Reverse Psychology: How to Turn a One-Time Offer into Monthly Recurring Revenue (Without Scaring Customers Away)

Tim: Hey Todd, thanks so much for coming on the show. I’m excited to talk to you today.

Todd: I’m jazzed to get into this man and rock and roll.

Tim: I love it. I love it. Good so we’ve got a really cool tactic to talk about today and I know that you know, our listeners are expecting me to go so what were the results from this case study but we’re not going to do that today because we’re actually talking about kind of a breakdown of one of the most successful marketing funnels and marketing campaigns from was it 2012 to 2013?

Todd: Yes, it was 2012-2013. Probably one of the best funnels or most successful funnels to come out and this one component that you and I are going to chat about was just that. It was one piece but one really savvy, really slick piece to this whole funnel man. Yeah.

Tim: Yeah and you know, this is like this whole funnel had some amazing things going on but I have to say that like this was the one that grabbed my eye more than anything. Another thing to note for our listeners that you know, if you want to see kind of really cool stuff like this MarketingFunnelAutomation.com has an amazing email. You know, the emails that go out are awesome, Todd. I’ve got to say I’m a huge fan and your content is awesome. So you know, thanks for sending out awesome stuff and sharing this. So enough of the butt kissing, let’s get into it. So kind of if you wouldn’t mind break down this one particular tactic.

Todd: Yeah. So it starts with what’s called a bump offer and more than likely everybody that’s listening to this is familiar with a bump offer. But just in case there are a couple of people that aren’t, a bump offer in this context is just an additional offer on the order form that wasn’t mentioned prior to that. So for example, you’ve got you know, individuals, traffic is coming and let’s say it’s going to a sale page. It could be long form, it could be VSL and there’s an offer that’s being made. Individual prospects that are interested in that offer go ahead. They’ll click the add to cart button and they will come to the order form. Then on the order form, there is what’s typically done when a bump offer is used is there’s an additional offer that’s being made, an additional component, an additional piece of content, something that the prospect can add to their order that they typically do with the addition of a check box. In other words, typically the bump offer this additional offer requires that a prospect clicks the check box to add this item to their offer. Typically the copy, the wording associated with the bump offer is usually in the affirmative. It’s typically like you know, yes Tim, I’d like to add this to my order or yes Tim, I’d like to add XYZ training for just 19 bucks to my order today.

Well what this particular funnel did was they used the bump offer right. So they had the additional offer on the order form but what they did which was really savvy was number one by default, the check box was ticked. So it was kind of already added to the order on the order form. The second thing that they did that was really savvy and we can certainly break down why and the psychology behind why this was really savvy, the copy was not in the affirmative. The copy was actually in the negative. What I mean is that the copy said something like you know, if this box is not checked or if this box is unchecked, I will not receive my XYZ.

If I remember correctly in this particular funnel what they were doing was and this was kind of the third really savvy thing with this particular bump offer is they were offering a free trial to their continuity program. Right? So they were willing to give people on the order form just a free trial, right. They weren’t adding any money on so that they weren’t you know, scaring people right. Like what are the biggest – one of the most – let me say this, one of the biggest reasons for shopping cart abandonment or order form abandonment is unexpected costs or an unexpected price.

Tim: Yeah.

Todd: So in this example, being that the box was ticked by default, if there was a fee, if there was a price associated with it, if it was really like a $19 additional charge, well then people would have immediately seen at the bottom that it was $19 more than what they thought it was when they clicked the add to cart button and my gut tells me from experience in testing that that would have caused a huge abandonment rate.

[0:05:08]

So in this context they were able to get away with having it checked by default because it wasn’t adding anything to the price. So it was a free two-week trial and of course that two-week trial, it then went into continuity. It’s not forced continuity because they were able to uncheck the box and not take advantage of the free offer. It didn’t add anything to the price so it wasn’t shocking or startling to anybody. In fact it was an additional reason to respond. Right? It was a free offer, a free trial. It was something extra that they weren’t even told about on the prior page.

Now the copy said if this box is unchecked, I will not get my two-week trial to XYZ program. So the way it was positioned, number one it required an action for the prospect to not receive it right. Rather than a proactive action for them to receive it, it required a proactive action for them to say no, I do not want it and stated in the negative meaning it immediately conveyed to them what they would lose out on, what they would miss out on if they took that action and unchecked that box. So that taps into this whole idea that right like people are obviously driven to take advantage of things that they don’t want to miss out on things right. We know that from the whole idea of scarcity and urgency and whatnot. People are typically more motivated you know, moving away from something than they are moving towards something. In other words right it’s you know, this idea that like look if you uncheck this box, you’re going to miss out on XYZ tends to be a lot more motivating for the majority of individuals. So for that reason yeah it was just an awesome addition just something that anybody that’s using a bump offer right now can tweak and test and I think that they’ll be pleasantly surprised with the results.

