Is Your Market a Door or a Ladder?
If you’re an Internet marketing entrepreneur, you’re not going to get rich selling a single product. Instead, you need to create a range of products, geared toward different price points and levels of commitment. Each of these products can be classified under at least one of the following categories:
1. Front-end Product
This is the initial product that customers purchase from you. It will typically be priced between $20 and $100. It will also be either an information product or a drop-shipped physical product that can be sold automatically with little or no effort on your part. Coaching and consulting services don’t make good front-end products, because they’re very time-consuming to provide.
Keep in mind that much of the revenue from your front-end product will go to advertising. In fact, some marketers don’t even try to make a profit from their front-end products. Instead, they break even or even lose money on the front-end, then make their money on the back-end.
2. Back-end Product
As you might have guessed, a back-end product is something you sell to a customer who has already purchased a front-end product.
Assuming that your front-end product delivered a lot of value, you’ve already won the customer’s trust. This means that if you charged $100 for your front-end product, you might be able to sell your back-end product for $500 or $1,000. (Of course, you’ll need to deliver a lot of value to justify that higher price tag. And if your front-end product was junk, you probably won’t get many takers for your back-end offer.)
One of the best things about back-end products is that you’ve already paid your customer acquisition costs on the front-end. Therefore, if your production costs are low, the revenue from your back-end products can be almost pure profit.
3. Upsell
Upselling is the process of taking prospects who are already interested in buying something from you, and persuading them to move up to a more expensive product or service.
You can upsell at the time of purchase, or you can upsell after the purchase. Except for your cheapest, most bare-bones front-end product, anything you sell can be an upsell.
An upsell might take the form of a premium version of a product that you encourage prospects to buy instead of the basic version. For example, it’s common practice to sell a basic e-book for $47, and a “deluxe version” for $57. Ten dollars might not sound like a lot, but think of it this way: If if costs you $30 to sell one e-book, then the premium version makes you $27 instead of $17. In other words, you make nearly 60% more money every time a customer opts for the premium version.
An upsell can also be a related product that you encourage your customers to purchase in addition to the product they are attempting to purchase. Amazon.com does this all the time. For example, if I’m interested in the novel The Girl Who Kicked the Hornet’s Nest, Amazon invites me to buy that book along with The Passage for “an additional 5% off Amazon.com’s everyday low price.”
The Sales Funnel
A related marketing concept is the sales ladder. Some people use the term sales funnel, which is basically synonymous. Each “rung” of the sales ladder is a different product or service. As customers climb the ladder, they come to trust you more and more–assuming that you deliver on your promises. This means you can sell them progressively more expensive (and higher-value) products. For example:
- A PDF report or video (free). Though less extensive than your paid products, your freeline product still needs to deliver substantial value.
- Your front-end product ($47). E.g, a 50-page e-book, plus several bonus reports.
- A mid-level product ($97). Perhaps a more extensive version of your e-book, with audio or video content.
- A membership site ($97/month). Likely includes video training, forums, and a weekly conference call. Unlike the lower rungs, this option allows customers to interact with you and with other members.
- Your “Inner Circle” ($497/month). Features one-on-one telephone coaching and a yearly in-person conference, plus “backstage access” to all the content you create.
Doors vs. Ladders
Everything I’ve said so far is a preamble to my main point: Some markets have lots of rungs in their ladders, while a few have just one. In the past, I’ve referred to these two types of markets as binary and non-binary markets, but those terms aren’t very memorable.
Instead, I propose to use the term door markets to describe markets that offer lots of potential for back-end products and upsells. In contrast, I will use the term door markets to refer to markets in which your first sale will probably be your last.
Door markets are often markets in which marketers typically promise a complete “instant cure” for a problem. They’re also markets with low co-morbidity.
What’s co-morbidity? It’s a medical term that refers to the tendency of certain diseases to occur together, but it has also been used by marketers to refer to the fact that if a consumer is interested in one product, they’re often interested in related products as well. For example, a small business owner who buys an e-book on how to get started blogging is also likely to be interested in a copywriting course, an logo design service, or a membership site on small business marketing.
Door Markets
- Acute health problems: Acne, bad breath, hemorrhoids, yeast infections.
- Addiction: Nailbiting, smoking.
That’s a pretty short list, isn’t it? I initially included a lot of other markets, but they aren’t really as limited as they seemed at first glance.
For example, if you sell someone a plan on how to build a gazebo, they’ve probably had their fill of gazebos at that point. On the other hand, there is likely some comorbidity here. You know that the average customer is probably a male, married homeowner who enjoys building projects. Perhaps he would be interested in a building plan for a swingset.
Again, someone who buy a Windows registry cleaner is unlikely to buy another registry cleaner from you if that one doesn’t work. But you know that they have a Windows PC, which means they’re comorbid for plenty of other problems. (As a Mac owner, I can’t resist a cheap shot at Windows.)
Perhaps acne and nailbiting are comorbid as well. Personally, I doubt that people who have those problems have many other things in common.
Door Markets
The prototypical ladder market is a market that involves an activity that involves skill. It takes a lot of education and practice to become competent in these fields, and even more to attain mastery. For example:
- Arts and crafts
- Athletics
- Business development
- Career development
- Dating and relationships
- Martial arts
- Personal growth
- Photography
- Writing
There are many factors to consider when you are selecting a market. All else being equal, however, a ladder market is better than a door market because it gives you more room to grow.
