So let’s assume a one-time fee of $37 instead of that $17 recurring. Now your churn goes way down. The customers have already paid, so very few of them will actually terminate their membership. You’d be safe in calculating an average stay of 12 months.
So the calculation is as follows: You’re going to see a 3% conversion rate, and the total one-time fees are going to be 3 x $37 = $111. Factoring in the backend offers ($5 a month per paid member), and over 12 months you’re looking at $180 in backend sales and commissions, for total revenue of $291. This brings your visitor value up to $2.91.
But there’s an alternative model that blows all three of these out of the water when it comes to down to making money for you – the Freemium model.
The Freemium Model.
The Freemium model is basically a free membership with an upgrade offer. It works like this: you put a “free” offer in place on the front end of the site (in a later article we’ll discuss how to make this free offer not appear to be “free” – and why you’ll want to do so), and you’re likely to see a front end conversion rate around 35%.
If you then place a compelling offer on the backend, you’ll see a conversion rate between 5% to 10% on that offer. It’s often much higher, so let’s use 10% for our analysis.
This means that for every 100 visitors – you’re going to get 35 free members, and then a 10% conversion rate on these 35 members on the backend. So what you end up with on average is 31.5 free members and 3.5 paid members.
On your front end that’s 3.5 x $37 = $129.50. The paid member back-end value is $5 x 12 Months x 3.5 People = $210. The free member back-end value is $1.50 x 12 Months x 31.5 People = $567. Adding these amounts and you have $129.50 + $210 + $567 = $906.50, so your average visitor value is $9.06.
That’s a big difference from the more “traditional” models we discussed above (and more than 10 times higher the most common product sale model)!
Here we’ve opened the doors, we hope, for a lot of people to recognize that this Freemium model is a very profitable model.