The Real Secret to Scaling a Digital Product Business

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In this episode, Dan Henry is going to cover the concept of scaling a digital product business. Most people think that “scaling” simply means selling more of what you have, but that’s just not true. Dan is going to break down the real meaning behind scaling and how you can make the shifts in your business to see real results.

Dan is going to go over the different phases of scaling, and it all starts with your Circle of Focus. He is going to break down what exactly that is and how to use it to gain forward movement in your business.

Dan is also going to breakdown all of the details on how your price for your offer affects many other aspects of your business and sales, not just the money itself. Everything will shift when you start scaling properly, from your chargeback rates to the amount of piracy of your products, and much more!

In this episode, Dan is going to cover:

• What it really means to scale your online business
• Why creating more offers actually leads to your business suffering, not thriving
• How to develop your Circle of Focus and why it’s so crucial to your time
• AND… how crucial the price point of your offer is, as well as everything that it affects in your business (which ALL contribute to your success and bottom-line number in profit!)

So if you are ready to take charge of your business and start scaling the right way, you can’t miss this episode!

If you got value from what you heard here, please be sure to subscribe and rate this podcast! Bonus points for you if you write a review! ;)
 

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— TRANSCRIPT —

Hey everybody. In today's episode, we are going to talk about how to scale a digital product business with high ticket offers.

Alright. I guess the question I get all the time with online business, specifically, digital products is how do you scale now? Let me look, grab a cup of coffee, grab two cups of coffee, take a seat because I'm a kid on my soapbox for this one. The concept of scaling is so misunderstood, so misunderstood, and I really want to correct it today. So a lot of people think that when you scale, it just means you sell more stuff, right? It just means you sell more of your course, or maybe you create a bunch of courses and you sell, sell, sell, sell, sell, that's not scaling. That's chaos. That's madness. And I'm going to tell you why. So we, and I'm going to go back a couple of years here. I was doing multiple six-figure months every single month for a long time, probably two years.

Maybe, maybe a year and a half a bad with time, probably about a year and a half, you know, two 50, 300, three 40 in that area. And of course, that's gross. You know, I had employees and costs. It's not like I was taking that home, but still, I would take home a lot of times, you know, I would have six-figure net, net months. And this went on for a while. Like I said, about a year and a half. And eventually, you know, I was riding the wave man. I was chilling. I was very passive. Wasn't doing much. And then, you know, I started looking around and going, you know, man, maybe I'm destined for more, you know, maybe I should grow. We should really take this seriously and really grow it. Like, like really try to grow it. And you know, I, I started thinking about real estate investing and thinking about, you know, how can I, how can I invest in real estate?

Because I want to eventually really build like this big real estate portfolio. And I found that, you know, in order to do it without going through, you know, hell and high water, it's nice to have some cash. So I'm thinking, all right, well, I'll just make more money from my business. And I'll, I'll buy all this real estate. And that was, that was my plan. And so I did what everybody did or everybody tries to do when they have some sort of offer an online course coaching program, they want to scale, they start making more offers. They start making more online courses. Cause you think, well, let's say I make a hundred grand a month with this course. If I make another course, I'll make 200 grand. And you would think that the obvious answer would be just to sell more of what you have or the price.

But no, most people like myself have to figure out a way to be an idiot about it and make more work for ourselves. And that's what I did. I did the idiot thing in my opinion. And I started creating more offers. And what happened was I became more and more distracted and everything suffered. So I would, you know, if I made a new offer that made X amount of money, I would lose that or more in sales that could have happened with my original product. Right? So literally my focus was going to these new products and I was making money with them, but then I would make less money with the product I already had. And I was just like, wait a minute. Now I'm doing twice the work or four more and I'm making the same money. And so I kept doing that. I don't know why.

And eventually, I whittled my way down to about 70 GS a month. And you might think, well, that's still good, Dan. Well, no, not really not. When you have a staff and you're used to making more, you know, no company is supposed to go that low, you know? And so what happened was you know, one day I said, enough's enough. And I started, I started researching. I actually spent more money on masterminds and coaching around that time than I ever have when I made the law, when I was making the least amount of money, that's what I spent the most on coaching and help because that's what you do that, it's hard to do. It's hard to wrap your mind around that, but the truth is that's when you need help, right? That's when you need help. I, multiple times I've been on calls with people that really say, well, Dan, I want to join your program, but I just don't have the money.

