Part 6: Downsell Offers | $100M Money Models Audiobook | Ep 943

0:00Section four, downsell offers. What to offer when they say no? In the last section, we used upsell offers to get people to buy more stuff. If we did a good job, we've turned a profit too. Another step forward or beyond. Awesome. But what if they say no? We downsell them. Downselling tweaks the original offer to find the highest value solution for the customer's budget. So any offer you make after someone says no is a downsell. I downsell in two ways. I change how much they pay or what they get. For how they pay, I balance how much they pay now with how much they pay over time. For what they get, I change quantity, quality, or offer something different.

0:36First, we cover my rules of downselling. They apply to all my downsell processes. Then, when we dive into individual offers, you can hit the ground running and downsell like a pro. How not to downsell, a real story from a friend. I was buying a car and the salesman tried to upsell car insurance. The cost of the insurance when he first started was$5 ,000. I said no, but then he lowered the price. And I said no again. He kept lowering the price until the same insurance he first offered for$5 ,000 was now only$400. I still said no. At first, I said no because it was too much money. By the end, I said no because I didn't trust the guy.

1:07The entire experience felt dirty. Then I wondered, was he ripping me off in the car too? Now I didn't want to buy the car from him either. People lower the price to close a sale. But even if you close this one sale, the customer will question every price you offer from that point going forward. And whoever they tell. You trade trust for a buck. Not worth it. Note, you can offer something different for less. You just can't offer the same thing for less. If he had offered different insurance for less rather than the same insurance for less, he probably would have kept her trust and closed the sale.

1:34The rules of downselling. Remember, they said no to this offer, not all offers. Sometimes, a lot of times, people say no and that's okay. Just because they rejected this offer doesn't mean they rejected you. It hurts when someone rejects you. I get it. But see it for what it is. An opportunity to find out what they really want and profit from it. Instead of hiding your head in the sand, stand your ground and make another offer. No means no for this thing, not no for everything. Downsells are traits. When downselling, you work with the customer to find combinations of giving and getting until you get a match.

2:07If you're gonna give something, get something. Personalize, don't pressure. Figure out what they like and don't like, then offer more of what they like and less of what they don't with a price to match. You're personalizing here. If someone refuses my large soda upsell, I can offer alternatives. I could ask if they want a small, a juice, or a coffee. Am I being offensive by asking? Absolutely not. In fact, if I can better serve them, it would be offensive not to. Offer the same thing in new ways. In a perfect world, you've got tons of different things to sell, so everybody buys something. In the real world, you limit downsells to what you've got.

2:40Otherwise, you create 100 businesses worth of products and problems. A silly choice. So just think of downselling more like 100 ways to offer the stuff you already have. Don't drop your price just to get somebody to buy. First off, dropping your price is not really downselling. it's discounting. If someone wants what you have and just doesn't want to pay the price, tough cookies. On the other hand, you can offer them to pay less now and pay more money over time, a payment plan. But whatever you do, don't just change the price to get someone to buy because customers talk about price. By all means, test prices.

3:10Plan to offer your thing at a specific price to a specific number of people ahead of time. That's way different than charging somebody less in the moment just because you felt scared of losing the sale in the moment. Customers talk. if they find out someone else got the same thing for less just because you'll upset people. And it also becomes an ethical problem, at least to me. Avoid it. Next up, I use three simple and brutally effective downsell processes. Payment plan downsells, how they pay. Trial with penalty, how they pay. Feature downsells, what they get. These downsell processes boost 30-day profit even further.

3:44They do it by making even more sales when customers would have said no. And I love them because with just a couple tweaks, you can fit them into your business and reap the rewards today. Free gift. Downsell offers video training. People say no, don't get flustered, get focused. Know what you're going to offer next. I made a video to go over this chapter in detail for you. Enjoy it free at acquisition.com forward slash training forward slash money. Payment plan downsells. How much can you put down today? August 2013. It was my first real month in business. I had exactly one month's rent and savings left to my name.

