When working on the value equation for your business, you have to go out and ask people what they’re willing to pay for your product or service. The question most entrepreneurs ask is, “Hey, this is what I wanna offer at this price. Would you buy it?”
Here’s the problem: you’ll never get an honest answer to that question. People will want to be nice to you, so they’ll say yes. But when you give them the page, they won’t actually buy.
To get them to buy, you have to increase the value of your offer. So how do you do that? And why is value so important?
Here are a few things you must always consider when it comes to value, and why it’s critical to your business.
1,000 for 100
I touched on this in my blog post about scalability a couple weeks ago, and I just want to repeat it here. Go out and have this conversation with ten people:
“If you were gonna spend $100 on x,” which is your product, “…what would you expect to receive? What would you need to get to make it worth the cost?”
Listen to what they say and, if you’re in that startup phase, use that information to get your value equation right. I’m a big believer in maximizing value.
So, if they say, “Yeah, I’d pay $100 for that,” and then you go and charge $100—that’s actually not what I’m talking about.
My rule of thumb is to always give five to ten times the value they would be willing to pay. If you offer something that’s $100, they should feel like it’s $1,000 of value.
Find Your Back End Offer First
In many businesses, we think of having a front end and a back end. A front end offer, often called an introductory offer, is something that’s low-value and gets you engaged with the customer. This initial transaction gets the customer to identify themselves as the kind of person who wants the big value outcome that you provide with your back end offer. And the back end offer is where you make all the money.
I’m oversimplifying, but imagine you have an ebook as your front end offer and a parent coaching program as your back end offer. What most people do is they chase their tail on the value equation for the front end without having worked out the back end.
That’s an example of the wrong sequence, and really hard to deliver on when it comes to fulfillment. However, it’s all quite easy if you determine the value equation of your back end offer first.
Let’s say you want to charge $10,000 for your coaching. You start asking parents, “Okay, in the area of parenting, what’s worth $10,000 to you?”
You ask a number of parents until you’ve really narrowed it down and discovered a need. And now you’ve got parents going, “Oh, my god. You’re telling me that for $10,000, you can guarantee that my child will have entrance into one of three Ivy League schools??? If you can guarantee that my child will get into Harvard, Stanford, or Columbia, I’ll pay $10,000 right now.”
When the program you offer coaches them to be the kind of parent that will guarantee their child acceptance into an Ivy League college… you won’t have to worry about what your ebook says. You won’t have to worry about how to market it or how to fill a teleseminar or how to get a joint venture partner.
None of those questions are actually relevant until you’ve solidified the big back end offer. It’s all about increasing the value to your client, so that your offer is undeniable.
Keep Your Promises
Of course, if an Ivy League school is your promise, you do have to worry about how to deliver on it. Whether the fulfillment is in your coaching or a magic pill the kid takes to be smarter or you bribing the admissions office… Whatever it is, you have to make sure you can keep your promise.
Once you keep that promise, then the ebook idea is easy. The joint venture relationship, easy. You call them up and say, “Hey, I have this incredible new value I’m offering to parents. Are you interested in that for the list?” And they go, “Yeah, that’d be great.” It’s an easy conversation.
Before, it was like, “Hey, well, I’ve got this back end offer which isn’t quite worked out, but I’d really like you to mail for me for the front end offer, which has a really catchy title but there’s no substance.” Again, this sequence is backwards.
Value for the Customer = Growth for Your Business
If you don’t increase the value ahead of time, you’re putting your business in a place where you’re going to have a real struggle. I see so many entrepreneurs get stuck here. All the money, the time, the effort, and everything else builds to a plateau where you have to look at your business and go, “Wow, I’m trying to sell this thing. But it’s not selling very well.”
You really need to start off by getting the value equation right at the core of your business. And until you have that going for you, the struggle will continue. Once you do have it, everything becomes much easier and smoother. Everything just makes sense.
And speaking of value, I have a free offer to help you evolve your business even further, faster than you thought possible. All you have to do is fill out the orange box in the top right corner of this page–I’ll send you a customized rapid growth plan for your business in the next 19 minutes.