And I go, well, isn't that the whole reason you're on the call in the first place. And so against the advice of you know, people close to me, I spent quite a bit of money on help. And I learned a lot by doing that. And I learned a lot about focus and a lot about actually growing a company. And so I went back and I deleted 90% of my products. I deleted all my funnels. I deleted all, I just shut it all down. And I went back to that first original product. And I went all-in on scaling it. And from there, we were able to more than triple what we had done on our best month because I refocused and I cleared my circle of focus. And if you haven't heard of this circle of focus, it's in my book, but I'll give you a quick rundown.

You draw a circle on a piece of paper and you start writing down all the things you're doing to move your business forward. And when you write them down, right, like let's say you have, you draw a circle and you write Facebook ads in that circle. Well, at the time Facebook ads are the only thing taking up that circle. So you're giving a hundred percent of your circle of focus to Facebook ads. But then if you add in YouTube channel or podcast or a Pinterest channel or speaking or whatever, now you have to draw a line through the circle, right? So let's say you have a YouTube channel and Facebook ads. You draw a line through the circle. Well, now you're giving 50% effort to two things, not a 100% effort to one thing. How many times have you accomplished something, giving 50% effort you don't?

And so, you know, if you actually write down all the things you're working on right now in your business, you, your circle focus will probably look like a pizza and you'll realize you're giving like five or 6% to everything. And so what I started doing was I would write one thing down. I would master that thing and then I would delegate it to my team and I wouldn't move on to the next thing until that was done. And I was able to get so much done so much faster by keeping my circle of focus clean. And every month I write, I drop my circle folks on like, Oh, it's getting, it's getting messy. It started looking like a pizza and removed things. And when I did that, I was able, you know, now, like I have a media buyer that, that runs my ads. And when I, when we moved on from the ads, we went to YouTube ads and I worked with another media buyer and I was able to grow to spending over a hundred grand a month on, on YouTube ads in 30 days because that's all we focus on is, is really making that work.

And now that's all, all automated and off my plate. And then I went and wrote a book. I wrote the entire book in 30 days, had it professionally edited. And I had the book, Scott virtually 100% positive reviews. People love this book. This is one of the best marketing books ever written. And, and that's not me saying that that's people online and I'm very humbled and very appreciative of that. But the fact remains that even if I got even less good reviews than that, it just, even if I got mediocre reviews, but still positive, I still think for writing a book in 30 days, that that's impressive, but the book has done well. In fact, the book has generated over a million dollars in revenue for my company within 60 days of launching it. And so, again, it's not that I rushed through it. I didn't rush through it.

I spent every waking moment of every day working on that book for 30 days and did nothing else. And so that's why the book is good. Not because I did it quickly, but because I focused on it because everything else in my business didn't really need my attention. And again, that's the circle of focus. And when I did that, that's how I was able to scale. Now that's only the first part of scale. The second part of scale is something that I didn't know when you sell more of your products, you see, at one point we had virtually no refunds. We had virtually no disputes. We had very little support tickets, but as we started selling in volume and we started going from hundreds of customers to thousands of customers, things changed. You see, let's take refunds, for example, most of the time, 95% of the time when somebody requests a refund for any sort of online course or digital product, it's because they get spooked.

Okay. They get scared. And this happens a lot when they make a purchase and then they don't get their username and password right away. And 100% of the time, it's always some weird issue with spam folders or the email didn't go through or whatever. It's not a big deal. It just, they just need to reach out to support and get their PA their username and password regenerate or something like that. It's always a simple mistake, but because that person just invested a fair amount of money into something with someone they don't know, you know, but the marketing was good and, and it made them believe and they got over their fears and they invested, but now they don't, they don't get their username and password. Now they freak out and they request a refund and I would freak out too. But the fact of the matter is, is when we had very few customers, we could get to somebody within minutes and help them.

