How To Think With Dan Henry Why You Are Losing Money If You Send Your Offer To Your Warm Audience
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“You never want to email or show a new offer to your list. You're leaving tons of money on the table if you do so.”
When you are building a new funnel and creating a new offer it seems smart to send it to your existing audience first, right?
Easy money right out of the gate, but here’s the thing…
It’s TEMPORARY.
Your warm audience will eventually be exhausted, and you will be left with no choice but to send your offer to a new, cold audience.
The result?
Everything starts to slow down. Conversions drop, sales slow or even stop and ad costs just keep going up!
So here’s the solution… start with a cold audience first.
It might feel counterintuitive to start your brand new offer to a cold audience, but I’m going to show you why it is well worth the effort.
Do the hard work first so you can reap the reward well into the future.
In this episode, I am going to cover:
- What are the most common mistake entrepreneurs make when releasing a new offer
- The “Dead Cold Test”: what it is and how to use it
- Who are the top four audiences you should be excluding when running ads to your new offer
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— TRANSCRIPT —
Hey everybody in this episode I am going to talk about why you are losing money if you send a new offer to your existing email list.
All right. So this is a common mistake I see a lot of online marketers and entrepreneurs make. I'm going to try to explain this in a way that makes sense to both new people and people who have been marketing and selling online for a long time. So what happens is a lot of times we'll create a new offer and we'll create a marketing funnel or sales funnel for that new offer. We get excited and we're like, "Oh, I can't wait to see how well this converts". So we email our email list and we say, Hey, here's this new offer. People go to the new offer they buy and then we see, all right, this is how much I'm making off this offer, or this is how many people are taking my upsells or what have you. We get a benchmark from that and then when we go to run paid advertising, like Facebook ads, Youtube ads, et cetera we use that benchmark when we're spending money on our paid advertising. Or we will create a Facebook ad, let's say, and we will run ads to that offer. The initial results we get, again, we'll create some sort of benchmark.
So let me give you a quick example. Let's say you have a funnel where you're selling like a book, okay? It's a new book and you sell the book for $7 and then there's a $37 upsell. Then there's a $47 one time offer, and then there's a $97 one time offer or what have you. If you're a newbie, try to follow along with this, this is a little bit more technical. But if you're an existing marketer, then you know what I'm talking about. Basically, you sell a book, and then on the next page it's like, okay, now that you have the book, how would you like this mini-course?
And this is only a $47 upsell. So what happens is, let's say you run a Facebook ad to this offer. Well, Facebook naturally, even if you select like a dead cold interest or a lookalike audience or something like that. Even if you don't intentionally target people that are already in your network, that already know who you are, Facebook naturally shows that new ad to people who have already engaged with your ads visited your page. It just naturally optimizes in the beginning. Then eventually that audience runs out and it gets shown more to people who just have never ever heard about you. So what happens is when you run that first ad, a lot of the people that see it are people that already know you. I have tested this because I've literally run two ads side by side where I've done what people would normally consider a cold traffic ad.
Then I've done another ad where I've excluded anybody that's visited my page, anybody that's visited my Instagram, anybody on my email list, anybody who's visited my website, like literally excluded every possible audience that could have heard of me. When I look at the comments to those ads, I see there's a ton of people on ad one "Oh hey Dan, da da da da da". Then on add two, there's like nobody that knows me. So I've confirmed that this happens.
So what ends up happening is people will run the ad and let's just say again, back to the example of the book funnel. You know, when people do a book funnel, they normally try to sell a book and then upsells and they try to break even on it so that they can sell their flagship program later, and then basically get free warm leads to their flagship program by breaking even on this little book or upsell funnel.
So what happens is, let's say you need an average order value of $50 to break even. Well, if you start running ads and you get this initial order value of 50 bucks, you're like, "Oh, all right, I've hit my benchmark and I'm good." And then eventually it goes down, and down and down. When this happens, a lot of people think it's offer fatigue or whatever. Most of the time it's not, it's just that more cold, more people that have never heard of you are starting to see your ad and fewer people that have heard of you. This is why, and it's especially bad if you email your list because now you've emailed your list and you get these super inflated, skewed numbers and now you're thinking, oh, this is going to convert great. I'll run traffic to it. Then you run traffic to it and it doesn't work hardly at all.