Tim: Yeah I think the reason why this worked out so well and you know, here we go speculating you and I talking about why but I mean I think there are a few things. One of the main reasons why it seems like this works so well is because it was all – it was a multitude of things put together. Because I think of you just – like you kind of mentioned if you just left the box or if you had the box checked by default and it was just an add-on product and it said you know, it was in the affirmative rather than the negative, I think you would probably see cart abandonment and it probably would have been less successful just because of the…  It lacked that combination of psychology along with the auto check box. And the other thing that I think makes this so powerful is that it is that free trial. Because again you get that sense that if it’s not an additional expense and that it’s something that they’re kind of getting as an added value almost that people would really be upset by losing that. It’s that fear of loss kind of mentality.

So it’s a really cool kind of combination of elements that made this work so well and it kind of reminds me of what the guys over at Bounce Exchange are doing. You know, they have this big overlay that comes up when somebody goes to leave a website and it says –you know, like instead of saying do you want to still receive your free XYZ, instead it says you know, like if you were to click no to go to leave the site, instead of just saying no it’s like no I don’t want to you know, explode my business today or something along those lines. So it changes the whole psychology of what’s happening in the box. So —

Todd: And that’s huge man.

Tim: Yeah.

Todd: I think that and you said it, I think what you said is just so on the money and it’s huge right. Like even though –you know, it’s this idea and I love talking about this stuff like you guys because of the impact that it can have on a business. Right. Like even though little changes in copy, even some things that might seem like it’s just semantics right. Like it’s just semantics saying to somebody like you know, like are you sure you don’t want to grow your business or worse saying to somebody like are you sure you’re okay missing out on —

[0:10:04]

Tim: Right.

Todd: –your business growing right. It seems like you’re kind of saying the same thing you’re just saying it differently but the reality is that it has a significant impact on people psychology right on an emotional level even sometimes where it’s not tangible. That’s what good marketing and good copy does. It’s not the superficial level conscious in your face stuff, it’s the stuff that really impacts people on a deeper psychological level and on a deeper emotional level. The reality is that to just kind of put a bowtie on this whole idea of how little changes can make a massive impact is this story that some of your listeners maybe familiar with. The ones that aren’t familiar with it, I think it’s worth its weight in gold. I could tell you that it’s one of the most valuable copy tips or nuggets really that I learned years ago. It’s a story I think it came from I think it was from Ted Nicholas. Ted Nicholas one of the greatest, you know, still one of the greatest advertising copywriters, contemporary copy writers of our time, a guy that was you know, involved in direct response well before the whole internet boom, made millions of dollars offline, well I think it was one of his clients at the time, this is many years ago was TDK the audio tape manufacturer.

Tim: Right.

Todd: They had this ad and I’ve seen this story told a number of different ways. I’m just going to give you the one that I’ve —

Tim: Yeah.

Todd: –heard told over and over. That they ran this ad that did well for them. It was kind of their control at the time and the headline said put music in your life. Right? So put music in your life. Well the next time they went to run this ad, there was an error in the ad, there was a mistake made in the ad and that mistake led to you know a 300+% bump in response.

Tim: Wow.

Todd: The error, the mistake was one single letter. Not a change to the headline, not a change to the offer, not a change to the price. It was one letter in the headline. The headline was, the control like I said was put music in your life. The additional letter was an S and it became puts music in your life. So it’s this concept of you know, pluralizing the verb right. It went from put music in your life which kind of –what it subconsciously tells to the prospect is this requires work for you. This requires you to do something.

Tim: Yes.

Todd: Right. Whereas the puts music in your life conveys that it’s done for you, right. So it’s pretty sick, isn’t it?

Tim: Yeah, yeah. It’s really like it’s funny to think that as a marketer and god people are going to be like god they’re like waxing intellectual right now, but it’s like the idea that neuro science has so much, so much to play with what you’re doing with marketing but it’s really true. I mean you know, if this box is I’m looking at that copy for what we’ve been talking about, if this box is unchecked I will not receive my free 14-day trial, it automatically like activates a part of your brain that makes you think like oh my god what’s –you know, what if I don’t have this. Like am I missing out on something that could really do X, Y and Z in my life. So really it almost makes you afraid.

It’s the same thing that causes people to – when they’re at a store and they see a sale buy 1 get 1 half off, even if they never need that second thing, it’s the same thing where they’re like oh yeah but you know, I don’t want to be kind of an idiot for missing out on that. So that’s where this is so powerful and then so combine that with the elements of the automatic tick check box and the fact again that I have to keep going back to that because I think it’s really important for people to recognize that this was not increasing the price. It was just getting people to a free trial and that’s kind of where this makes it so successful. But Todd, I want to hare about you’ve tested this with several of your clients and so can you kind of give, pull an example from one of your clients where you’ve used this and gotten maybe slightly different results?

