value ladder

The Value Ladder – How to Create More Value in Your Product Range

Previously, we’ve discussed the importance of giving your customer something for free before selling them a paid product or service; however, marketing is never that simple. In reality, trust is the only way to sell to somebody online. There are many ways to build trust, but sometimes the most significant hurdle between you and the customer is price. 

Below, we discuss the concept of a value ladder and the many benefits it can have when growing a product range and retaining customers. However, before we talk about value ladders, we need to understand what value is and how we can use it to encourage a customer to make a purchase. 

What Is Value?

Whether or not we realise it, we’re constantly judging the value of a product against its asking price. If the value level exceeds a product’s price, we’re likely to make a purchase, whereas a product that provides less value than the asking price is more likely to be ignored.

Value is mainly subjective to each individual. However, in the context of products, we tend to assign a value based on the likelihood of that product improving our lives in some way. For example, we’ll happily pay more for a Starbucks coffee because it’s handmade, tastes great, and has a social status boost associated with more expensive products. 

This concept of value can also apply to a product range, and this is where the value ladder becomes useful. 

What Is a Value Ladder?

The value ladder is a process of introducing incremental steps between the lowest-paid entry point and the highest. The ladder lets you ease your customers into your higher-paid offers by starting with cheaper, easier-to-sell products. With each step up the ladder, your customers should receive more value for money until they reach your highest offering. 

A great example of a value ladder in action is membership tiers, which typically start with a low-paid bronze tier that includes only the most basic membership benefits. These tiers will increase to a more expensive gold membership with the most exclusive benefits. 

Why You Need a Value Ladder

Most customers aren’t going to purchase your product or service on the first visit to your landing page or after seeing your first advertisement, so creating a ladder allows you to cater to every possible customer who comes across you. 

Value ladders provide a way for you to retain customers over a more extended period of time by delivering more value as they ascend the ladder. The most profitable companies realise that each customer has a lifetime value that can be increased by introducing more steps to the ladder.

How to Create a Value Ladder 

Whether you’re creating a value ladder for clients as a marketer or a business owner looking to maximise profits, the process begins by categorising products based on price and value. One of the core principles in building a value ladder is that you start small and gradually move towards your most expensive product or service.

Ladders often start with a free product that is a lead magnet for potential clients. This type of offer is commonly a free eBook download or access to an online seminar. Companies that use a subscription model will offer a free trial to new customers over a short period to allow potential clients to test their service. 

The highest offer will vary depending on the products or services a company sells. Usually, the most expensive offer is exclusive and personal, such as one-to-one coaching, in-person training or a personalised product based on the customer’s requirements. 

It’s important to remember that every step on the ladder is designed to increase customer desire for your most expensive offering. 

A Final Note

Russell Brunson (Co-founder of ClickFunnels) introduced the concept of a value ladder in his book Dotcom Secrets. The ladder spread like wildfire amongst online businesses due to the ease at which they could develop one with minimal costs. However, it also presented a hidden benefit that changed how eCommerce worked with the lifetime value of customers. 

Acquiring customers is an expensive process that doesn’t guarantee a healthy profit margin, especially if you’re increasing your marketing budget to compete with other companies. When you create a value ladder, you can spread that cost over your entire product range instead of the initial product, which, in turn, increases the customer’s potential worth too.

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