Optimizing Ad-Driven Sales Funnels

Introduction

There was a brief period around 2020-2021 where I was learning about and pursing the possibility of starting my own consulting business. There was a type of business model that was popular amongst the solo-entrepreneur community that follows a relatively straight forward pattern:

  1. Find a “niche” - a community or group of people who have some sort of shared interest, occupation, problem, etc.

  2. Identify a problem this community has

  3. Learn how to solve that problem

  4. Consult clients in this niche on how to solve that problem for a high-ticket price (or solve it for them somehow)

  5. Once developed, possibly turn this service into a high-ticket course

It happened to not to work out for me. Briefly, I think this was because:

  • The combinations of niches/problems/solutions that I tried pursuing weren’t successful fits

  • These niches weren’t optimal for this type of consulting service

  • This type of info/consulting business model in general felt played out and oversaturated by the time I started trying this

Regardless, during this time I learned a huge amount about sales, marketing, product management, sales funnels, advertising, copywriting, e-commerce, etc. In this post, I’ll be sharing some of the main lessons and concepts that I learned from this experience, mostly regarding sales and customer acquisition.

Keep in mind, most of the below lessons are within the context of high-ticket, ad-driven SaaS products or consulting services, but can mostly be transferred to other types of products as well.

It’s All About the Product

If your product doesn’t solve a painful problem, and isn’t something that people desperately want, then it’s simply not valuable. Your business is rotten to the core without a valuable product.

Shoveling money into ads for a broken product is hopeless. You need a product where word of mouth ALONE is enough to scale.

Optimize your Product for Ads

Obviously this isn’t a hard rule - you can have a valuable product that does not meet all of these criteria, but the products that work best with ads often have the following traits:

  • Untapped, or new/emerging market

  • There's another product that’s like yours and sold in the same way (field-tested)

  • Your solution fits your market

  • The market is easy to run ads to (audience is online more or on certain platforms)

  • It solves a serious, painful problem

  • It can be sold high-ticket

Build Respect, Trust and Rapport

This is particularly valuable if you’re going to spending some time talking with a prospect before they decide to buy. Respect, trust, and rapport together create the willingness to be persuaded. This is how you develop each: 

  • Trust:

    • Spend lots of time with them.

    • Go out of your way to be honest.

    • Be relatable, use self-deprecating humor (within reason), reveal embarrassing truths, etc.

  • Rapport:

    • Acknowledge similar interests. Create bond through similar experiences.

    • Make them feel. Turbulent emotions create connection.

  • Respect:

    • Hold them accountable, call them out when they’re wrong.

    • Make them be honest (be like a mentor figure, not a friend).

    • Generally be very good at what you do. Brag without bragging.

Surface the Pain

The pain that your prospect feels about a problem is what gets them open to a solution.

In your ad copy and sales funnels, use language that surfaces the feeling (or belief) of pain about their issue. You want them to feel enough pain to be motivated to act.

Make them understand their:

  1. Current state - the painful present where they are at

  2. Future state - the ideal state in the future where their problem has been fixed or desire has been fulfilled

  3. Gap between current state and future state - illustrate this as being a huge chasm for them to cross

When interacting with prospects (like on sales calls), ask questions to find if they actually have a problem. If they do, make them realize that they have do a problem and attach those problems to tangible consequences. Ask things like, "What will happen if you continue with this problem? How do you expect to ___ with these problems?"

Talk with them until you can agree on where they’re losing or facing obstacles. Make them think, "This is a problem and I have no idea how to fix it."

Remove Limiting Beliefs

Even if the prospect understands their problem and feels that pain, that doesn’t mean they will become a customer. There will still be friction since they’ll likely still perceive your product/service as a risky investment that isn’t worthwhile.

In your sales funnels (particularly your landing page), remove doubts about your product by:

  • Including lots of testimonials, reviews, stories, etc.

  • Emphasize results and ease-of-use

Assume Disinterest

One of the keys to scaling your business (particularly with ads) is convincing uninterested people to buy - we must assume disinterest with our target customers.

If you're market is ONLY people who are already interested in buying your product, it’s likely that the market is highly competitive with limited prospects that are expensive to acquire.

Optimize your Funnel

Most SaaS and info business have a sales funnel that looks something like this:

Prospects get exposed to our ads, and then some portion of prospects drop out of the funnel at each decision point. In the end, you will have some number of converted customers and a cost per customer based on how much you spent on ads, which should be lower than the price your charge your client. The net value of these is your ROI.

If you’re operating a funnel like this, it is critical for you to know:

  • The click-through rate (CTR) at each point in the funnel (calculated from Google Analytics data or similar).

  • Benchmarks for these click-through rates based on industry standards.

By comparing your CTR with the industry standards, you’ll be able to identify the stages of your funnel that are killing your total number of end customers and ROI (called “bottlenecks”).

For example, if your Landing page -> Sales video CTR is particularly bad, it could signify that your copy isn’t very convincing, or that you need to include testimonials, have better branding, etc. At worst, it could mean that there is no product-market fit and that you should go back to the drawing board.

By continually monitoring and addressing each of your bottlenecks as they arise, you increase the number of end customers, reduce cost per customer acquisition, and set yourself up to invest in more ad spend.

Interestingly, the math that describes this funnel analysis is a stripped-down version of the throughput analysis that I used to do as an Industrial Engineer.

Create Multipronged Attacks

Now, more advanced businesses will have complex funnels and strategies designed to retarget prospects and upsell existing customers:

In this case, the funnel also acts as an entry point into a separate email funnel: One that either tries to sell customers the same product that they overlooked the first time, or tries to upsell them a different product.

The reason why this is so effective is because, by having prospects opt-in (and provide their email) early in the funnel, that means we gain access to the emails of a huge number of people who are already at least somewhat interested in our product. And since sending marketing emails to prospects is effectively free, this means we have a pool of customers to sell to for no extra cost.

Additionally, if a prospect clicked an ad and then immediately bounced, it qualifies them for retargeting ads. These ads may be more aggressive, humorous, or direct in order to catch the prospect’s attention again, and hopefully convince them to buy whatever they overlooked.

Scientific Advertising

Lastly, an approach that I learned about effective advertising can essentially be described as natural selection for ads (note: this is mostly in the context of Facebook ads but the ideas can broadly be translated to any other media/platform).

To start, most ads can be described by 3 variables:

  • Image - The picture or visuals that make up your ad

  • Message - The language/angle/value proposition that you use in your ad copy

  • Audience - The target audience of your ad

The overall idea is that we will create many combinations of these variables and iterate on the most successful ones.

To start, we create:

  • 4x unique images (usually high-quality, eye-catching, provocative images)

  • 5x unique ad angles (big promise, personal story, specific claim, customer testimonial, etc.)

  • 30x audience filters (based on your customer personas, these filters should be some characteristic/interest/group that they belong to)

With these, we can make ~600 possible combinations of ads.

Prior to deploying these ads, decide what defines success - what click through rate, or cost per lead, do you need in order to generate a profit? Keep this in mind.

After deploying our ads and observing them for a few days, we can determine which combinations met our standard for success, and which did not. The ones that did not we simply remove from the mix.

For the successful combination that we have left, simply duplicate those and add some small variation to the image, angle, or audience to the duplicates. To my initial analogy - this is essentially a version of natural selection played out with ads.

By repeating this process over and over, we should find that we can keep systematically creating successful new ad combinations and keep sustaining success over time.