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Self Liquidating Offers

by chrislewis217
4 replies
Question. Been doing alot of research on self liquidating offers in which you offer something for free that's linked to your low cost entry product ($5,$10,$15) which covers advertising costs. I was wondering what has been your experience or thoughts in terms of average conversion rate for a set up like this? I want to hear people's experience since I don't have a sort of range or frame of reference whats good and whats bad in terms of conversion numbers or percentages.
#conversion rates #liquidating #offers
  • Profile picture of the author lotsofsnow
    [DELETED]
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    • Profile picture of the author chrislewis217
      Originally Posted by hpgoodboy View Post

      There are many factors and variables involved.

      Build a funnel and test.

      If you make more money than you spend on advertising: you found the right combination.

      Making less money than the advertising expense:keep testing and tweaking.

      Yeah I was thinking about it more last night and I guess it's something that comes down to testing. If my goal was to be able to spend a $1.00 per visitor and get a $1.00 back. I would be happy since I'll be able to keep spending more on advertising. Furthermore when it comes to testing, to make sure to refine my campaign(s) in an effort to raise conversion rates and figure out which part of the demographic or which keywords are converting the best. Right?
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  • Profile picture of the author JohnMcCabe
    Originally Posted by chrislewis217 View Post

    Question. Been doing alot of research on self liquidating offers in which you offer something for free that's linked to your low cost entry product ($5,$10,$15) which covers advertising costs. I was wondering what has been your experience or thoughts in terms of average conversion rate for a set up like this? I want to hear people's experience since I don't have a sort of range or frame of reference whats good and whats bad in terms of conversion numbers or percentages.
    You actually have two conversions in this model - stranger to free option, then free option to entry product.

    An "average" value won't help you at all. Consider this: what is the average of 0 and 100? 50, right? How meaningful would it be if you had zero conversions and I had 100% and we started telling people our average conversion rate was 50%?

    If you read the old direct mail masters, they looked for a margin on the entry offer of 8-10 times cost. Meaning that they were aiming for total conversions of about 10-12%. If they could come close to breaking even using those numbers, the project was worth pursuing. If it bombed, they scrapped it and tried something else.

    You can work that backwards, too. Start with your entry product. With a good market match and pre-sell, you should be able to convert 10%. Say you sell the product for $10. That means you can afford to spend $1 per prospect. Now back that out and figure 10% conversion on your freebie offer. Again, to break even, you can spend $0.10 per viewer to your freebie offer.

    Run a test with a freebie offer and entry offer. Set a baseline, and work to beat it. I've seen case studies where, with testing, the self-liquidating offer actually turns a small profit. That's what gives birth to aphorisms like "if you knew every dollar you spent on ads would bring you two back, how many dollars would you invest in those ads?"
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    • Profile picture of the author chrislewis217
      Originally Posted by JohnMcCabe View Post

      You actually have two conversions in this model - stranger to free option, then free option to entry product.

      An "average" value won't help you at all. Consider this: what is the average of 0 and 100? 50, right? How meaningful would it be if you had zero conversions and I had 100% and we started telling people our average conversion rate was 50%?

      If you read the old direct mail masters, they looked for a margin on the entry offer of 8-10 times cost. Meaning that they were aiming for total conversions of about 10-12%. If they could come close to breaking even using those numbers, the project was worth pursuing. If it bombed, they scrapped it and tried something else.

      You can work that backwards, too. Start with your entry product. With a good market match and pre-sell, you should be able to convert 10%. Say you sell the product for $10. That means you can afford to spend $1 per prospect. Now back that out and figure 10% conversion on your freebie offer. Again, to break even, you can spend $0.10 per viewer to your freebie offer.

      Run a test with a freebie offer and entry offer. Set a baseline, and work to beat it. I've seen case studies where, with testing, the self-liquidating offer actually turns a small profit. That's what gives birth to aphorisms like "if you knew every dollar you spent on ads would bring you two back, how many dollars would you invest in those ads?"

      Yeah sounds like a plan. I want to take another shot at PCC since last time I tried it didn't work out so well, but I think I know why. I was trying to make a profit on the front end and also didn't have a good match between the freebie offer and the product. Plus the product I think was a bit on the expensive side in terms of a front end product or self liquidating offer. Since I'm a bit smarter now, it's time to jump back in and to test out my suspicions. Is it possible to get a 10% conversion rate on a low cost ($5, $10, $15) low risk product?
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      • Profile picture of the author JohnMcCabe
        Originally Posted by chrislewis217 View Post

        Is it possible to get a 10% conversion rate on a low cost ($5, $10, $15) low risk product?
        Yes.

        It might take some tweaking of the offer, CTA and traffic sources, but I've seen it done...
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