Mike: Right. You know, it's not like you wake up everyday and say, “What can I e-mail my list today?” In fact it's always, “I don’t know. I mean I've committed to Alex Mandossian already and I'm still trying to work on my own products.
So I don’t think that our community always understands that. Sometimes it's like, “Oh, they're always promoting. What it is, is we do have friends that create great products that we’d like to share with our members.”
Tom: Yeah, you definitely get to a point where you'll look at your calendar and as you mentioned about blocking off stuff, I've got a big calendar on my wall. I'll write somebody in. First obviously we want to check out the product and look at it, make sure it's good.
But you originally write that person in. Then all of a sudden later you might have two, three, four more people contact you on that same date. And unfortunately you can't say yes to everyone. You tend to usually go with the people you’ve met, the people that you know.
Everyone always says you’ve got to be in the inner circle. Well, it's not so much there. There might be some truth to that, but it ultimately comes down to that you want to help out the people that have maybe helped you in the past or people you’ve met at seminars or people you’ve met somehow online and it's just kind of a natural thing.
So yeah, when you guys pull off that reciprocity for your seminar, giving those JV partners, those VIP partners, getting them in for free or at a reduced price, I'll have to say that it had to have been the most powerful group of marketers I've ever seen at a seminar ever. I don’t know how you guys feel.
Mike: Yeah, we were blown away by the attendees. And Marlon Sanders would have been the cherry on top, but his plane like lost an engine halfway there and the oxygen masks came down. And they had to turn around and go back to the airport. He got so scared he went home. That was the only one that was missing.
[Laughter]A couple of other people couldn’t make it as well, but we had some really, really cool people there. And it just made for great footage and testimonials and credibility.
And for the attendees, when the attendees see these people and they see like Armando Montelongo from A & E’s Flip This House sitting there with a straight face, a pen in his hand, and writing down notes and taking notes, and then later going out and applying these techniques in his business, it blew us away. I mean it just totally blew us away that we reached out and had all these people in there.
And then you take a look at like Jeff Walker was there and there were a couple of other people like Frank Garon. And the reason I'm typically bringing up these names is because they said that people wanted to talk to them and they were like, “No, I've got to get back in the room because I want to learn this stuff.
Like Frank Garon said he hasn’t been to a seminar in the last three years where he's in the room for every speaker taking notes and saying, “I'm going to go apply this because this will work. This will work. This will work.”
Everything was like, we broke down our business. So it was really cool to see that we had these people actually in the room and taking notes and then later going and applying it and then calling us and saying, “We applied this technique that you guys spoke of and we’ve gotten this result,” and it just truly, truly helped for the launch when we had those people heartfelt promoting the product.
Jeff: Now you touched on this earlier. Could you expand on your future plans? You touched on how you were going to take some of the content out, create a front end product, and then the back end I assume is going to be the full price DVD set. Would you kind of want to get into the details on that a little more?
Mike: Yeah. This is a great, great strategy. We kind of stumbled upon it but then other people started talking about it. And then we’ve actually checked it out and it has been done before.
And you know we teach that front end products lead to back end offers. And I think what everybody tried to do is they would look at their marketing funnel, right? And then they would say, “Okay.”
It starts with an e-book or software. Then it goes to multi-media where I offer CD-ROMs and then I can go to maybe a DVD and then I've got home study. And then I've got a coaching program. And then I have a platinum program or a one on one coaching program. And I can bring that all the way up from $47 and I've got this funnel that I can back people to all the way to $4,000 or $5,000.
Now what we think is the better thing to do is not create the front end product and then later go and say, “How can I make this better? How can I keep building on this and start building back end products?”
What we recommend people do is create the back end product first. And then after you have the back end product, you make light versions of the back end product and use that as the front end to sell the back end.
So if you take a look at like what Frank Kern just did, he just did this seminar or this coaching program called Mass Control. So what he does is it's almost like getting paid to create your content. He could have done the videos live, I mean by himself, but what he does is he does it in a training format.
And then people pay a higher price and then what he gets to do from there…I see you chuckling, Tom. If you're talking to Jeff you're both in trouble. I'm telling you right now.
[Laughter]Tom: We’re instant messenger guys.
Mike: What Frank does is he takes this information and now that he has people that maybe pay, I don’t know what it was, maybe $5,000 or $10,000, whatever it is, to get into his coaching program, he then uses that to create the product. He then goes and he’ll sell that product for let's say $497 or $997 instead of $5,000 and it's the recordings.
