In this article, I will talk about how to set up your marketing funnel starting with “FREE” offers, and I will teach you my secret “4 Step” method of:

FO – UD – FC – BE

In the last article, I spoke about the word “FREE” and how it is the most powerful word in marketing. We discussed the psychology in how people react to offers that are free and how taking action is viewed as nearly without ANY risk. It is important that you have read that article in order to get the most out of this one. If you did not, make sure to get your back issue and read it now.

If you just joined our newsletter, you can get the back issue of that article here http://nowview.me/tMG

OK. So by now you are probably wondering what in the world I mean by my “4 Step” method of FO – UD – FC – BE. But before I start, I am going to add two new items in the mix as well: “BU” and “CS”

So let me explain the steps.

FO = Free Offer
FC = Forced Continuity
BU = Bump
UD = Up sell / Down sell
CS= Cross Sell
BE = Back End Offers

When I first started marketing online, I would focus on just trying to sell things up front. I quickly made a switch to giving things of real value away for free. My only goal at that point was to get the name and email address. While that was a great strategy for list building, it was only a small part of a much bigger picture, one that would take me 5 years to figure out. One that I am going to teach you here today, right now.

Quickly, I realized that I had an opportunity to make and offer to the prospect at the time of opt-in. I then started to aggressively work on this process and was one of the people that popularized what is now known as the One Time Offer, or the “OTO” process in marketing. In fact, my entire Butterfly Marketing was based on this concept along with an instant viral affiliate program.

UD – The Up sell / Down sell. The OTO is sometimes called an Upsell. But that’s not what it is. It is really just an offer that uses URGENCY as its main strategy increase conversion as well as the influence factor of commitment and consistency, which I covered in past articles. An Upsell is usually used when someone is already making a purchase (not an opt-in) and you offer them more of what they are getting already at a special price.

Later, I started to realize that I can also offer a “Down sell” if people said “NO” to my Upsell. You can see a video demonstration of the “Down sell” process here:

http://thebutterflymarketingmanuscript.com/videos/downsell-bonus-video

But that was it. That is where Butterfly Marketing left off. Even in version 2.0 I only left off with the “Down Sell” – I will not get too much into this as you can get this report by logging into the members area at the7figuresecrets.com (or Get My Software Free).

It took me several years before I realized that there was more that could be dialed in to maximize the transaction. Part of this maximization process will be featured in the near future articles that go beyond this process that involve getting traffic and working towards reducing loss and stick strategies. For now, I want to stick with the letters in this method that we have not discussed yet.

FC = Forced Continuity
BU = Bump
CS= Cross Sell
BE = Back End Offers

FC – The Forced Continuity is a crucial part that ties in what we learned last week. This is not to be confused with “HIDDEN” continuity. Continuity simply means a membership. So if you have a membership site, in effect it is forced continuity. Meaning, the member stays active until they decide to cancel.

However there is one main difference from a membership when using FC. FC focuses on a “RISK FREE TRIAL” similar to what we discussed in the last issue. Who uses this? Companies like Eharmony.com that allows you to get a free profile and 30 days to use their site. NetFlix may offer you 1 free movie when you create an account. Or back in the day we may all remember that FREE AOL CD-ROM we would see at the check out counter at Walmart. You would put it in your PC and set up a RISK FREE TRIAL account to try AOL for free for 30 days. If you like it, do nothing and stay a member forever or until you decide to close your account.

(NOTE: Although I am not going to go into “Stick Strategies,” it is important to note that when there is “Pain of Disconnect,” members will tend to stay with you longer. For instance, with AOL, back in the day before they offered FREE EMAIL, if you ever left them, you would lose your email address. So people would stay for years just so they would not lose just their email address even though that is 1% of what AOL had to offer in its hay-day.)

So what you want to focus on is allowing people to try your offer RISK free for 7 days, 14 days, 30 days etc. for FREE (Sometimes a $ 1 trial) in the hopes they love it and want to stay with you for the long term. When it is free, sometimes it is not as easy since you still need to collect the credit card information to bill them. So that is why sometimes you will see a free product given as a bonus that can be shipped to customers for just shipping and handling.

NOTE: It is also crucial to note that now you are not just getting “name and email.” You are now getting full postal data and phone information that can be used for offline marketing. See “BE”

I came to the conclusion that your conversion rate does not change much for a monthly rate as opposed to the same price 1 time. What you must do is justify why the service is worth the value every month to the member and simply over deliver. Residual income makes a drastic difference in your income online.