But when you have thousands of customers, it can take hours or sometimes even a day or two. And that's where people would get mad and would request refunds and even chargeback. And that's when things started breaking down. In fact, in February of 2019, we hit a million dollars a month, or we had a million-dollar month. And that's it, by the way, that's a million dollars gross. Now you would think that a million dollars in a month, that's crazy. That's crazy good skill. Yeah. But you don't have any support tickets. We had that month, over 1900, 1900 support tickets. We had about a man, we had about like a 15% refund rate, which went up from like 1%, and not everybody actually ended, ended up getting a refund. They requested one. And then we would, we would try to talk them out of it and say, Hey, you know, it was just a mistake.

You didn't get your password or whatever, but we also had like a two or more three maybe percent chargeback rate. And that was because again, people would not get, they wouldn't get an answer to their problem right away. And so they would chargeback. And if they were on a payment plan and let's say they made five payments, it would count as five chargebacks. And so our, our chargeback rate went from virtually nothing to like terrible, like 1% is where you're supposed to be 1% or less. And ours went up to like three, we almost launched our, we almost lost our merchant account and well, well, it was good in terms of selling more of our products and selling more of our programs. It wasn't good in operations, everything just started falling apart. Students weren't, we're starting to become unhappy because they weren't getting the attention they deserve.

And I'm like, man, how do I fix this? Like, this is, this is nuts. Like H how do I, you know, how do I fix this? Like, this is not what I envisioned scaling would be. And on top of it, the prop, because I needed so much staff. So, so many issues, the problem was that our profit margin was not that good. I mean, our profit margin was like, you know, Oh man. I mean, it was, it was less than half. Now. You might think that, you know, that's, that's still good. But the thing about it is, is that when you spend money on ads, if you spend a hundred dollars and you make $200 back, that's good in all, but wouldn't it be great if it wasn't just that, because you still, now, you still have to pay like staff, if you have him you know, you have other expenses besides just what you make off of your advertising.

And so I thought, man, you know, this is nuts. You know, this can't be good. And so right around that time I was talking, I was, I was at an event and I ran into Alex [inaudible] who he, he owns a gym launch. He's like a, he's this multimillion-dollar gym company that he sells info products and coaching for, for gym owners and we're backstage. And cause we were both getting an award for, you know, marketing or whatever, and we're backstage and we're talking and we're talking about Facebook ads. And I remember, I, I, you know, I was just shooting, shooting, shooting it with him. And he was talking about what return he gets on Facebook ads. And it was something crazy. It was like 15 to 20 X, not one ax, not two X off. It was like 15 to 20.

And I'm like, Whoa, how are you getting that much return? Like that's nuts. And he goes you know, and I said, well, you know, are you, are you like a Facebook ad wizard? Because you know, at the time I was selling a course that one of the main core components of it was Facebook ads. And I consider myself by far a Facebook ad expert. In fact, I had one of the top-selling courses on Facebook ads, but for some reason, this guy's killing me, killing me. And I go, dude, I go, what are you doing with ads that I don't know. He's like, oh, I don't know. I suck at ads. And I go, what? I go, you suck at ads. What are you talk if you suck at ads and why am I here? What do you mean? He's like, yeah. Like, I mean, I know how to like to launch them and stuff, but I don't really, you know, I don't really know all that advanced stuff.

I just, you know, I just run the ads and I'm like, well, I don't understand. And he's like, look, he's like Dan. And by the way, Alex is huge, right? He's got these enormous shoulders, like Sully. He looks like the dude from the day the earth stood still. When he's towering over you giving you advice. So he like looks over and he's like, Dan he's like, listen, my cheapest product is $16,000. That's why I make so much money from ads. Because when you cheat, when your cheapest product is 16 grand, it doesn't matter what you spend on ads. You're always making money. And I go, Whoa, because at the time I was, I was making, you know, I was generating an in gross, like a million dollars in gross on an, on a thousand dollar product. Right? So the sheer volume of customers was a lot.

