Increase Your Product's Price And Conversion Rates With Value Stacking
Updated: Nov 20, 2020
Over the years in my experience in e-commerce, and as well as import and export trading wines and liquors, I've learned that it is useless to compete on having the lowest price.
Sure, you have a product or a service, and your only advantage is that you’re cheaper than the competition. And you do get some views only on the basis of your products or services are cheaper. But that's about it.
What happens if you have the lowest price, but then a competitor is able to set their price lower than you? And are you going to set the price even lower than your competitor?
Imagine you’re selling a digital clock and Amazon comes out with its own version at an even cheaper price point, or your supplier decides to start selling the products themselves?
In all honesty, there's no advantage being one of the cheapest in the market. Selling too cheap can also hurt your conversion rates since people associate the product with being low quality.
The only way of being the cheapest works if you are able to sell in large volumes like McDonald’s or IKEA.
For the majority of the companies, I myself included, it's much better to compete based on value. The definition of value here means to increase the usefulness of your products or services to your customers.
By offering more or better value means that customers are more willing to buy at a higher price. And by selling it at a higher price, it meant that you will have more margins when you are trying to acquire a customer.
There isn’t much difference in the e-commerce space these days. Most supplements and beauty products are from the same factories. Most physical products are coming from the same factories in China.
But you can differentiate yourselves by having pretty packaging or adding a logo to the product (for example).
But there’s one way you can substantially add more value to your product that not many people are using (even at this point of time in writing).
By turning your product into an offer.
Doing this will definitely increase your conversion rates, offer more value to your customers, and you’ll be much more profitable. And the best part? It doesn’t take much effort.
Subconsciously, everyone intuitively knows what selling-on-value means. But however, many fail to implement its principles.
Value is the trade-off between the perceived benefits derived from your business solution and the price the cust is willing to pay to acquire it.
Here’s an example.
Let's say you’re shopping for a brand new Mercedes-Benz S-Class Coupe.
For the sake of simplicity, we are going to price the cars at the same value and assume that both are exactly the same.
Here, 2 dealerships are offering the same car. Naturally, your decision in purchasing is going to boil down on the price, reviews of the dealership, and maybe your relationship with the salesmen/saleswomen.
What if one car dealership increased the value by turning it into an offer? What if they added additional items that didn’t cost them much?
Note that I just made those details up. But you get the idea. So let's say if everything else is equal, which dealership are you going to buy it from?
DJ Jina Car Dealership
It’s a win for the customer because they’re getting more value in their purchase as they knew that it also comes with all these "packages" even though technically they aren't free.
Another example here. Would you rather purchase an air ticket to Bangkok from a website that only sells air tickets at a price of $150, or a website that sells air ticket to Bangkok AND 3 days 2 nights hotel room inclusive at a price of $450 which have your trip and accommodation covered without any issues?
It's a psychological thing in the minds of the customers.
That’s a real-life example.
But how does this apply in the world of e-commerce?
Let's say Chloe is interested in purchasing a protein powder specifically for weight loss. She does a few searches and has narrowed it down to two choices:
Let’s take a look at what Shop X is offering.
As you can see here, it's a straightforward purchase. One pack for $24.99.
The large majority of e-commerce transactions are done like this.
Now let’s see what Shop Y is offering. If Chloe is making a direct comparison, then she’ll compare the reviews and ingredients to see which Protein is better.
But wait…it’s NOT a direct comparison.
In this case, Shop Y had created an offer.
Clearly that Shop Y ($49.76) is a much more expensive option as compared to Shop X ($24.99).
Chloe could simply go for Shop X at a cheaper cost of $24.99 with just the protein shake.
Or Chloe could go with Shop Y by paying an extra $25 more and get the protein + Recipe book + 28 Day Challenge Access + Workout Plan eBook + Facebook Group Access + Free Shipping.
It's a no-brainer which shop helps to solve Chloe's problem more.
In fact, it's not even a fair comparison. Shop X only offers protein shake, while Shop Y offers protein plus a ton of free goodies.
By turning something into an offer,
You have a higher conversion rate.
You can charge a higher price point.
Higher customer satisfaction because you are helping them to solve a problem.
You are no longer directly competing against other people.
Now, I understand that there will also be other marketers who will also create an offer as well. But do take note that every offer that is created comes in many different ways. So there isn't really a direct competition among offers.
Offers created are more of a needs and wants.
However, if you are going to sell exactly like how Shop X sells, then your biggest competition is going to be Amazon.
It's a well-known fact that people love to compare prices, and chances are they can find a similar product on Amazon for half the price.
But when you turn your product into an offer, it's no longer a direct competition. From there, you will find that you will have no problems with pricing it higher.