And then he can later go and create a Mass Control e-book where he can take a summary of everything and sell it for $47 on ClickBank. Then when they buy it he can say, “Hey, I have a home study course that sells for $1,597. In fact, you may remember last year we sold 1,000 units in 36 hours.
“Well, since you’ve just purchased my e-book for $47 and you’ve shown an interest in Mass Control, what I'm going to do is I'm going to give you a five times discount on that $47 you just paid. I'm going to give you up to $500 off my home study course, normally $1,497. You can buy it now for $997 at this one time offer special since you’ve shown interest in the Mass Control psychology.”
So what ends up happening is we recommend creating the bigger product first and then finding something that you could break down out of it to create your front end product. So what we're doing with the 7 Figure Code is we have the home study course which is a DVD home study course with printed transcripts and the Power Point slides of every presenter.
We paid someone to go through the entire 7 Figure Code and create a mind map of every single DVD. So it will show if we were talking about taxes or we were talking about product creation or time management or hiring employees. Now you get these awesome mind maps. I mean these things are just awesome.
Then we hire somebody to take all the transcripts and then read them and say, “Okay, how would this look if it was a book?” and write it in chapters then and then put it in more of a sequential order and now we have The 7 Figure Secrets with these mind maps and we also have the Power Point slides that can be popped in there as well, usually with some good flowcharts and things like that.
And now we’re going to take that and what we’ll probably do is raise the price of the 7 Figure Code because right now we’re selling about ten a month, maybe a little more, maybe about twelve to fifteen a month. But what we do now is we raise the price to $1,497 and that is a contrast point.
And now that we create the front end we say, “Hey, you can get this $1,497 course,” and create a charter price or whatever we want to call it of $797 or $697 or $897 or $997, whatever the case is.
So when you have a price comparison you have to have a price comparison when you do a one time offer. It's crucial. That’s a big mistake a lot of people don’t do. They never show they’re selling higher somewhere else. Otherwise what's the incentive to buy it now?
You don’t want people thinking, “If you don’t buy it now you can never get it again.” What you want people to think is that if you don’t buy it now you'll pay more later. That’s a very important thing in a one-time-offer.
What we try to do is now create that front end, so now if we can sell 15 or 20 e-books a day, now you can get a 10% conversion where you can do 1.5 to 2 sales per day of the home study course on autopilot for years to come—where you can sell two to three courses a day by creating a front end for it.
Jeff: You did something similar like that with your Butterfly Marketing script where you would raise the price up about $1,500. Then you did the ClickBank. Was it a $97 offer?
Mike: Ninety-seven dollar product for ClickBank and we gave the affiliates a 70% commission just because we wanted affiliates pushing the front end product. We actually paid more on the front end and didn’t pay on the back end. We could have paid 50/50 on each.
What we did, being that we had hard costs, we were drastically reducing the price of the home study course, we gave the affiliates the majority of the money on the front end.
And what we did is again, what was Butterfly Marketing? It was a back end type of product. It was a home study course. But what we did is we said, “Well, Butterfly Marketing is software and an ebook and five bonus interviews and three bonus reports.”
Let's just take the principles themselves and take what we sent people in a spiral-bound binder in the mail with the software and convert the Butterfly Marketing manuscript hardcover into an ebook and just sell the principles and show case studies of people that read the manuscript but didn’t use the software and had great results in their business and use those case studies as, “Hey, you don’t necessarily have to have the software for Butterfly Marketing. Here are some great principles.”
But then after they bought it we said, “Hey, as you know if you get so excited about this after you read this, I believe that you're going to want to go out and buy Butterfly Marketing for $1,497 when you realize how powerful this is. But instead of that, what we’re going to do is I'm going to give it to you for the price that it originally went out on the market for, for only $997.
But since you just paid for the manuscript, I'm going to also take that hundred dollars off and I'm going to give it to you for the lowest price it has ever been offered on the Internet for $897. But this is a one-time-offer.”
Then if they actually said no to that, we actually had a downsell that said, “Okay, how about we don’t ship the course to you, but I give you the entire course right now in a digital version where I'll give you instant access to the software instead of shipping it. And I'll give you the download of the two DVDs, 5 mp3 recordings and the bonus reports instantly. Since I don’t have to ship anything to you, I can give you the digital version for $497.
So that was our downsell and one out of every five people that purchased the manuscript purchased one of those offers. So for every $97 sale that was made, we averaged almost $700 total profit minus the $50 it costs to ship. So we averaged about $675 on every sale that was made for $97.