4:15And I'd never dozens of strangers to give me money in the next few weeks just to keep the lights on. I only made a few sales the first week. If I kept that up, it meant going hungry very soon. I had nightmares about going back home of failure. The idea was unbearable. I got desperate. The next morning, a lead walked in and I went through my normal pitch. She said, I can't afford it. Normally, I just give up, but I really needed the money. So in desperation, I blurted out, okay, when do you get paid? The first, she said. Okay, just put half down now and half when you get paid. I can't afford that either.

4:46She said, okay, do you really want to do this program? Yeah. She said, I do. Okay. What if you do three payments and just put a third down today? I still can't do it. Hmm. What can you do? Honestly, nothing, but I can pay for the whole thing on the first. My rent was doing the fifth. Bingo. Sounds good. Just give me your card and I'll charge you on the second. That work? Yeah. Great. Two weeks later, I ran the card and it worked. My first ever payment plan. A success. Hallelujah. Payment plan downsells work no matter how many zeros the price tag has. I've made tens of millions of dollars with them and I still use them to this day.

5:25But payment plans are a gamble. So you have to know how to use them. I know how to use them and I'll show you exactly how to. Payment plans are a gamble because they can make money in one way, but they can lose money in two. They make you more money when you get more customers and those customers complete their payments. They make you less money when people cancel before you turn a profit. You lose the most money when people who would have paid in full take a payment plan and then cancel early. This chapter maximizes how much money you make from payment plans and minimizes the money you lose. I take the bet when I know I'll win.

5:54With this playbook, you can too. Description. When most people think downsell, they think of a lower amount, lower quality, cheaper, and so on. Fair enough. But I like to downsell by offering the same product again. I know it sounds crazy, but hear me out. Instead of offering a different thing, I spread the cost by charging some of it up front and putting the rest into scheduled payments. I call this a payment plan downsell. Let's go over how they work. Many people reject offers because they cost too much. Sometimes true. But in response to this, business owners and other sales professionals will immediately discount or sell cheaper stuff just to get them to say yes.

6:25However, a huge percentage of the time, it costs too much really means this costs too much upfront. In other words, people think discounts work because people pay less for the product. But when you peel it back a layer, it's really because they pay less in the moment. So payment plans get the best of both worlds. They get more buyers because customers pay less in the moment. They also boost your profits because customers still pay full price over time. My payment plan downsell's process takes up to seven steps. The process shifts from getting paid more up front to getting paid more over time. I stop when they buy.

6:55Here are the steps. Step one, reward for paying in full rather than punish for paying over time. Step two, offer third-party financing, credit card, and layaway options. Step three, offer half now, half later. Step four, check to see if they still want the thing. Step five, offer to split into three payments. Step six, offer to evenly spread the payments. Step seven, offer a free trial. Let's go through them in order. Example of payment plan downsell process. Step one. Step one, reward for paying in full rather than punish for paying over time. If I take on the risk of a payment plan, I increase the price.

7:32Normally businesses do it by charging interest, but I do it by offering a discount if they pay in full. Think about how businesses normally charge interest. They basically say it's$10 if you get it right now, but it's$15 if you pay over time because we charge$5 interest. No fun. Instead, I say it's$15, but it's$10 if you prepay it. You save five bucks. That's what most people do. To do this, I present the price with interest included. Then I offer prepayment as a way to get a discount. This way, we make the offer friendlier and benefit from a price anchor. Same math, better feels. If they said no, I start downselling.

8:05But even still, I try to get paid first. Step two, offer third-party financing, credit card, and layaway options. Third-party financing. This means another company pays me now and the customer has to pay a payment plan with that other company. Car dealers do it all the time. The dealer gets the money from the financing company today and the customer pays the financing company tomorrow. Note, it takes work to get third-party financing set up, but totally worth the effort. Credit card. Just ask, would you rather I decide your payment terms or you decide? They say normally that they'd prefer to decide.

