Customarily, the way businesses generally go about things is to pump out large amounts of content through multiple channels – social media, email, paid advertising – and hope that does the trick. Then they might retarget those that didn’t bit the first time, including offering a few different low dollar purchase options before finally converting all of that effort into a few sales.
But by reversing that sales funnel and simplifying it down to just 3 easy steps, you can convert even cold traffic with less work and less risk, and increase your customer’s lifetime value. Essentially you’re beginning with the end of your sales funnel and optimizing that by cutting out the middle man, which is faster and more cost effective for your business.
Rich: Kim Snider has started fourteen ad-ventures, ranging from restaurants to a training video site for polo players. Some have been very, very successful, others not so much. She has made and lost millions. Through her Snider Investment Workshops, Kim has trained thousands to take control of their own financial future. In fact, she had the top rated financial radio show in Dallas-Fort Worth for 9 long years.
In 2011, Kim retired to South Carolina with her husband and dogs, built a polo farm, and planned to live happily ever after. That was after company #9. Retirement is not obviously for everyone.
Kim’s “why” is to learn things people think only experts can learn, make it her own in some systematic way, and then teach it back to others who need that information to improve their business or life. Kim, welcome to the show.
Kim: Well thanks so much for having me Rich.
Rich: So you and I first met at Social Media Marketing World 2017, and we sat at the same table, I was the moderator at the Small Business Table Talks. And you introduced yourself as the person behind the “reverse funnel”. So tell us, what is the “reverse funnel”?
Kim: The “reverse funnel” is a way for micropreneurs to create an online sales or marketing funnel so that they can grow their business without having a blog, a podcast, social media or even an email list for that matter. And beyond that, the other thing that makes it unique is that the profits from that funnel are typically something like 3-10x what they would get from a traditional funnel.
Rich: Alright, so tell me about the traditional funnel and why you don’t think it works well for thee micrpreneurs. And if you don’t mind, just tell me how you define “micropreneur”.
Kim: So the way I define a micropreneur is less than $1million in sales and anywhere from just yourself to a very small team of 5 contractors and employees. And the reason I am specifically honing in on that group is that micropreneurs have really specific constraints that businesses that are bigger don’t have. And that’s what makes these online funnels so difficult for micropreneurs.
So to your questions about the traditional funnel and what doesn’t work so well, I think everybody is probably familiar with the model. It’s that we create all this content and then often there are Facebook ads or some sort of paid advertising that drives them to that content. They’re then pixeled , then you retarget them with more ads to get them to opt into at lead magnet, and from the lead magnet often there’s a trip wire offer, and then from there is the core offer, and then after that there’s all the backend sells and cross sells and all of that stuff.
Even as I’m sitting there explaining that, that’s a lot of stuff. Which is great if you have a big team and a big budget, or can afford a real advertising agency that can run all of that for you. But micropreneurs don’t have that. And the earlier they are in their micropreneurial journey, the more constrained they are.
So 1) it’s a lot of stuff, 2) the time from when you start building it to when you actually figure out if what you’ve built works is a long, long time. But then on top of that there’s this one kicker, and that’s the 20% rule. And that we know is that only 20% of our marketing efforts work, so we have to test, test, and test all of that stuff in order to figure out which is the 20% of each of those steps that work. And when you put all that together and you think about a micropreneur trying to do that, it’s never going to happen.
Rich: Alright, so what I hear from you is micropreneurs are just getting started, there is so many things they need to do in a business. The traditional funnel is kind of like a numbers game, we throw 100 pieces of content at the wall and we get 20% engagement. From there we move down the funnel and we get another 20%, then we get another 20%, and if we’re reaching a million people or even a few hundred thousand people, great.
That’s not the case with most micro entrepreneurs. And the problem is just that you are going to exhaust yourself before you actually get to improve your funnel to increase your conversions. IS that a lot of the problems that are there in the traditional funnel as you see it?
