I’ve seen a lot of people trying to do tripwire funnels and struggling to make them work with cold traffic and I wanted to show you WHY the struggle is real for most people…
A certain marketing blog just released a blog post showing one of their ads that generated 129,890 leads at $3.15 a piece in just one year…
Super impressive, but here’s the problem:
I happen to know that their funnel usually looks something like this:
- LEAD MAGNET
- TRIPWIRE ($7)
- CONTINUITY UP-SELL ($38.60/month)
- PROFIT MAXIMIZER ($297)
They generated leads for $3.15 and if they did a GOOD job:
- 10% of their leads will buy their tripwire
- 10% of their tripwire customers will buy their continuity up-sell
- 10% of their continuity up-sell customers will buy their profit maximizer
Let’s do some math:
- 1,000 leads (Cost $3.15 each = $3,150 ad spend)
- 100 tripwire customers (@ $7 = $700 sales)
- 10 continuity up-sell customers (@ $38.60/month = $386 sales)
- 1 profit maximizer sale (@ $297 = $297 sales)
With GOOD conversion rates and those typical ‘tripwire funnel’ price points ($7, $37, $297), these are the results:
In other words, for every $1.00 they spend on advertising, they’ll make $0.44 back on the front-end (and this is before they have to pay for their staff, software, office rent, merchant fees and all the other overheads involved in running a business)…
If you extrapolate this to the volume they did with this one funnel (129,890 leads at $3.15 a piece in just one year), here’s how it pans out:
I know what some of you are thinking…
“They have a continuity program so they’ll make their money back on the re-bills”…
With the numbers I mentioned above, even if they have a 100% retention rate (which is unrealistic), it would still take them 4-5 months to get to break even, BREAK EVEN!
So how do they do this volume without going bust?
- Finance – They’re an established business with money in the bank that allows them to “go negative on the front-end (funnel)”
- Funnel stacking – They have other funnels (both in their automated follow-up sequences and yearly marketing calendar) – Launch funnels, webinar funnels, high-ticket funnels, live event funnels, etc that allows them to get to break even in the first 30-60 days and be profitable beyond that
- High-ticket offers – They have products and services priced from $500-$2,000 and even up to $25K+ that allows them to massively increase their average customer value over time
- They know their numbers – They know their ROI after day 1, day 30, day 60, day 90, day 180, day 365 and beyond – This allows them to make strategic decisions about how aggressively they want to acquire customers without running into cash flow problems
So what can you and I learn from this?
Before launching a funnel or even PLANNING to launch a funnel, you should have a certain understanding of how the numbers (especially profit and ROI) will work out if things go GOOD, BAD or AS EXPECTED.
If you know that even if things go GREAT, you’ll only recoup 50% of your ad spend BUT you can’t afford to go negative (because you don’t have the cash), then change your strategy…
Maybe you are better off selling a $500 product via an automated webinar funnel and trying to hit these numbers:
$5 CPL (Cost Per Lead)
50% attendance rate
5% close rate
…Which will mean your CPA (Cost Per Acquisition of a new customer) will be $200 and on average you’ll make $2.50 for every $1.00 you spend on ads (on the front-end).
Or maybe you are better off selling a $2.5K service via a strategy session (phone/skype call) and trying to hit these numbers:
$125 CPSS (Cost Per Strategy Sesion)
25% close rate
…Which will mean your CPA (Cost Per Acquisition of a new client) will be $500 and on average you’ll make $5.00 for every $1.00 you spend on ads (on the front-end).
I’m not saying that tripwire funnels actually suck – I’ve built 7 for clients in the last year (4 which crushed it) and written a blog post about what I’ve learned from them – They just suck for most people because they can’t get the numbers to work for their business.
Similarly, no specific diets work 100% of the time for all people – they work better or worse for some people than they do for others based on a whole variety of factors.
Ultimately what matters is that you pick a funnel model, pricing strategy and funnel stacking strategy that works for where you are now and allows you to get to where you want to go.