8:37And when they do, I tell them to use a credit card. That way I can pay today and then they can pay the credit card company over time. It's wild to me that this reframe works, but it does. I don't judge. I do. Layaway. Layaway means paying off the product before getting it. Customers can make as many installments as they want. They can take any reasonable amount of time to pay, but they only get the product after they've paid in full. This is by far the most flexible for them and the lowest risk to us. If they say no to these, I move to step three. Step three, offer half now, half later. I start by asking, when's the next time you get paid?

9:11After, I ask, want to just put half down today and the rest when you get paid? If they can't do that, I ask, what's the most you can put down today? When they offer an amount, I say, great, we'll put that down today and put the rest when you get paid. Fair enough. I like scheduling payments off paychecks since that's when most people get paid every two weeks. This boots 30-day profit far more than monthly payments. If they can't do those, I pause to make sure they actually want it. Step four, check to see if they still want the thing. No payment plan will satisfy a customer who doesn't want the thing.

9:40So make sure the person actually wants your thing before putting more effort into selling it. I might say something like, got it. So money's tight right now. Real quick. I just want to make sure on a scale from one to 10, how bad do you want to do this? If they say eight or above, keep offering payment plans and say, awesome. Don't worry. We're going to figure a way out to make this happen for you. If they say seven or below, ask why not a 10? And I think we may have something that could be a benefit for you. Then you sell them something different, which I'll cover in feature downsells a little later.

10:08Step five, offer split into three payments. If they said eight to 10 on the scale, I can downsell from half down to a third down. I offer a three payment option, one third now and one third of the next two paychecks, or one third now and one third next two months. Step six, often evenly spread payments. If they still can't manage it, I evenly spread payments over the rest of their service. For instance, gym launch was 16 weeks long. So I charge them each week 16 times in total. If that still creates problem, I move on to step seven, offer a free trial. I offer free trials in a special way. So I dedicate the next chapter to it, but the sale ends here, at least for now.

10:45This payment plan downsell process makes up to nine offers. And if you think that sounds crazy, you're probably making way less money and serving way fewer customers than you could. Important notes, seesaw downselling. If you prefer fewer steps or have less experienced salespeople, then you can use this payment plan downsell process. Instead of asking for the full amount, just ask, would you rather have giant monthly payments or tiny ones? They'll say tiny. Then you say, normally it costs X. And if you prepay it today, you'll get a huge discount and zero monthly payments. That work? This frames the payment plan as negative and highlights the benefits of prepaying.

11:16Then if they say they can't afford it, say the more they can put down now, the lower their monthly payments. If you can't afford it upfront, I totally get it. We'll just adjust the down payment so you get the monthly rate you like. This still incentivizes bigger down payments to get their monthly payments lower. If they still say no, ask if they still want the product. If they do, pull your chair to their side of the table and walk them through the options. The sale becomes a team effort. Straightforward. Payment plans have built-in upsells. Make periodic offers for the original paid in full discount during the payment plan.

11:46If they pay off the balance, they can still get the original prepaid discount. This works exceptionally well. Customers forget they have the option. So when we give it to them, some jump at the opportunity. Also give your sales guys the same bonus to close the balance to incentivize the follow-up. And remember, if you give people the option to pay slower, they will pay slower. If you incentivize them to pay faster, they will pay faster. So if you want them to pay faster, give them a good reason to. In other words, you can extend the prepayment discount for the first 30 days of their relationship with you.

12:13And that gives you 30 more days to collect more cash upfront. Get fewer declined payments. Align payment schedules with paycheck schedules. If you charge on days people get paid, they have a higher chance of paying. Also, people's paychecks get deposited it at different times. So if at first it gets declined, run it a few times that day. I learned this strategy from John, my early mentor. I often recoup a third of my declined payments by adding this little process. How to make sure payment plans make you money. After implementing payment plans, your close rate should increase. Duh. But if the number of paid in fools goes down, you have a problem.

12:45You just put people who would have paid in full on payment plans. So you want to close more points overall, but with the same percentage of appointments paying in full. Example, if I talk to 10 leads, I might sell three. If I have a downsell, I might sell three more for a total of six. So in the second scenario, I get my upfront cash from the first three and the payment plans from the second three. This makes sure that downsells properly increase your 30-day profits. Another reason to start high before working your way down. ProfitWell, a company that manages subscriptions, reported churn data from 14 ,000 businesses.