Kim: Actually, let me tweak what you said about this 20%. So if I put out 10 pieces of content only 2 of them are going to resonate. We heard a statistic at Social Media Marketing World – and I don’t have it exact – but it was something like 22-24% of tweets and Facebook posts get even a single like, share or comment. And you can go down the line, 20%. If I make 10 ads, only 2 of them are going to work.
So if you take .02% success rate times .20 success rate times, times .20success rate, as a micropreneur all I’m going to have time to do is make one piece of content, one ad, one lead magnet, one landing page. My chances of success when I take .2 x .2 x .2, is like .000018%. You see the reason that it works for big guys is that they have the time, the bandwidth and the budget to test to find the 20%.
Rich: I see. Ok, alright. That makes sense. So then how do we fix this? How do we fix this traditional funnel? You’ve created this reverse funnel, what does that mean exactly?
Kim: So for me the secret is in the sequence. And what I mean by that is when you only have very limited amount of time and you can only do a limited amount of things, the things that you do and the order that you do them in matter a lot because of funnel math. And I won’t go into tons of math, but what I mean by that is that funnels are multiplicited. At each step down the funnel we lose people, we multiply by a percentage.
And so what that means if you look at it is that the math is the things at the bottom of the funnel where people pay us can actually have far greater impact on the number that we all care about which is profit, particularly as a micropreneuer because that’s what we take out of the business and goes into supporting our families. So the impact on profit is greatest at the bottom of the funnel. Who knew?
And by that what I mean is, for me it’s three steps. The first one is an offer to one avatar that converts reliably. If you don’t have that then the entire funnel is neither here nor there. If you can’t convert at a reasonable percentage everything else is just money and time wasted.
Once you get that then step 2 is retargeting leaky buckets. Because by definition funnels have more “didn’ts” than “dids”. And what everybody does is they focus on the people who do what they want who are compliant in each stage of the funnel rather than looking at all of the things that they’ve already paid, the leads and people they’ve paid before that didn’t do.
So retargeting is step 2 and then step 3 is then increasing lifetime value. When you put those three numbers together in that sequence, the difference on the profit numbers are just staggering.
Rich: Ok, so let’s start with #1. You need to create one offer to one avatar that converts. That sounds obvious, but obviously it’s got to be difficult. How do we create this offer to one of our ideal customers that’s actually going to convert?
Kim: It does sound obvious. And let me just go one step further, it’s more than just creating it. What I’ve found is that we just ignore the fact that, first of all 10% of people who come to our site aren’t ready to buy, so it’s not just creating this offer but instead of having the content and all of those steps before, it’s driving that traffic – that cold audience – to that offer with the intent of getting them to buy, and then retargeting the ones who didn’t. So that’s why we call it the “reverse funnel”.
It’s very different and opposite of the way that everybody else is suggesting. Now in terms of concrete steps to create an offer that converts reliably. One of the things that I tell my folks is let’s sit down and use some frameworks that are proven in order to check the boxes for offers that can convert.
So I love to apply the “5P Framework”. I’m not sure who first created it but I first heard it from James Wedmore. It’s Premise, Problem, Promise, Price and I can’t recall the last one. But to actually sit down and not just slap something up on a page, but you only understand that we’re only going to do a few things and do them well. So to sit down and take the time to get your offer right, that means doing research beforehand, it means actually sitting down and creating a customer avatar profile, which most micropreneurs don’t even do.
I think if I could sum it up Rich, part of it is just doing less but doing it complete. Doing it completely, doing it well, doing it so that you get full benefit out of the things that you are doing.
Rich: So if I’m a web agency – for example – and I know that my avatar is a marketing director who has buy in from his employer to hire an outside firm and they’re looking to be the best in their industry, then to craft an offer based on those 5 P’s, and then that’s the offer that should work. Of course we’ve got to do some testing, but that’s really what I should be focusing on and not trying to be all things to all people.
Rich: If I’m a pizza place it’s figuring out what’s my exact offer that’s going to bring people in the door and get them to buy a pizza or an entire dinner or whatever the case may be. But I just need to figure out who my ideal customer is – or as you say, “avatar” – and then what do I want to do with that, what is the offer that’s going to really convert at a higher rate and obviously still make me a profit at the end of the day?