You want to start to measure how long a member stays active. This is called LTV (Lifetime Value). So, if you charge $ 19 a month and after 1 year you see the average membership length is 4 months, your LTV (on the membership only) is 19×4 = $ 76.00 (What you make on upsells and backend etc. should also be figured in your LTV calculations.)

Make sure you are VERY clear of the terms of your billing in your offer. Do not try to hide it or make it confusing. Make sure the customers know what they are getting and that way they have the choice to pass on your free offer if they do not want to try out your program. It is also good to let them know upfront that it is easy to cancel and you should explain in the signup process how to cancel as well.

What you should start doing now is think of what you can offer as a monthly service and how to design your free offer to get them to try it risk free.

BU – The Bump. This is a simple little cross sell that happens at the time the customer fills out their credit card info on the page. It is a great offer that can be 1 time or monthly (Like a DVD of the month club.) You simply add a check box (usually check off) that if they check on will add the item to the cart.

Where do you see this? For example, at McDonalds when you ask for an Apple Pie they will say, “Do you want 2 for a dollar?”
At the movie theatre, when you order a medium soda for $ 4.25, they say (as they hold up a huge cup,) “would you like a large for just 25 cents more?”

How about online . . . where do we see that? Well at Amazon.com, you will see BEFORE you checkout, “Customers that bought this item also bought these items together. Get all 3 and save even more.”

That is simply a bump. It is an Up sell or cross sell at the time of purchase. This can add 33% income to your campaign and is a must have in your marketing funnel. Once people make a decision to buy, their defenses are way down and now is the time to offer them a great value. People LOVE TO BUY (but they hate to be sold), so once they commit to the buying process, give them more of what they want.

CS – The Cross Sell. This is the same as the bump but it is usually done at the END of the order process. It can be your own product or an affiliate product. In fact, this “CS” was the entire concept of my launch called “TrafficFusion.com” – Simply put related products in your members area or “Thank-you-page” at the end of the check out for products they may also be interested in.

Just as when you checkout at Amazon.com, they say to you, “You may also be interested in these items…”

You simply place an ad that is easy to see, or make a link that says “Special Offers” and place it there. It is important to make these special prices lower than retail. REAL Limited time and limited quantity can double conversion in these items but you will have to rotate offers when they expire. – You can also advertise these products via email follow up as well.

Finally we talk about BE – Back End Offers. Believe it or not, many campaigns focus all profits on the BACK END. They use all of the prior items we discuss and call that the “Front End.” They will lose money on the front end or pay all of the commissions (or more than 100%) to affiliates to drive the front end just to get leads for the Back End.

The Back End is where you are selling something usually 5 to 30 times the price of your front end. Your front end drives this and generates leads for your back end. Your Back End will be most effective as follows and as we go down the list, generally the effectives are not as high as the one above.

- You get the customer to call you at time of sale.
- You get the customer to call you at anytime after the sale.
- You (or a 3rd party professional call center) call the customer.
- You mail a direct sales letter or promotion to the customer to get the customer to call.
- You mail a direct sales letter or promotion to the customer to get the customer to go to website.
- You mail an email campaign to the customer to get the customer to call.
- You mail an email campaign to the customer to get the customer to go to the website.

Also keep in mind; if you can invite the customer to come to an offline event, these customers will be your most profitable customers, at least two times more than sales done over the phone.

You of course will have to design your Back End. But you need to get your wheels spinning now as you build your empire. Make sure that you have a plan so you can execute this now or when you are ready. If you sell something for $ 19 and it costs you $ 10 to make that sale, making a $ 497 sale on the Back End takes care of all the efforts it would take to sell another 25 sales at $ 19.00. The Back End is what will take your from making 5 to 6 figures per year to making 7 figures per year and that is what will allow you to make your millions online.

What you should do now is get a blank piece of paper and draw out your Marketing Funnel. That’s right, just draw out the diagram and then start to brainstorm on what you can fill in as far as the offer. Think about what you will sell and how you will fulfill it based on the pricing model terms we went over earlier. The information I covered with you today is priceless; I wish I had someone to teach it to me years ago. If you implement the plan I just laid out for you here, you will be on your way to setting up your online empire.

In my next article, I am going to kick this topic into high gear with a new series that will show you the 5 ways you can increase profits online. If you thought this was good, the best is yet to come.
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By Mike Filsaime
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This article first appeared in the February 2009 issue of the MarketingDotCom newsletter. You can get a free copy of the latest issue for the price of shipping at http://the7figuresecrets.com

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