Well, the reason is you're showing to people who already know you and they'll buy anything. Okay. I've created offers where people have bought and they say, "Oh Dan, I love everything you do. Everything you do is great. So I didn't even watch the video. I didn't even read the copy I just bought." You know what? That's great. It really is great. But, it doesn't help you when you're trying to create an offer that will convert and sell for years to come.
So the way to fix this is to do the dead cold test. The dead cold test is where when you create a new offer, you do not email your list. You don't tell anybody, you don't tell your mother, okay. You don't tell anybody. You keep that tight-lipped super secret. Then when you go to create your first paid traffic ad, your first cold ad, you create an audience. These are the four audiences you should, you should focus on.
You create an audience in your Facebook ads dashboard of anyone, of all website visitors, anyone who has visited your website in the past 180 days.
You upload your email list and you create an audience of people who are on your email list.
You create a custom audience of people who have ever visited or engaged with your Instagram page in the past 365 days, and you do the same for your Facebook page. Anybody that's visited or, or engage with your Facebook page in the last 365 days.
You take these audiences and you exclude them from your initial ads, your initial dead cold test ads, and then you know, and it's okay to target interests, lookalike audiences, whatever. That's who you target. But then you exclude, basically what you're doing is you're excluding anybody who could have possibly heard about you. You might have a few slips through the cracks. That's just how it goes, but that's what you do. You run ads and you try to get this funnel or this offer to convert at where you want it to dead cold first. That means any split testing you're going to do, any adjustments to your funnel, any changes you're going to make. You do dead cold by excluding people that have heard about you. You work on that until it converts dead cold. Now, once you've refined that offer, you refine that funnel to where it is working dead cold, now you can start running traffic to people who have heard of you. Now you can email your list to do this, two very important results happen.
Number one, you get an offer that will work for a long time because if you base whether or not an offer is working based on warm traffic, well you're getting skewed results, right? If your average order value is $60 to warm traffic, it's probably going to be 20 bucks to cold traffic. So you need to get that If you need an average order value of $50, you need to work on that funnel dead cold. That's how you can get it up to $50. Once it is now, it's going to convert for a long time because eventually that warm traffic is going to run out and you're going to have to convert to dead cold traffic.
The second important result is that you will make more money off of your existing warm audience than if you sent an unrefined funnel compared to a refined funnel. If you send a funnel that converts dead cold, you're going to convert a lot higher with your warm audience. So instead of a $60 average order value, maybe it's $80 or $90. Now, and I've tested this in the past. I've sent an offer that I've, I used to make this mistake in the past. When we started doing the dead cold test, we started having funnels that did not see any decline. They just kept converting. They just kept working and they did not slow down anywhere near as fast as previous funnels that we did not do this with. On top of that, when we did email the list, oh my lord, we would make so much more money, it would convert better than anything we'd ever done because we had made sure that we refined it.
If you just whip a funnel together, emailing your list, you're going to get a temporary... And I know it feels good. "Oh I threw this funnel together, it works. I made some money." You're getting temporary money. If you want permanent money, you need to create something that is going to convert people who have never heard about you and you need to do that first. Once you've done that, now you know you have a solid offer. On top of that, you know that when you do email your list, that thing is gonna make you the most possible money it could. That thing is going to make you more money than if you just emailed it out, right? You will make a lot more money so if you're not doing the dead cold test, you are leaving a ton of money on the table.
In order to do the dead cold test again, you exclude anyone that's ever heard of you. That is Facebook page engagers, Instagram engagers, all website visitors, and your email list. You exclude that from all ads until those ads convert at the level in which you want them to convert. Once that happens, now you can start emailing your list. Now you can start running those ads to cold traffic. Give you a perfect example.
