Before I share this technique, I want to provide you with some additional information so you can be of an appropriate mindset...
Here are just a few of the many reasons that product launches work as well as they do:
- It allows you to better engage a potential buyer and through the sequence of a series of marketing messages be able to chip away at their potential objections as lot as their interest remains.
- A strong human need is wanting to feel a part of something. Becoming the excitement associated with a launch day can help fulfill this desire. This is especially true when you have a solid name within a well defined market/niche.
- There is often scarcity associated with launches - i.e. there are only X number of the product available at this price. Perhaps you may be increasing the price. Maybe you might never offer the product again. The scarcity approach helps drive the urgency.
So let's say you've taken someone through the product launch cycle. You've chipped away at their objections. The price of your product is not an issue. You've done such a great job with marketing, they are completely sold even before your sales page goes up. But on launch day, one small thing stops them from buying. One little thing that even months ago may not have been an issue but with today's economic crisis it is. You miss out on not one sale but potentially 20% or more of what you did generate.
Even if you are one of those optimists that are harping that the economy isn't affecting you - you need to keep in mind that no matter what you are telling potential buyers during your pre-launch, no matter how sold they are, no matter how affordable your product is for them - they just may just not be able to pay today.
Credit card companies are restricting credit limits. With some companies increasing fees, many consumers are cutting back on the number of credit cards they have. Consumers with cash flow problems are turning to using their credit cards more and more for routine purchases. Many consumers are losing credit cards period and being forced to use debit cards in lieu of credit cards (meaning the money has to be in their bank account at the time of ordering).
All of these things add up to a situation where at least some portion of your potential buyers not being able today because of not having access to sufficient funds on a credit/debit card. If you are dealing with higher ticket items - which I'd consider to be $50+ in today's economy - it will likely be more of an issue for you.
Many Internet marketers have borrowed from traditional marketing the idea of offering split payments. For example, with a product costing $1797, they may offer the option of 4 payments of $497 spread 30 days apart. This strategy is especially useful during a recession, but it doesn't deal with the issue that the buyer still needs to pay $497 today. $497 which they may not have access to on a credit card on the day of launch.
There is a simple alternative: offer buyers the ability to submit their credit card information today but they will only be billed/have their product shipped/delivered in 2 weeks time.
From a technical side, if you have your own merchant account, you may want to say $1 will reserve their product. This will allow you ensure that the credit card information provided is valid. If you are using Paypal, you can create the product as a subscription item.
I have a client that has multiple sites in the same niches. (Opening "competitive" sites in the same niche is one of most effective ways of dominating a niche.) He will often launch second tier priced products in the same niche a few weeks apart. Same product with slightly different packaging and marketing geared to the differentiation of that site. He had a full schedule of second tier products to be launched in 2009 and was concerned with how the economy would affect sales. I had suggested he do a side by side comparison in one niche to see whether or not the deferred payment would make sense.
The last week of January he launched a $147 product to one subscriber base in a niche (Market A). He had slightly modified the product for positioning to a more upscale market at $197 to another subscriber base in the same niche (Market B). Traditionally this market was less price resistant. This was launched this past week. All those who received marketing messages for either campaign consisted of people who had either opted-in or made prior purchases from the respective sites.
With the exception of differences in marketing/positioning for Market A and Market B, all of the following held true:
- The pre-launch sequence was the same
- The sales page URL was the same
- The sales page content was the same
All that changed for either group was that the pricing component varied. A cookie was placed on the computer of a visitor upon their first visit. This ensured that the same visitor would see the same offer. Otherwise, two different pricing option sets were equally rotated amongst visitors:
- Pay up front or 3 equal installments
- Pay up front, 3 equal installments or reserve today for $1 with $147 charged in 14 days
Here were the results for Market A:
- $147 upfront, 3 payments of $57 or $1 now with $147 due in 14 days.
- 38,104 subscribers mailed
- 6,312 subscribers in pre-launch sequence
- Soft-sell message sent to only those subscribers NOT in pre-launch sequence day of launch - 34,692
- Total mailed on launch date: 41,004
- Unique visitors to sales page: 9,819
- 4901 viewed no deferred option - 192 orders @ $147 and 167 orders @ 3 payments
- 4911 viewed deferred option - 184 orders @ $147, 171 orders @ 3 payments and 162 orders @ deferred payment
- 3 deferred payment orders were declined upon processing
Total gross sales with no deferred option: $56,781
Total gross sales with deferred option: $89,830
* Obviously this doesn't take into account charge backs, returns, and potential rebill issues with those opting for the 3 payment option.
I have to admit, I was shocked when I saw the numbers myself. I had expected that it would boost overall sales by enough of a percentage to make it worthwhile. But I had also expected that some buyers that would have opted for the 3 payment option would have gone for the deferred option as well. That didn't happen. My client and I both thought this was an anomaly. Sometimes randomizing simply doesn't work. However, when the same thing was done with Market B - keep in mind here that it is targeting a group where buyers are known to be less sensitive to price than Market A was - the outcome was almost identical. (A slightly higher percentage of buyers in Market B opted for payment in full.) Since the launch for Market B was only done a matter of days ago, we won't know whether or not declined payments will be an issue.
My client is sold enough on this concept that for any tangible products he will be selling for the next several months using the launch method, he will be offering a deferred payment option without split testing it further.
Can this strategy work for you? First, something like this will only work when using a launch method or special promotional effort. There is really not much point in using it for ongoing market efforts. Second, I think this would work best when tangible products are involved. For ebooks, membership sites, e-training, etc, converting this method would amount to a free or $1 trial. Trial offers do work well, but my own experience has been that you get a lot of freebie seekers - i.e. people who will sign up with the intention of cancelling before they are billed - and people that will go through what they can and then cancel. This method works fine when content is "dripped" but if all information is provided upfront, you are likely to see overall revenue lowered.