13:15They uncovered this valuable gem. Across all businesses, the billing cadence affected monthly churn. Monthly, as in 12 times a year billing, resulted in 10.7 % monthly cancellation rates. Quarterly billing, as in four times per year billing, resulted in 5 % monthly cancellation rates. And annual billing, one time per year billing, resulted in 2 % monthly cancellations. I already present pricing in order of most cash up front to least, so it just so happens this also makes customers more valuable over the long term. So start high, fewer bigger payments, and work your way down. Bottom line, changing how customers pay can make a massive difference in how long they stay.

13:53We go in more depth on continuity and churn in section six, continuity offers. Summary points. Payment plan downsells spread the cost of a product by charging some of it up front and putting the rest into scheduled payments. Payment plans get more buyers to like discounts, but can also boost profits because they agree to pay full price over time. Payment plans only grow your business if they get more customers and those customers actually pay. Step one, present at full price, then offer a discount if they pay in full. Step two, third-party financing, then credit card option, then layaway option.

14:22Step three, split the payment in two, schedule on their paycheck dates. Step four, ask if they still want the product on a scale from one to 10, you want eight or greater. Step five, split the payment in three, split on their paycheck dates or monthly. Step six, schedule equal payments across a specified period of time. Step seven, offer a free trial in exchange for putting a card down, covered in the next chapter. Seesalt downselling gradually shifts from paid in full to equal payments. Payment plan upsell, they get the original discount price if they pay the balance today. Align payment schedules with paycheck schedules to get fewer declined payments.

14:54At the end of all of this, if someone still refuses to pay anything, then we offer them a free trial in exchange for their card. But it's not an ordinary free trial. I do it in a special way. It took me years to perfect it. So that's where we're going to go to next, and you're going to love it. Free gift. Downsell offers video training. Properly designed payment plans almost always make you more sales and more money. I recorded myself actually doing the step downs so you can model them for whatever you sell For those of you like to learn in multiple formats, which I recommend you can watch it I made it for you at acquisition.com forward slash training forward slash money Traw with penalty If you do x y z i'll let you start for free Spring 2018 gym launch was scaling fast with 100 employees and counting Layla needed better hr solutions to manage it all After months of sales calls with prospective hr companies, she found one she liked And to my surprise, it wasn't anything special.

15:40It looked like all the others Yeah, the software is complicated, she said. They got me. Seriously? How they manage that? They had a trial offer with a weird spin. It was pretty smart. What'd they offer? They said if I did their training, I'd get free onboarding. But if I skipped the training, I'd have to pay for it. So what'd you do? I went through the training, of course. So they took your card, you did the training, and then you didn't have to pay for the onboarding? Yep, she smirked. And now I can actually use the complicated software too. Light bulb moment. Wait, you said no, then they downsold you a free trial on the condition they could penalize you if you didn't use it.

16:14Basically, I mean, it makes sense. It forced me to learn, and now I don't want to learn anyone else's complicated software, so we're sticking with them. You're right. That is pretty smart. The software company used trial with penalty as their attraction offer, but I prefer it to downsell trials. So I only downsell the trial if they say no to my first offer, and if you do it the way I'm about to show you, it only changes what they pay today, not how much they pay in total. Description. In a trial with penalty offer, customers can try your product or service for free so long as they meet your terms.

16:42For comparison, when your money back offers, attraction offer number one, give customers the chance to get their money back if they meet your terms. In trial with penalty offers, customers only pay if they don't meet them. Ideally, the term should be things that make excellent customers. So they'll mirror the actions and results used in your win your money back offer. But this time we use avoiding fees rather than winning money back to incentivize adherence. So trial with penalty isn't here's my thing, see if you like it. It's here's my thing, you get it for free so long as you do this stuff, which makes you a perfect fit for my next offer.