And so I thought about it and I'm like, wait a minute. I thought, so what you're telling me is that if I charge more than, you know, because if you make certain decisions with the advertising, you know, and you get like a, say a $10 lead versus a $5 lead, that could be the difference between you making money and you going broke. But if you're charging a high ticket price and the difference between a five and a $10 lead becomes negligible, you don't even notice it. And I thought, wow, there's something to this. And so over the next few months, I really dug deep and I researched everything. And I made a decision and I launched a high ticket program, a program that was you know way more in-depth. And this program was evolved around what I knew really well, and that's selling digital products.

And so, you know, cause I had made at that point, like at that point in my life, I think we had, we were at about 8 million for what we had done on a nine 97 info product offer. And keep in mind guys, I, I, I should not, don't take this as complaining my very first year of business, even, even with all these issues and the refunds and all that. I still had a beautiful 8,000 square foot house on the water, nice cars, you know, nice clothes, great doctors for my son know vacations. Like that's, I mean, I smile my life financially was great. You know, don't get me wrong. I'm not complaining at all, but, but it was driving me, crazy, solving all these problems in my business and I wanted to fix it and I wanted to do that. And so we made a program that helped people launch their digital products and, and we added a lot of support to it.

It wasn't just an online course coaching program. There were actual calls every week with me, with members of my staff. And you know, we charged a premium for it because it's a premium service. And here's what happened. People that bought that program never refunded because we would sell it over the phone instead of online, like you on like an order page, we would, you know, people would watch the same type of marketing, but then we would just say, book a call. And so they'd get on the phone and we would get to know the customer and they would get to know us and there would be rapport built and they are comfortable. And so there was no buyer's remorse because they were comfortable. They had like an hour before they bought, there was no miss password because they got their password right up there on the call.

Like they got all that on the call. They got added to the private groups, any access, all right there, they're very, very comfortable. And so our refund and charge rate for that product went to basically zero. And also our support tickets were almost nonexistence because again, they had an hour conversation and we had coaching. We had so much support, better programs. It was just better. So the support tickets were much less and the community kind of took care of itself because when people pay more, they tend to be less needy. And when you talk to them for an hour before they buy, they get most of those questions that they would have sent a support ticket in over. They get that hashed out on that initial call and anything that they don't get hashed out, they get hashed out on the coaching calls. And so what I ended up doing was switching to this model and come February 2020, we did about half the revenue.

We did it for that million-dollar month. I think we did about five 50 is a little bit more than half yet, yet. Even now you might say, well, wait a minute, Dan, Whoa, Whoa, you, you did a million dollars in sales. And then a year later in the same month, you did five 50. How is that scaling? Well, I'm gonna tell you how, not only did we have a fraction of the support tickets virtually no refunds, there was actually no refunds or chargebacks. There was literally a pittance, a tiny fraction of the support tickets. And most of the support tickets that came in, I remember it was 423 support tickets came in. And if I remember correctly, 400 of them were leftover tickets of people still submitting tickets from the old program only about 20, 23 were from the new program. And so literally the amount of staff I needed, the amount of expenses I needed, the amount of advertising I needed, I would spend hundreds of thousands of dollars on ads to ads become more expensive.

The more you spend as well. So I would spend hundreds of thousands of dollars on ads to make that much revenue with we, you know, with the nine 97 offer, but when I did it with this, I remember the very first month, the very, very, very first month we even tried it when we were, when we were just trying it. I D I spent about $28,000 in and Facebook ads and did 128,000 in sales. Like what, you know? And that was like the very first attempt. And I was like, Whoa. And so again, you know, moving to the difference between 2019 and 2020 in February, not only all that but here is the final payoff. Even though I did a million in February of 19 and 550 in February of 20... in February, when we only did the 550, our profit margin was 30% higher, 30% more profit, and literally half the revenue, because all those things added up and there are things you don't even think about like piracy, right?