We made $675 divided by five, because it was one in five, $135 net profit for every sale that we made on the manuscript, we made an additional $135 on the back end.
Tom: Which is important to go into the math, like Mike said, because we gave away 70% of the initial $97. So we gave away most of that up front $97 initial investment, but $130 on average was the per profit of each of those $97 sales. So it worked out very advantageously.
Jeff: Plus you guys had the full affiliate contest for the book if I remember right. It was a seven day contest and I think you sold something like 6,000 of those things on ClickBank. Are those numbers correct?
Mike: I don’t remember. I don’t know if it was 6,000. It could have been 4,500. It may have gone over 5,000. It’s on my blog way back there in the month of August at www.MikeFilsaime.com.
But I do know this. I know that we grossed, our own business kept the profits, for about $325,000 after 24 hours. Selling a $97 e-book where you're giving away 70% commission, we made ourselves a total of $325,000 all profit, all in the bank, and that’s after affiliates got paid.
Jeff: And if you did not have that back end at all, what would your profits have been?Mike: Oh, let's see. We made $135 on the back end so I think it was like $22 on the front end. Let's see. It would have been $325. We would have made about $54,000.
Jeff: So obviously very important for everyone listening. Mike just pointed out the difference between having a front end offer, even though it was successful, but the difference between that and the total sales brought in because of the back end is unbelievable. And I think I heard these numbers in the past, Mike, one time when we were talking. Could you break down the difference? What percent, you mentioned one in five, 20% went for one of those up-sells. How many actually went for the full price and how many went for the downsell because many people have an offer
Mike: Eleven and nine, 11% went for the $897 offer and 9% went for the downsell. And obviously less people are going to get to see the downsell because already there are one in ten purchasing the upsell, the one-time-offer and never see the downsell.
So it's not that the downsell is actually selling worse than the upsell. It's that some of them don’t seem to be leading them to. But let's put it this way. A hundred people come to the site. A hundred people actually buy the product at ClickBank for $97.
Out of those hundred people, 11 paid us $897. Nine of them paid us, actually it was ten. It was 11 and ten. It was 21% percent actual conversion. Eleven paid $897. Ten of them paid $497. So in that scenario out of every 100 people, 21 people made a purchase, 11 at $897, 10 at $497.
Jeff: Yeah, those numbers are totally unbelievable. When I first heard that I was just shocked.Mike: Yeah. That’s a 20% conversion and for an average ticket of about $700.
Jeff: And I think part of it is that because the customer already has their wallet out and they have just purchased, they are more inclined to turn around and buy again. I know a lot of people I have talked to or that have e-mailed, they seem like they’re hesitant.
They want to make the sale but then they're like, “Well, I don’t want to hit them with an offer again too soon.” Obviously the philosophy is you give them an offer right away that’s targeted and they're more than likely going to purchase it.
Mike: Jeff, I was in the car business for fourteen years. And I'm not trying to say this like, “I was in the car business for 14 years and let me explain to you…”
I'm trying to tell you like what I witnessed and what I witnessed was a guy that was very, very difficult to deal with and you would be talking to him and you’d be like, “ So, if we could save you that extra $50 dollars could we put the deal together for you today?”
And he was like, “Let me explain something to you, son. I said $200. If your manager comes back at $199 I'm walking out of here and I'm not coming back. I'm going to go buy the Infinity.”
And you’d be telling your boss, “Hey, this guy is just not budging.” Then he’d be looking at his watch going, “You know what? I don’t even have time for this anymore.” It's like the guy is tough.
And you know what happens? When you finally put the deal together it was like, “Whew!” He would sit back in his chair. He would pick up his three year old. He put her on his knee.
He’d grab her by the hand and look her in the face and say, “Daddy just bought you a car. That’s right. Yep. We’re going to put the seat in there.” And it's like, “Hey, is there a McDonald’s around here?”
And then all of a sudden you see the guy like Austin Powers when he just got out of the cryogenics. He's just like walking around like, “Where’s the waiting room?” and the guy was the nicest guy in the world.
Then after that he starts saying, “You see that Forerunner over there? What are those things on the bottom?” “Those are chrome side steps.” “Could you put those on for me?” He doesn’t even ask you the price.
He is now in what we would call the buying mode. And he’d be like, “You know what else I wanted to get? I wanted to get a pin stripe and the wife was like, ‘I don’t want a pin stripe.’ No. I want to get a pin stripe and let's tint the windows as well.
