Lots of people are seduced by the notion of creating a simple $27 product and instantly making $$$ while you sleep…
They’re called an SLO (self-liquidating offer) but I’ve also seen them being called…
Itty Bitty Products
Aaannnddd…. they’re actually not a new concept (they’ve been around in marketing for years), and although they’re marketed that way, I absolutely don’t recommend them for people just starting out and here’s why…
They’re not designed to make a profit.
They’re just there to grow your list with paid advertising.
Let’s back up though and explain what an SLO is.
What is an SLO?
It’s called a self-liquidating offer and in old-school marketing, we used to call them things like loss leaders. Basically, products that aren’t designed to make a profit – they’re just designed to get you through the door.
A really good example of a loss leader is your standard printer. The printer is dirt cheap but the ink is where they make the money!
And… the meatballs at IKEA.
IKEA sells a whopping 150 million meatballs per year and the foot court and meatballs were created for the sole purpose of increasing the time people spent in the store and thus increasing the amount of money people spend. If people are sitting in the cafe, they can talk about their purchases and make decisions without leaving the store.
So, even if they make a tiny loss on the meatballs, they’re more likely to earn bigger bucks on the new sofa the customers buy, in addition to the 12 other things they’ve found as they’ve (another clever tactic of IKEA) had to walk the entire store to find the one thing they initially came for.
Now… if IKEA sold only meatballs… at a loss – they’d go out of business.
And if all you do is offer $27 products – the same will likely apply to you.
The big thing the people who sell $27 ($37 and even $47) digital products won’t really tell you is that in order to sell many of these at all to make a dent in your email list, you need to spend a significant amount of ad spend up front and they’re only designed to break even on spending.
Meaning… spend $27 to make one $27 sale.
If you want to sell 5 per day, you’re looking at a Facebook Ads investment of $135 per day, or $4,050 per month to increase your email list with (admittedly better leads) only 150 people.
So where do they make revenue?
The answer: the revenue comes from 3 other offers on the backend…
Bump Offer: $7-$17 easy add to cart at checkout
Trust me – you see these all the time. They’re the SUPER easy button to tick at checkout that basically asks if you’d like Fries with that.
One-Time Offer (OTO)
A heavily discounted offer after checkout – usually basically a shorter version of the sales page that replaces the typical thank you page.
And THIS (just like any other online business) is where the money is made. The signature program is pitched during nurture or launch.
So aside from needing $$$ on the front end with this offer, as well as an established signature program at the very least (and ideally your Bump and OTO too), the other reason an SLO funnel is really, really hard, is that before they take off – they often need loads of iterations, testing and tweaking.
Meaning… experimenting with thousands of dollars in ad spend in order to get it working well – which for newbie entrepreneurs – that can be a really stressful experience!
So, Is an SLO right for you?
- 4 different offers (or at least more than just your SLO)
- $1000 ad spend for testing, tweaking and refining
- Knowledge of Facebook Ads
- Time and ability to frequently monitor, test and refine until you find the package that works best with your funnel
If you aren’t there yet, there is an easier way…
Start with either 1:1 coaching or a signature product
A signature program is the absolute best way to step away from 1:1 coaching and into the digital space. It establishes your authority, gives you back your time and gives you $$$ in the bank.
Then, once you’re making consistent $$$, it’s time to circle back to an SLO.
For more help creating your online signature program, join the waitlist for Launch Easy Life here