Understanding Your Value Ladder
By Fernando Camacho
Your value ladder is your various service offerings and their progression from small commitment/low price to large commitment/high price. Essentially, it’s the path you want someone to take in your business.
Although you have a number of different service options that you offer—and it’s understandable to want people to take your biggest and most expensive package—ninety-nine percent of the time, you can’t level-jump the relationship that fast. I know you want the extra cash and that you provide a great service, but you can’t rush the process.
If someone comes in for their first day of daycare, you shouldn’t try to sell them on your biggest package. That’s the equivalent of going out on a first date and then asking your date to get married. You have to build a little trust, provide enough value and show them why you’re worth it. You can’t jump up the ladder. You have to go step by step and follow the natural progression of the sales process. If you go too far too quick, you risk turning them off by making them feel like you’re just trying to get their money. However, if you encourage them come in gradually and use your services more, they will see how awesome you are, realize the value that you provide and be willing to make a bigger investment.
At the bottom of your value ladder you have your low-cost offer. I like to make this an irresistible offer—something that they can’t say no to. Typically in the daycare world, that will be a free day of daycare. How can you can say no to free? It’s got zero risk, so why not try it? When you have someone that has no experience with you and you haven’t built up any trust, you need to alleviate all the risks for them. Make it an easy decision. Then, once they have had a successful experience with that first offer, you move them to your next-lowest offer. Don’t try to jump them up!
One of my clients was running the “free day” offer but people were just not becoming customers after that first free day. We were getting a lot of leads from our ads and they were doing the free day, but they weren’t able to transform them into paying customers. Once I took a quick look at what they were doing, I saw the mistake. When people were coming in for their one free day, they were then trying to sell them into their lowest package, which for most daycares is a five- or 10-day package. That’s too big of a jump.
It may not seem like a big commitment to you, but to them, they’re still not ready to make that big of an investment in a business they only had one experience with—especially if they’ve never used daycare before. They still need a little time to get comfortable with the process and see the value in what you offer.
For my client, we created a three-day package, which I call the “Intro to Dog Daycare Package.” It’s not advertised on their website or in any promotional materials, it’s just for those who come in for their free day. When the customer comes in to pick up their dog from their free day, they just say, “We’re glad your dog enjoyed the free day here. We have a special deal available for you because you tried us out. It’s our Intro to Dog Daycare Package, which will give you three full days of daycare at 50% off.”
They also tell them the offer is only available right now (as they are picking up their dog from their free day). We want to create a little urgency to the offer. They are welcome to decline and come back later, but the three-pack won’t be available (even though if they ask for it later, I would give it to them anyway). It’s an irresistible offer, low commitment (but more than their first one) and big value.
Once they finish that intro package, you can level them up. In the beginning of your relationship with a customer you need to take small steps, but once you’ve proven you do a great job and they are happy, you may be able skip a level or two and go to your higher packages or a membership.
You’re trying take them by the hand and lead them up this stairway of service offerings. You need to be patient and do your part to help them feel comfortable and see the value of what you do. You can make it easy for them by giving them irresistible offers and building trust, but they won’t take the next step unless they believe in the value.
If you do it the right way, your customers will be happy to make the climb up your value ladder, using more of your services and on their way to becoming a loyal, lifetime patron of your business.
Fernando Camacho (Fern) runs Overdog Digital, a digital marketing agency specializing in working with dog daycare and boarding facilities. He does private business consulting, staff training and helps pet businesses utilize modern resources to expand their customer base and grow their businesses. Fern is also the author of six books and is a speaker at national conferences and private events. To join The Dog Daycare Business Think Tank or ask a question, go to: www.facebook.com/groups/dogdaycarethinktank