“And you know what? I also want to put one of those TVs in the back.” All of a sudden the guy has separated the pain of the negotiation process and he’s now in a buying mode.
And Jeff, have you ever been there? Where you're like in Best Buy and all of a sudden maybe you go in just to do something and all of a sudden you just get in this mode where you're like, “Let's go get that TV.” And, “You know what? Let's look at a home theatre.” The next thing you know you go to the sales person and you're like pushing out this huge cart out to your car. Right? Because you bought the home theatre and you're setting it up and you feel good about it. You feel good about it and I don’t think anybody says it better than Jeffrey Gitomer.
And what that means is that people love to buy. They hate to be sold. There is nothing wrong with putting offers in front of your customers. We all get a very, very good feeling out of buying.
I mean for goodness sakes, yesterday, Tom, myself, and Mike went to the Apple store. I bought this Apple Desktop with three computers. They fell in love with it. They go back.
They buy Macintoshes and we’re buying accessories for our iPhone and we literally got in this mode of, “What else can we buy? Is there anything else we can buy?” because we felt like buying.
So the point is that when you make a sale to your customer, the sales letter was the hard part. The internal conflict was the hard part. Clicking that Order button was the hard part.
All the joy begins when that sales page says, “Press continue to be redirected back to the merchant.” Because then they're like, “Yes!” and then you provide them something else, and you're like, “Yeah, let me just make this experience better. I want it all.
“I want the XM stereo system. I want the navigation system,” because they made that decision to buy which separated the buying process. Now I'm in the negotiating process. I’m now in a buying process. If you're not putting offers in front of them, you're taking away from their joy.
They want to make more purchases. I think that anybody that says, “I feel kind of funny making another sale after they just made one. They may feel that that should have been included.” No.
If that was the case then Toyota would include extended warranties in every one of their cars. They give you a three year warranty. If you want more, then there's an option to go seven years and many people do.
Some people say, “No. I'm only leasing it for two years. I don’t need it.” Some people say, “I keep my cars for ten years. Too bad they don’t have a ten year warranty because I'd buy it. I'll have to go for the seven.”
So never, ever should anybody listening ever feel bad about giving people additional options. The thing to remember is you're just giving them a choice. They can say no. They can say yes. They’ll never get upset as long as they're given a choice.
Certainly you don’t want to give them 19 upsells in a row where they can't find their download page. But having an upsell and a downsell is a very sound strategy.
Jeff: Yeah, I totally agree with you. With my fitness clubs, some of my workers would feel hesitant after someone purchased a new membership, a two year, whipping out some good money. They would feel bad about trying to then sell them personal training.
And we had to figure out why they did not want to do this. Well, when we turned around and said, “Well, the personal trainer is going to teach them exactly what they need to do. They're going to get them on the road to fitness because just buying a gym membership doesn’t mean much if they don’t know what they're doing.
So once my employees realized that that personal trainer, they’re purchasing a package of personal training sessions, that could mean the difference between total success or not success. And many times if someone was obese, you’re talking like life or death type situations.
So once we presented it in those terms, my staff started really selling the personal training because they believed in it already. It was just one of those things that was an easy sell and then they saw the value of it.
But yeah, just like you said, Mike, people that are in that mode to buy, if you're giving them something of value, then go ahead and offer them that.
Mike: And you know what? Those buyers make happier customers. I would guarantee the person that has the personal coaching is happier than the person that just got the gym membership because you know the gym. It's the industry.
The gym membership people, a good percentage of them, the only time they ever use the facility is when they swipe their credit card. Then they never come again. But the people that get the personal coaching, they have the accountability and they're happy and they're getting the results.
So I think your sales people started realizing, “Hey, this is in the best interest of the customer because at the end of the day, they're getting what they wanted to accomplish when they set out to come to the gym in the first place.
Tom: And you mentioned the keywords there of value and belief. If you're providing something of value and you believe in yourself, you believe in your product, you believe in your company, that boosts your initiative in not feeling like you're doing a disservice. You're feeling you're doing your customers a disservice if you don’t share with them the upsell options.
Because that’s specifically what Mike and you just pointed out, from someone who just buys the gym membership and they swipe the card, they work out once and then they may go three, four, five, months without even attending, they're not feeling so good. But the person who had accountability with the upsell, that personal trainer holding them accountable is getting the better results.
Similarly, if you can provide that in your products with an upsell and a downsell to give them those extra values that you believe strongly can help them from where they are to where they want to be. That’s the winning combination, belief in yourself, belief in your product, belief in your service.