Kim: Right, what’s their problem that you can solve for that one group. And then what’s the premise, because it’s going to take more than just solving their problem, you’ve got to message it right in a way that gets their attention. But to focus on understanding that group – and ad you say – not putting up marketing that is very generic.
Just as a quick example using your digital marketing agency, if I am running ads to a large enterprise versus a local pizzeria, the way I’m going to talk about my offer and the way I’m going to message it, absolutely everything is different. The problems that they have, the way they express these problems, the language they use, everything is going to be different. So it’s about understanding that and trying to walk a mile in their shoes, and then craft your offer in a way that is compelling.
Rich: I think this is important because too many of us try to be all things to all people and put out a thousand offers at once and kind of dilute who we are. When I see a company that says, “we only work with doctors”, or “we only work with woman between 40-45 who find healthcare to be their #1 priority”, that’s a very specific target audience and that’s a great way to start. And of course you can always expand from there, but really focusing on one avatar and creating that offer makes it easier in some ways. That constraint can free you up, so I think that’s an important piece of all this.
But I want to move to #2, which you said “retargeting the leaky bucket”. And yes, obviously as people with a traditional sales funnel we lose people at every single step. So walk me through what you want to do with #2.
Kim: Sure. So typically when people think about retargeting they only are thinking about ad retargeting and ad retargeting is a very big piece of it, but it’s not just ad retargeting. So we use ad retargeting, site retargeting, and email retargeting. And in all cases what we’re talking about is putting a very specific hyper-targeted message in front of someone that is known to us based on what they have or haven’t done and where they are in their relationship to us. And again back to the point we made in step #1 about being very specific with who we’re going after, when we put a message in front of them telling them exactly or encouraging them to do what comes next in the funnel that we can do that very precisely person by person, clearly we’re going to get better results than if we’re just putting a generic ad up or a pop up on every page to every visitor, or when we send the same email to everybody. Again, it’s fairly obvious when I say it, but most people aren’t doing it.
Rich: No, absolutely. In fact I was just putting on an event the other day and one of my speakers is from Constant Contact and she was actually talking about how she’ll create a list – and I’m sure every email service provider does this – but she will create a list of everybody who didn’t open an email, creating new lists out of those people and then send them a new message. The same kind of offer but maybe coming from a different angle, and she’s seen high conversion rates from that, and that sounds like what you’re talking about. Finding those people who have basically not continued down the funnel and retarget them – or however you want to phrase it – back into the funnel and she gets a high percentage of conversions there as well.
Kim: Absolutely, that’s exactly it. That’s just low hanging fruit. But now take that one step further and imagine if my funnel – let’s say a webinar that I’m trying to do – so I send people an email trying to get them to sign up for my webinar. Some people will open that email and some people won’t. Some will click on the link to register for the webinar and some people won’t. Some people will attend the webinar and some people won’t. We just stop right there and then take this idea of email and site retargeting.
So some of the people on my list will never open my emails, some will stop opening them for whatever reason. But by taking this multi-channel approach – called “behavioral targeting” – that can say, “If you opened my email but you didn’t register for the webinar you are going to see either/and an ad, a site message, and an email all encouraging you to register for the webinar regardless of where you go whether it’s my site, email inbox or Facebook. And as soon as you do, you stop seeing that ad/email/site message and start seeing the one that encourages you to attend.” So it’s working across channels to drive them down, and that too is way more powerful than just one of those three.
Rich: I don’t questions that. But if we’re talking about the micro entrepreneur that doesn’t have a lot of time, managing all that amount of retargeting seems like a lot of work. Do you have a specific tool or are you just a spreadsheet person, how exactly do you manage all of those steps?
Kim: I do, it’s a fair question. Part of what makes it manageable is getting rid of so many steps in our funnel so that what we’re creating becomes very evergreen. Like I said, we do less but we really drive it all the way through. So that’s part of it. And because of that, then it can become very iterative, every time I do it I improve on it a little bit more.
