Levers of a profitable front end offer

Hey!

This issue of the newsletter will be about the different levers to pull (and their impact) to ensure a profitable front-end offer.

As a bootstrapped eCommerce business, being able to spend big on the front while liquidating ad costs OR even better creating positive cashflow in the business is incredibly important. If you’re struggling for profitability OR would like to spend more, I’m going to outline some of the levers I look at/pull in being able to do so.

Offer Selection: The first piece in the puzzle is picking the most suitable front-end offer(s) to drive traffic to…

For very “direct response” businesses like mine, that are typically built around driving traffic to a single product this is fairly straightforward. You just want to go over your key data (gross margin, CAC, 60D LTV) and test each offer for profitability… Usually one will stand out as the easiest to acquire customers at a breakeven or profit.

A real time example of this would be our health brand we recently sold - our 3 “front-end” offers were a neck pain product, a back pain product AND a compression sock. On a small amount of spend our neck pain product was easiest to achieve front-end profitability (based on combination of CAC & gross margin), when we measured it for 60D LTV (additional LTV after front-end profit) against the other two offers the results were negligible. Therefore, we focused 80% of our efforts into this funnel and the creative strategy behind it.

If you aren’t at the point of selecting an offer, I will write another email breaking this down later.

Offer Structure (once offer is selected): Once you have selected your offer, it is incredibly important to split test the structure…

Your “product” is 80% of the offer but remember that people buy for the outcomes that your product brings. So, it’s important to test:

• Promise (what outcome are you giving to the customer); An example of this would be a gut health offer - the outcome could be a fix for brain fog, the outcome could be improved focus at work or the outcome could be losing belly fat. Same product, wildly different outcomes.

• Price (how is the offer priced - there’s usually a “sweet spot” or optimal price. If you haven’t split tested this, odds are you haven’t found it and this can be a huge lever to pull)

• Pricing terms (the terms would be when/how/what the customer pays. If you offer BNPL on a $99 product, the terms would be 4 payments of $24.75/month. You can see how 4 payments of $24.75/month is a better proposition than $99 up front)

• Offer structure (A huge lever to pull… We recently split tested charging $49.95 for 1 unit VS $59.95 for Buy One, Get One Free as the entry level variant for an offer. The former was 78% gross margin, the latter 70% BUT the change in offer meant our CAC cut in half at the same spend, negating the impact of the margin hit). Other things to test are free gifts, shipping thresholds and dark patterns.

• Risk reversal & wording of risk reversal (You can split test a 30-day guarantee VS a 90-day guarantee OR you can split test the “specificity” of a guarantee, and how you word it). We split tested being incredibly specific AND aggressive with the guarantee VS not so (e.g “if you don’t receive relief from X painpoint OR you are simply unsatisfied in any way, simply email or call our US based customer service team…” VS “If you don’t like it, we are offering a refund”) and the former won comfortably.

• Bonuses (PDFs, entry into groups, etc.)

As a first point of call, I would split test the promise, price & risk reversal before doing anything else as these are your biggest levers.

Measurement: An important thing is correct measurement. A lot of people send traffic to their shopify store which is important BUT they aren’t measuring the efficiency of a particular channel correctly.

If you’re sending from Facebook, I would recommend pushing to a separate funnel with sub-domain OR a separate, and hidden page within your Shopify store (even if it matches your regular PDP exactly). This way you can correctly track $ in VS $ out…

You might actually be unprofitable on your front-end funnel without even knowing it AND even though the overall store (organic, google, email, SMS, repeat customers) is pushing you into profitability, you may be missing out on a lot of efficiency.

Funnel structure: How you structure your funnel (in terms of maximising AOV) is incredibly important in terms of driving maximum revenue per click, and allowing you to spend more on the front end. Here are some examples of things you can do to increase your AOV:

Pushing a particular bundle:

You can see with this example (Clarifion), that they are highlighting the “6 unit” bundle, pushing a red arrow to it, making it “free shipping” (while the entry level variant is $7.95 shipping), putting the “Each Price” (which is $10 less than the entry level variant).

Order Bumps:

This example from Miracle Sheets shows that the order bump is “pre-checked” and in a lot smaller font than the rest of the checkout. The placement of it is such that you would miss it unless you were specifically looking for it. On tests I’ve run in the past this probably has a 70% opt-in rate, and is essentially all margin.

Pre-Purchase Upsells:

This example from AirPhysio (a Giddy Up offer) shows a pre-purchase upsell to add more before going to checkout.

Post Purchase Upsells: I usually have four upsells when I have decided that a product is something I want to push heavily on paid ads.

Typically, I would structure it like this:
Upsell 1 (same product at a discount) → Upsell 2 (complimentary product at a discount) → Upsell 3 (complimentary product at a discount) → Upsell 4 (warranty)

For each upsell, you want to select something that is:
1. Popular/actually something that customer would want
2. High margin
3. Ideally small/light - bonus if it can be packaged easily in the original without adding weight or excessive shipping costs.

Note: Once you go above 3 upsells, dispute rate will increase and it can leave a sour taste in the customer’s mouth, so it’s something to keep in mind.

I could go further in depth into upsell psychology if you would like. Just reply to the email and let me know!

Messaging: Outside of technical things like dialing in funnel structure AND split testing the price/presentation of an offer, the correct messaging can cut through the noise and lower CAC, making it easier to scale.

The best way I like to split test messaging is either through statics OR 45-60s long raw “story style” creatives to see what resonates best.

Let’s use a back pain relief product as an example, with a 45 year old male with back pain,

We could split test the messaging using very simple & raw story style creative, with the structure of Hook (Problem) → Agitation of Problem → Discovery of Solution → End Result Outcome → CTA

The things I would test in this instance is:
1. How did he get the back pain? Was it through heavy lifting or an office job.
2. What is the back pain stopping him from doing? Playing with his kids, being intimate with his wife, playing golf with buddies.
3. What is the emotion he is feeling?
4. How did he discover the solution?

You want to find your most profitable angle + avatar, which will give you the positive cashflow to continue to test and dial in the messaging for more angles + avatars.

Creative/Level of Awareness: This is an important lever if you are struggling to scale. I see a lot of brands stuck in the “solution” level of awareness, with ads like “3 Reasons Why These Gummies Are The Best” or something like that. These creatives might find profitable pockets of audiences BUT ultimately die quickly. You are also competing against 8 other people selling gummies. If you go one level above the “solution” level and target “problem aware” customers, this does a few things:
1. Opens up more scale because you are targeting a larger audience.
2. Less creative fatigue
3. Less competition (all of your competitors will be stuck at solution aware - by going after problem aware there is less comparison before purchase)

That’s it for now! Let me know what you think.

Happy scaling,

Paul