Todd: Yeah. So I’ll tell you where –I’ll give a couple of examples. Well I’ll give you one example that I’ve seen repeated over and over with a variety of different clients that have tested this where it hasn’t done well. Quite simply it’s when there is I like to call it an incongruent price point for what the continuity program will be on a monthly basis after the free trial.

[0:15:16]

Tim: Okay.

Todd: So one of the things that I talk about often and I don’t want to go off on a tangent on this but I think that just within this context I think that it will be valuable for everybody. But one of the things that I talk about often is that I think the way most marketers are taught to do upsells or what I refer to as add-ons in terms of the pricing strategy I just think is off the mark. That’s first and foremost based on opinion and now based on testing data. I think that this most marketers, most online marketers at least have been taught like you know, that when you’re going to offer somebody an additional, you know, an additional product, an additional service, when you’re going to make a bump offer or what they would call an up sell, that it can be multiples of the price of the initial product. So within the typical average upsell offer they would say like look if you’re selling something for $33 you know, your first upsell can be up to three times that price. It could be up to $99. If they take a $99 or $100 offer, the next upsell can be upwards of $300.

Well the reality is that nowhere in the real world, nowhere in the real world of commerce is that ever done. Right? When there are add-on offers where a man goes in and buys a $2000 suit, right, he’s offered a shirt for 300 bucks, he’s offered a tie for 200 bucks, he’s offered shoes for 250 bucks. He’s offered things that would make the initial product more valuable, right, more enjoyable or would a person get better, quicker results right. No matter where you go, no matter what you purchase when you’re offered add-on, they’re never multiples of the price. They’re always a fraction of the price.

Tim: Right.

Todd: Right. So one of the things that I talk about often is that I believe and I call it the reverse add-on right where the very first upsell in a marketing funnel should be up to 80% of the initial product. So if you sell a product for 100 bucks, the first add-on offer should be up to 80 bucks. We could you know, different episodes, different podcasts we can get into some of the nuances of like how that differs whether it’s a front end funnel or a backend funnel because I’m really talking about a front end funnel. So to tie this all back together anytime we’ve seen where the continuity program is like 130%+ of the initial product, price the results haven’t been –in many cases, the results have been really poor. So in other words any time the continuity program is 30% more than what the original product being purchased is yeah the conversion suffers. So I’ve seen that across —

Tim: Even using – I’m sorry, even using the same kind of copy psychology?

Todd: Yeah.

Tim: Using the exact same copy psychology.

Todd: Perfect. Like one of the things that is critical for everybody to understand is that look first and foremost just to be clear with everybody that you know, if you’re doing this and by default you’re checking the box and you’re saying that it’s for a free trial, you have to make sure that upfront you are crystal clear that these individuals are going to be charged and what they’re going to be charged, right. Like –

Tim: Right.

Todd: -that’s just from a pure integrity perspective but certainly from a refund charge back perspective, from a merchant account perspective. You have to be crystal clear and upfront with these people that they are going to be charged, when they’re going to be charged and what that amount is. So if you’re selling somebody something that is you know, $49 and now all of a sudden you are telling them that in two weeks they’re going to start to get charged $69 every month. Yes you know, again let’s think about the psychology of the prospect that they’ve made a decision to buy something for $49 right or $39 whatever it is and now you’re telling them that I’m going to charge you $69 every month going forward when they’ve yet to even consume your product, they’ve yet to experience your product, they’ve yet to see that you deliver the goods, that you deliver on our promises, that you’re not a charlatan. That you know, you’ve yet to give them results but it’s one thing to use that type of offer on the back end where you’ve got a relationship, you’ve got trust, you’ve got this, you’ve proven yourself. It’s another thing when you’re talking about a front end funnel and you’re talking about an individual that is yet to even enter their credit card information.

Tim: Right.

Todd: Or has just entered their credit card information and now you’re trying to turn them from a one-time $49 customer into a you know, call it a $69 a month or a $59 a month customer and you’re doing it in the context of a bump offer. Right. So like you know, it’s not even a “upsell” where you have the ability to prove the value, demonstrate its worth right, make the case for it. You’re talking about a simple bump offer on an order form.

[0:20:46]

So like the best bump offers really are or the ones that perform the best are the ones that that are what I would call reverse add-ons where they are a fraction of the price and as a fraction of the price, it becomes this, it becomes more of an impulse ad than anything right. Like when there’s fees involved and there’s big money involved your mind goes back into decision mode right. Where now it’s this contemplation mode. That’s the last thing that we want somebody to do on the order form.

Tim: Right, yeah.