Like when you sell a 500 or a thousand dollar course, eventually people buy it and then they start bootlegging it and selling it for 50 bucks a pop, they go into your Facebook groups and they try to sell it. They go online and try to sell it when somebody pays, you know, 5,000, 10,000 or more for and they, and they do it on the phone. They buy it on the phone and, and they, you know, sign a contract on the phone. They have a conversation, but they don't do that stuff. They just don't do it. Plus when you're in a coaching, for those of you that are thinking about a course or as a coaching program, whether you do a full-fledged coaching program, or you just add coaching calls to the course, that's something that people can't get in a bootleg version, right?

They can't get, get it. They want to attend the calls. They have to be in it. And so piracy became literally zero. And so the amount of expenses, the amount of staff and the amount of advertising required to make the money is so much less, the profit is so much more. And so I always encourage people. If you can sell high ticket, do it. And you say, wow, am I, I might now I don't want to, I don't want to sell over the phone. It's icky. Well, I can teach you how to, how to sell where it's not icky at all. In fact, it's the opposite of high-pressure sales. You're almost begging people to get off the call, but you know, here's the thing you're trading. One thing you don't want to do for like five things you don't want to do, do you want to deal with piracy?

Do you want to deal with tons of customer support tickets? Do you want to deal with refunds? Do you want to deal with chargebacks? No. So if you sell it over the phone for a premium price, you don't have to deal with most of those things. And if you do, it's, it's very minimal. So you're trading one thing you don't want to do for like five things you don't want to do. And anybody that sells a normal program can absolutely sell a premium program. You just add more support, you add more help you make the product better. And if you're wondering, like how, you know, you're more about that and more the specifics you can grab a copy of my book, digital millionaire secrets. I'll leave a link in the show notes, it's free. You just pay for shipping and I'll send you one right out.

But I talk more about that in detail in the book. But you know, creating a high ticket program is not much different than creating a program that is low ticket or even super low ticket. You know, you might think, well, Dan, I can, I can sell my program for 50 bucks on you dummy or something. Well, yeah, but you could also sell it for 500 bucks yourself on your own website. Like, like I teach people to do and it could be great and people will pay that, especially if you're giving good results. And if you can do that, you can also give more support, more help and sell it for 5,000 because that's the thing is here's. The other thing that I forgot to mention is the people, even though they were getting massive results in that nine 97 program, people, even though they paid way more for the new program, those people made their investment back faster way faster than the people that only paid a grant because they got way more help, way more support.

Think about this. If Warren buffet or any really experienced stock trader said, Hey, you give me 50 grand and I'll sit down over your shoulder and I will check every trade you do. And I will make sure every tape trade you do is correct versus somebody who is a good stock trader and says, Hey, here's this video. Here's how to trade. And it's a thousand bucks. Which one do you think you'd make your investment back faster on? It'd be the 50,000 because you buy the thousand dollar one, you get some videos and you think, you know what you're doing, but you're not sure. And then you go in and you lose all this money trading, you end up negative, right? Versus you pay 50,000 and you get this experienced trader, helping you for say the first 30 or 60 days or whatever it is.

And then you make all these amazing trades and you make way more money. You don't go negative. You pay that investment back. And now you have the knowledge to last a lifetime. That is why selling high ticket is more ethical. It's I'm sorry, but I'd rather make sure you're doing something right. And be in, be able to make sure my team can directly help you and charge you 10 times more than charging you 10 times less than just leaving you on your own because you know, there are thousands of customers. I don't want you to be one of the thousands. I want you to be one of the few, because one of the few who had the faith to make that extra investment, that's not only somebody who has the mind frame and the mindset to get results. But somebody who now has access to a product that can actually get them results way faster.

And so I believe selling a high ticket premium program is not only better for the product owner, meaning you, but your customer, your student, your client, it's better for everybody. And again, if you want more information on that, you can grab a copy of my book, guys. Thank you so much for listening to this podcast. I can't wait to drop more value bombs on you and keep recording and launching these episodes. I'm going to keep firing them out. So make sure you're subscribed. Make sure that you are getting my emails and you're getting notifications. And you're listening to these episodes because I just really want to help. And I really want to put this knowledge out there, the no BS version, the no fluff version, because that's what the industry and the world needs to hear. They need to hear the real stuff. I'm not the hypey stuff. So I hope you're enjoying this podcast. I love you. And I'll see you in the next episode.