Examples for Value Addition
First of all, do ensure that the product is profitable or not first. Only after it proves profitable should you invest your time and money into creating value adds.
#1. A Simple Physical Product
For example, you’re selling one of those weight loss detox tea products that Instagram influencers love to promote.
You can consider adding a cheap item to complement your tea product.
I searched Alibaba and found this tea infuser. It could be useful for those who are drinking detox tea. The initial cost for this tea infuser is cheap too.
Now our tea product has this value add: Our "insert-your-own-brand" Tea Infuser (Value: $15)
Here, you can even customize your own logo onto the product to further increase its value.
Notice that I source the products via Alibaba, and not from AliExpress. The reason being is by sourcing from AliExpress – your initial tea product, and your tea infuser will be shipped separately, in which both products will not arrive together to your customer's destination.
One thing to take note of is sourcing from Alibaba would require you to pay your products upfront, get it shipped, and store it in a warehouse. One good place to store your products is dollarfulfillment. They are based in the US. How they work is basically they will store your products for free. Each time someone fires an order, you can request for dollarfulfillment from just $1 onwards. The prices are usually based on the size and weight of the products.
And also, by sourcing from AliExpress via dropshipping, you are unlikely able to ask your supplier to customize your own logo for your products (unless you share deep relations with them).
In short, this example may not work very well if you are doing dropshipping.
#2. A Step-by-Step eBook
Do you have information or knowledge that can help your customer solve their pain point? You can turn this information into an eBook or a Guidebook.
Remember that your eBook or guidebook design and presentation matters.
I'll share two examples of a free guide book.
The first one looks like a throwaway eBook.
It’s only a value add if the customer wants it.
The second one has a much better design and presentation. It legitimately feels like an eBook that could be sold on Amazon.
So how do you create an eBook? It doesn't sound as far-fetched as you think!
The content is pretty straightforward. If you have strong expertise in that niche, you can write it yourself. You can hire someone to write it, or find free content using private label rights (PLR) articles.
As for the designs, you can hire a professional. Freelancers websites such as Fiverr and Upwork are areas that you can easily find professionals to come up with pretty good designs.
People love things that they can print out.
When someone purchases a product from you, you can include one of the above (or even more) to complement along with your product.
This doesn't cost you much, but it is useful to use it like a "freebies" to entice your customers to buy from you.
Now The Action
Let’s say you are selling a portable vacuum cleaner.
Most entrepreneurs would probably buy it for $18.65 and sell it for $49. It can work, but the margins are going to be tight with paid traffic.
Let’s turn this portable vacuum cleaner into an offer.
How can we help the customer to improve their cleaning?
#1. A Cheap Physical Product
A portable vacuum cleaner is excellent for cleaning. But as you all know, there are some narrow areas which portable vacuum cleaners are not able to reach. So a solution here is to introduce a micro vacuum brush cleaner to complement together with the portable vacuum cleaner and make it into an offer.
As I've mentioned earlier above, if your main product is from an external supplier and your secondary product is from AliExpress, you will have difficulties in shipping the products together.
However, if both of your products are from AliExpress, it will be a good idea to check with your supplier whether does he/she have both the desired products that you want, and request to pack and ship them together.
#2. eBook – The Perfect Home Cleaning Solution
What the customer really wants is a guide on how to effectively use the potable vacuum cleaner. What else can help them? How about an eBook that gives them tips on how to use the portable vacuum cleaner in an innovative way.
The content + design is probably $100.
#3. A Cheatsheet
Maybe perhaps if we could create a PDF that gave someone a daily checklist on what are the important areas to clean around the house?
You can either:
Increase your price.
Keep the price the same, and get a higher conversion rate.
As times goes by, traffic costs are going to keep increasing. This is something that no one could change. More and more people are embracing digitalisation into their businesses.
If you can’t lower your costs, then focus on increasing your value.
Now is a great time to start implementing that tactic because not many others are doing it. Don't procastinate. 5 years down the road, you'll be telling yourself that how you wished you would have started today.
As far as implementation, keep it simple.
When someone orders something from you, automatically send an email with “Here’s Your Free Goodies”.
Woolah, the email links directly to the ebooks. No login bullshit.
Instead of creating a value stack on the front end, you can offer bonuses if the customer performs a specific action.
The standard classic is free shipping when you order $50+ or more.
Order $50 or more and you get a free item.
Online marketing is going to become more competitive over time. Traffic costs are going to be more expensive than ever. Honestly speaking, the barriers to entry have never been lower for someone to come in. It's people or so-called gurus who underestimated it.
How can you compete in an increasingly competitive world?
It’s simple – offer more value to the customer.
Solve their problems better than your competitor can.