Jeff: Right. And plus, with those happy customers, they were the ones that tended to refer other members to us. Because they were coming in all the time, we had an option to continue to sell them stuff be it tennis lessons, or be it whatever, different parts of our club. I mean we had everything just like a Web site.
We had everything broken down into add-ons or additional sales or it could be just them simply grabbing a drink or a workout bar on the way out of the club. If they're not coming in the club, then there's no way for us to make more money off of each one of them.
Hey, let's go back to the 7 Figure. I know you guys are busy and our call is wrapping up here. I always like to talk about mistakes because oftentimes you can learn, people can learn from other people’s mistakes.
Looking at your total launch from the actual seminar itself, all the way through the launch of the take home study course, what were some of the mistakes that you guys did or what are some of the things that you think you should have done or improved on?
[Laughter]
So it wraps up at 3:30. Thanks. Thanks for coming out folks. No, just kidding.
Seriously, Jeff, we’d probably need another hour to go over the mistakes that we made. So it's been a good six or seven months, or whatever it's been. I forget now. But how many months, Tom? Five?
Tom: Four.[Laughter]
Mike: Okay, let me rattle off in no particular order. I'm going to tell you some of the things that come to mind. We did a lot of things right. We did a couple of things wrong.
Number one, my opinion, if you're going to do any type of payment plan, don’t use PayPal. PayPal allows the user to go in and cancel their subscription which they can't do with credit cards. So people that are like, “You know, I'm going to go and cancel my subscription. Then I'm going to go to the help desk.”
People can't do that with their credit card. So the only way that somebody can cancel their subscription is by going to the help desk and saying, “This isn’t working,” or, “I didn’t get this,” or, “I'm not sure,” or whatever the case is. But you're too much behind the eight ball.
When I tell you the amount of cancelled subscriptions we got, it was enormous, enormous, probably 15%, maybe more. What happens internationally is people don’t get their package, and we were on time.
“I ordered five days ago. Where’s my package?” “You live inJapan. You live in New Zealand. You ordered on a Saturday.” “They didn’t get it until a Monday. We didn’t ship it till Tuesday. Today is the fifth day and it’s Wednesday and you just cancelled your subscription.”
“Oh, well I just wanted to make sure that you didn’t charge me again until I was sure that you shipped it.” So that’s one of the things.
The other mistake that we made was not getting a price of the course before we decided to come up with a price that we were going to sell it for. It happened very, very quickly. We were going to sell it just as a DVD course. That’s the way it was going to be.
With nine days to go we get on the phone with John Reese and he says, “You know I think your course is going to rock and I think it's definitely, definitely worth $497. But can you do anything else?” And we were like, “What?”
“How about this?” And he comes up with this grand plan. If you do that, that will be great and that was like creating mind maps and all that type of stuff and we were like John, we just can't. “It might be worth it. Push the launch off.” We don’t have the time.” He says, “How about transcribing everything?” I was like, “You know, that we can do.”
He was like, “Yeah. Just get all the DVDs over to a transcriptionist.” So we ended up getting that and then we had to get it printed and all that type of nonsense and that’s what made this crunch. However, what we didn’t realize is that our prediction cost for the DVD course was about $28. By the time we were done with two two-inch binders, two three-inch binders, I'm talking thud factor of the transcripts, our production costs went up to about $105 a unit.
Now keep this in mind, Jeff. In order for us to ship internationally, because, here’s another mistake we made, was not having gotten fulfillment houses in Australia and the UK and have orders for UK customers go to the UK, Australia customers and New Zealand and Malaysia go to that house, and domestic orders go for US and Canada and Mexico here. Because our final cost was about $155 to ship a course that heavy, because now that it got heavier to New Zealand, now you take into the fact that you get 3% of your merchant account, right?
So you take $490. Well we’ve got shipping and handling so let's say we’ve got $524 minus 3% is $508. That’s what we got after the fees. Then we paid our affiliates $225. That left $283. And then it cost us $165 to ship. We only made $118 per course because 90% of our sales were made by our affiliates.
And now you take into consideration the guy that cancelled his payment but he got the course and our first payment was only $147 and it cost me $165 to send it to him. And we collected $147 on payment one and then I paid an affiliate $75. So now we’re in the hole. So that means I have to sell three products to make $118 three times just to break even on that one sale.
So we got hurt. We made money. But let me tell you something.Tom: We added a