Todd: Right. So you know, yeah and for that reason you just want to make it where it’s just brain dead simple for them to just be like yeah I’d be a knuckle head to uncheck this box and not get this right and to lose out on this. So yeah mean.

Tim: Yeah. So and we’re going to wrap up here in just a second but if you can just give me two quick examples. Walk me through a briefly one that worked and what the – if you have the data, I would love to hear the data. Like one that worked and one that didn’t.

Todd: Yeah. So I’ll tell you that one that didn’t, I’ll start with one that didn’t is I had a client in the supplement arena and let me see. If I remember off of the top of my head it was a free bottle. They were paying what was the offer? The original offer if I remember correctly and don’t hold me to this was a free offer and they were paying shipping and handling and of course for my client the shipping and handling that they were charging covered the cost of both shipping and the production of the –you know, like the total film.

Tim: Yeah.

Todd: So they were at break even. And then the – I think the bump offer was an ongoing monthly fulfillment that wouldn’t start for 30 days. So it wasn’t called a trial. I forget what we called it. It was just auto fulfillment and it started in 30 days right because they were getting this free bottle. Yet just it was like worthless. It was you know, – we didn’t put anybody into, like it was insignificant and so we dumped it fairly quickly. We were able to come to a statistically valid conclusion very quickly because of the – with that because of the volume of media buy-in that was being done for that company. Later on we —

Tim: Did —

Todd: –found we were able to get people into that auto replenishment feature but not as a bump offer we weren’t.

Tim: Did it hurt, did it actually hurt the signups for the original –I mean I know that the original was just really a way to get people to you know, get on to the auto replenishment feature but —

Todd: No, we didn’t see a bump in and I don’t even want to call it a bump. We didn’t see and increase on the order form, on the abandonment rate.

Tim: Okay.

Todd: I’ll tell you that what we did which and again everything – let me say this for everybody right. This is and I may go, I might say something that is – I don’t want to say anything that’s blasphemous on this podcast but every single thing that the – the beauty of hearing about other people’s test results is not that you should jump for joy thinking great now I have the answer for my funnel like –

Tim: Right.

Todd: — if this worked for Bob, if this worked for Todd, now great, I know how to bump my – no, it should – it’s simply to give you ideas for what to test in —

Tim: Exactly.

Todd: –your funnel right, in your niche, in your marketplace. The other thing is that what you’ve got to realize is that different stages of your funnel need to be tested separately. Meaning that if you have a let’s say a video sales letter that is selling your main product, and let’s say you test the video sales letter with the delayed add to cart button versus a non-delayed add to cart button and you find that the delay outperforms the non-delay right. So and now you’re running with the delayed add to cart button.

That doesn’t mean that everywhere else in your funnel that you’re using a video sales letter like add-on offer number one or upsell offer number one —

Tim: Yeah.

Todd: That you should also then use a delayed add to cart button.

Tim: Right.

Todd: That stage needs to be tested separately. So with that what I was going to say was what did significantly decrease response was when we added or we tested a video on there that explained the bump offer. That really hurt us and my opinion on that and this is all speculation right. You know, we could speculate on why certain things do well —

Tim: Yeah.

Todd: –and certain things don’t do well. At the end of the day, we’re –you know, it’s like I think it was I forget who it was from agora who has right we’re not in the why business. We’re in the what business.

Tim: Right.

Todd: What was the result, why does it matter really at the end of the day but because look when they’re on the order form, the last thing you want them to do is start to engage in more thinking, more learning right. Like the analogy that I give is like look –you go into a car dealership and you decide that you’re going to buy the car and the guy says great I’m going to get you the paperwork to fill out you know, the salesman doesn’t say oh and by the way I have another video to show you about what makes us great.

Tim: [Laughs]

Todd: Right.

Tim: That’s right.

Todd: Or you know what I mean? So yeah for that reason man. Really quick, the –where we’ve seen this thing just constantly or consistently do really well is when it’s for a free trial in some type of continuity like a membership or a subscription where the subscription price, the monthly subscription price is like 50% to 55% of what the initial offer is and it’s totally congruent. Meaning like if somebody is buying you know, let’s say like a 101 or let’s call it 50 split test results that’s the initial product that they’re purchasing and it’s call it whatever $49 let’s just say. The trial subscription is to like the you know, – split testing membership where very month we’ll share with you the split tests that we’re doing and you get a trial membership to that and you know it’s only whatever, $19 a month. Those rock, almost always.

Tim: Awesome.

Todd: Test it but those almost always rock.

Tim: Yeah I love that. It really goes back to again why that initial campaign probably worked out so well because again it had all of those elements put together and it also worked with their market. So that’s something to keep in mind. So I think this is definitely something people should test. Todd. Thank you so much for being here. This has been awesome and a lot of fun to talk with you about this stuff.

Todd: Yeah. Thank you so much for having me man. It was awesome.