And then the third piece of it is tools, no question. So for example as a CRM I use Active Campaign. And Active Campaign has a lot of these tools built in for behavioral retargeting, so it knows when someone is opening an email or someone’s visited my site, etc, and I can use that. I use Convert Flow to do my site retargeting, so it knows who’s tagged as what in Active Campaign and who’s visited what pages and so on. So it, too, uses all that same data in order to show that coordinated message. And then Facebook as well, Facebook Custom Audiences. It’s very easy between website custom audiences and customer list audiences that you can upload or download to keep Facebook in sync with those buckets as well. And so the key to making that work is less the tool sand a little more simplifying the funnel. Because if you didn’t simplify it down, then there is no way it would work.
Rich: Ok, let’s move on to #3, increasing customer lifetime value. A huge thing, but what is your lifetime value? How does one calculate it and then of course how do we improve it?
Kim: The lifetime value calculation itself is actually a fairly complicated calculation. However, it’s pretty easy for someone to swag it. For me the cutoff point is $500, greater or less. If you have a $500 customer lifetime value, then it is reasonable that you should be able to put marketing out there and be able to spend a reasonable amount on your marketing and still be profitable. As you get below $500 and especially when you get to some of the small ecommerce-type offers, it can get really, really hard. So you can swag it just because you know generally what your primary offer goes for, you know how long you retain a customer, you generally know how often they stay with you or buy again, those sorts of things. So at first you kind of have to swag it.
But in terms of increasing it, one you have an idea of what it is or is going to be, then there’s all kinds of tactics. The first of which often is just raise your process. Most of us undervalue our goods and services and are not charging enough for it, but then there are things like cross sells and upsells, improving retention. There are some creative things we do.
There was an example, Troy Dean had a course that he did where they had access to the community for the year that they had taken the course, and he realized that people didn’t need the course anymore but they hated to lose the community. So he did a program where people could just buy the community after that. You can get fairly creative about ways to deliver things that your customers are willing to pay you more money for.
Rich: That makes a lot of sense. And here at flyte – which is my day job – we’ve done things like look at our pricing on both ongoing and one-off’s like a website, and just increased it to what we felt was now fair based on our experience and expertise. And then as far as ongoing, we certainly try to move people into some of our ongoing marketing campaigns as well, and then upsells. We have a website care plan now so that if you don’t’ want to be dealing with any of the WordPress updates or you want to make sure that the maintenance is taken care of, we just have a flat fee for that. And also just people used to paying you on a regular basis as well, and I think those are all great ways to increase that lifetime value of customers.
Some can be right up front, like you said, like increasing prices. Some could be about extending the number of months or years somebody stays with you by creating add-ons or retainers or selling the access to the community.
Kim: Retention is huge, pricing is huge, and then bundling, cross sells, upsells, those are really the three main categories in the lifetime value bucket.
Rich: Awesome stuff. This has been great. Kim, I’m sure a lot of people are sitting there going, “I need to work on my offer, I need to work on my retargeting, I need to increase my CLV.” I’m sure they probably want to talk to you a little but about this, so where can they find you online?
Kim: You bet, I would love that. You can find me at reverseyourfunnel.com. That’s really the best place. We have a Facebook page as well, not so much on the other social media.
Rich: Alright. Well Kim, we’ll have all those link of course in the show notes and I just want to thank you so much for your time today.
Kim: It’s been my pleasure Rich, thank you.
Head on over to Kim’s website to learn more about her reverse funnel strategy, and see how she helps countless micropreneurs build their online marketing sales funnel that both fits their business and works!
Rich Brooks is the President of flyte new media, a web design & digital marketing agency in Portland, Maine. He knows a thing or two about helping businesses grow by reaching their ideal customers, and he puts on a yearly conference aimed at that as well. Head on over to Twitter to connect with him, and grab a copy of his brand new book geared towards helping businesses generate more leads.