17:12And if you don't, then you have to pay for it. To do a trial with penalty downsell, you must consider what they have to do to avoid the fee and how you charge them. Normally, you get one chunk of people to buy your main offer, so offer that first. And the rest you'll get on this downsell. Let's say you normally close three out of 10 people on your upfront cash offer. Now you downsell another four on a trial with penalty. Then, after the trial finishes, upsell three of them. You go from three sales to six, doubling your customers. If you only have one offer, you lose to everyone who says no. Downselling trials with a penalty gives people another chance to say yes.

17:45I'm still irritated at the thousands of customers I've lost on free trials over the years before learning this. But now we can save them. The trial with penalty makes it happen. Examples. Business to consumer offer. 28-day kick-that-habit blueprint. To get the trial for free and avoid the penalty fee, you must attend all your consulting calls, post your progress pictures in the group once a week, journal daily in our app, attend feedback sessions and transformations, aka upsell opportunities. Business to business offer. Five day, get your first five customers challenge. To get the trial for free and avoid the penalty fee, you must send 100 outbound messages per day, report stats on these outbound messages, attend the daily training, post in the group once you've done your homework, attend your graduation call.

18:27Upsell opportunity. Software,$500. Onboarding for HR software, then$99 per month thereafter. Trial with penalty. You don't have to pay$500 up front, but you must. Attend onboarding, which is three 60-minute Zoom calls, upsell opportunities. Do the homework. Activate your employer profile. Get your employees set up by the end of the third call. Otherwise, you pay the fee. Important notes. What they get for free and what they have to do to avoid the fee. You'll need to know what your terms of service will be. The valuable parts will either be your bare bones offer, like the decoy offer or your win your money back offer.

19:01Either work. I'd recommend giving more rather than giving less if you can afford it. The criteria should activate and retain customers. You can swipe these directly from win your money back attraction offer number one. Breaking up fees versus one lump fee. Say you have a$500 product with 10 things to do. I'd rather bill$50 for each mess up than one$500 fee for their first mess up. On the other hand, if missing wants really messes up their success, you want the fee to reflect that. I've seen both work. How to downsell the trial. Here's a graphic to show how I downsell a trial with penalty in five steps.

19:34Step one, offer the trial last. If someone makes it clear they don't want your first offer, then downsell the trial with penalty. Here's how it might sound. Hmm, that sure is a pickle. I'll tell you what, how about we just get you started for free? Would you be okay with that? We can just help you out, and if you like it, you can stay. Let me get your ID, and we get the process started. Fair enough? Great. Step two, always get a card. Record their info, hold on through ID, and motion for their credit card saying, what card do you want to use? They have to leave a card. If they balk, just say, that's how you've always done it.

20:06If they still refuse, wish them a lovely day and show them out. Pro tip, if someone doesn't agree to put their card down and do the work, I won't sell them. They complain more and convert less, not worth the hassle. Step three, always sell staying and paying. Ask directly. If this program got you the result, will you stay long-term? You want them to agree to staying long-term if you get them results. If they say no, there's no point in giving them a trial. Then we frame the conversation as if they'll stay long-term, even if we haven't started billing them yet. So if they say no, but want more explanation, say something like this.

20:40I don't want you to try it. I want you to get results. And out of integrity, I want to set realistic goals. You're not going to hit your long-term goals during this trial, but you will establish the habits to help you get them. And we're going to help you do that for free. But if you want to get your long-term results, you're going to have to stay on after. I just want to make sure that you're not looking for a quick fix because I ethically can't promise you that. Once they agree, move on to step four. Explain the fees after getting their card. I'll say something like, we will do our part so long as you do yours.

21:06That's fair, right? So now I just ask that you bet on yourself. If you miss or skip any stuff, your results will suffer. We charge to keep you on track. If you miss, no big deal. You'll get dinged a little fee, but it'll get you back on track. If you follow through, then you get all this for free. So this is the best way we can get you amazing results and keep it free for you. Best of both worlds. Note, if you explain the fees before you get the card, you'll get more resistance. So explain after with a little, this is how we've always done it, attitude. People still have to agree to the fees, but you'll get a higher take rate doing it this way.