Today we just launched a new funnel and I can tell, I can talk about it because by the time you listen to this podcast episode will have already finished our dead cold test. So I can go ahead and freely talk about it. But basically, it's called my Slide Template Funnel. What it is, it's a funnel in which I'm selling an online course, a plug and play online course slide template. Essentially the offer is $7, and you get a slide template that allows you to create your lessons, your modules, and all that stuff for your online course.
The purpose of this funnel is obviously to get people to enroll in my flagship program Sold Out Courses. Now, why am I doing this? Well, this is what I call the Steppingstone Funnel. You've heard of a lot of funnels, right? And I'm kind of getting off on a side road here, but I just want you to understand an example and I'll do another podcast episode on what the steppingstone funnel is. Essentially what it is, just to give you a quick vague overview. It is a funnel, much like you have book funnels, you have webinar funnels, you have challenge funnels, it's called a steppingstone funnel. What it does is it takes a problem that is preventing people from joining your flagship program and it solves that problem, while at the same time giving them a glimpse inside your flagship program.
So for instance, give you an example. A lot of people don't join Sold Out Courses because they have a false belief that they need to have their course ready before they join. That's completely untrue. In fact, it's much better if you join soc before you create your course. 'Cause then I can make sure you create a great product that will convert. It's much easier to help somebody that doesn't have a course than somebody that does. 'Cause now we might have to fix some massive mistakes, right? I can't just say that, right? I mean I might be able to say that and some people might go, "Okay great, I'll join." But the vast majority of people need more than just me saying that. They need belief, and so in this stepping stone funnel, I give them exactly what they need.
I give them a faster, better way to get their course done and then there are upsells that help them do it faster. Like my recording and editing masterclass and what that is, is actually a segment out of Sold Out Courses. And now why do I do that? Why would I take a segment out of Sold Out Courses instead of creating something new? Well, it's because I want to give them a glimpse inside of the flagship program. Anyway, I'm going too deep into the steppingstone funnel, but I'm just giving you an idea of what that is.
So my goal here is I'm going to run traffic to this offer. People buy the slide template, they buy the upsells, and let's say I need an average order value of $50. I want to be able to spend $50 on Facebook ads and make $50 so that when somebody books a call when somebody goes through that funnel and then they book a call and then they get on the phone with my team and we assess whether or not they're a good fit for the program and if they are, we try to enroll them. Those calls become free because when you're paying a hundred or $200 per call, you got to make sure your sales team is on point because there's a cost. But when you are spending $50 you're making $50 and all the calls generated from that are now free because you've broken even. You can scale a lot faster and you can make a lot more profit. You get a lot more customers, build your brand and, build your message and your movement, and all that. So the point of this is I need to make sure that if I spend $50 on ads, I make $50 and the only way I'm going to do that is if I first do the dead cold test.
I first make sure that I can show my ads for this offer to a bunch of people that have never heard of me and they will buy and I can break even dead cold. I will adjust my funnel. I will split test, I will change things until I can. And once I can then I'll email my list and I'll show my ads to my warm traffic and then I'll continue. I know that if I do that, I'll be able to use that for a long time. So that right there is why you never want to email or show a new offer to your list. You're leaving tons of money on the table if you do so. Now I will do another podcast episode on the stepping stone funnel. I very briefly went into it. There's so many more, I do not recommend you listen to what I just said and implement because there's a lot of very, very key factors to the steppingstone funnel that I didn't cover in this episode because I was just kind of giving you an example. So I look to the future for an episode on Steppingstone Funnel because man, it's such a great funnel. On top of it, if you don't want to do a traditional book funnel, I mean, you don't want to write a book. This is a funnel you can put together super fast and it works really, really well. So look for make sure you subscribe and all that stuff so that you get notified when we do an episode on the Stepping Stone Funnel. But that said, you know make sure that you always do the dead cold test if you want to make sure that your offer is going to convert for years to come. Otherwise, you're getting false data and you're leaving money on the table.
Love you guys. Hope you enjoyed this episode. See you in the next one.