Product Splintering: How we Generated $188,674 from a Dead Email List and a Tired Offer

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November 14,2014 by
Ryan Deiss

In 2011 I stumbled across a business that was struggling.

They had a great product and were targeting a passionate, growing market.  Their sales copy was well-written.  They were using opt-in forms and squeeze pages and they even had an email list of 113,636 people.

But, despite all those things, this business was headed for disaster.

They were doing around $30,000 a month in sales but they were on a downward trend headed to zero when I caught them and drove sales to over $1,000,000 a month in sales.

***NOTE:  Last year at Traffic & Conversion Summit (which, this coming year, is February 17 – 19th, 2015 in sunny San Diego and has Early Bird pricing available until Friday, November 14th) I revealed our Customer Value Optimization (CVO) process to a crowd of over 3,000 digital marketers.  If you haven’t learned the CVO process, read this article before reading the rest of this one.***

Alright, back to our struggling business…

Here’s what they were doing wrong…

They would get a new lead and send them a little autoresponder sequence about their product.  If the lead didn’t buy after a few days, they would continue to send them a random broadcast email a few times a week about the SAME PRODUCT.

The email list was burned out.

They were tired of hearing about the same thing over and over again.  Sales were grinding to a halt and traffic costs were going up as new competitors entered the market.

The business was in danger of going under.

So here’s how we turned things around and, specifically, how we doubled sales in this business almost immediately after the acquisition.

Although they had an email list of 113,636 subscribers, they only had one product priced at $47 and no one was buying it anymore.

We knew we needed a new offer, but there wasn’t time to create a new product.  This business needed a cash infusion and fast.

So, here’s what we did…

Instead we took a bonus report that was bundled with the main product and offered it for sale for only $7.

Here’s the really important part…

I didn’t care about the $7 sales.  I wasn’t going to get rich selling a $7 report and I knew that.  I just wanted buyers.

Why?
Because according to my research, if someone takes that $7 “front end” offer they are 10X more likely to buy the main product.

The results were staggering.  Let me break it down for you:

  • List Size:  113,636
  • $7 Sales:  9,926 in 30 days (8% Conversion Rate)
  • 2,536 upgraded to the $47 main course

That’s $69,482 in sales from the $7 report and $119,192 in sales from the main course.

$188,674 in sales from a tired offer to a “dead” list!

Was it magic?  Not at all.

It’s a simple tactic we employ in all of our funnels called Product Splintering.

Here’s how it works.  Your core product or service is made up of many different components.

  • If you sell a guitar training course, it’s made up of smaller lessons and modules.
  • If you sell website design, it’s made up smaller services like logo design and wireframing.
  • If you sell golf clubs, they can be broken down into drivers, irons, putters and wedges.

Product Splintering is the process of breaking off bits and pieces of your core product and selling them a la carte.

Let me show you what I mean…

The company I acquired was selling a big, multi-module training course called 40 Days and 40 Nights showing you how to survive off the grid for at least 40 days and 40 nights.  As I said before, this product sold for $47.

From this one core offering we were able to splinter off over a dozen smaller products.

The one we got the best feedback on, called 170 Gallons a Day, was the one that we plucked out and sold as our $7 offer.

Product Splintering

It was a splinter of the main product and it was how we were able to generate $188,674 in sales from that tired email list.

The next month we splintered off another report and repeated the process.  And we did it again and again.

Ultimately, this “Product Splintering” process is what allowed us to grow this business from $30,000 a month to well over $1,000,000 a month in just over 12 months.

By changing up our “front-end” product, we could keep our marketing fresh and go back to the same list selling the exact same “backend” product month after month without burning out our list.

Those prospects that weren’t interested in one “splinter” of the core product would never see the offer for the core product.  This means that we weren’t exposing our list to the same old tired offer over and over again.

The only time they would see the core offer is if they were a BUYER.

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Splintering works for products and services too…

This isn’t just for information products.

There’s a guy on ebay right now that sells vintage guitars.  Every time he sells a guitar he bundles in some guitar picks.  But here’s the genius in his business.  He offers 100 guitar picks for just $8 as a separate “splintered” offer.

Brilliant.

Who’s going to buy a guitar pick unless they are interested in guitars?

He has over 91,000 reviews on ebay meaning he likely has a list of 100’s of thousands of buyers that are interested in guitars.  By splintering his product and lowering the barrier to entry he is able to acquire buyers.

splintering-image2

My business partner was, at one time, the world’s 3rd largest candle manufacturer.

He also sold the wax, fragrance oils and votives to people that made their own candles.  What’s the number one thing you need to make your own candles?

A wick.

So, he dropped the price of wicks (he sold them at dead cost) and moved them to the front end of his funnel.

The result?  He obliterated the competition as everyone started buying wicks from him.

And when he acquired a wick buyer — he had acquired a buyer that would naturally be interested in higher ticket items like waxes, frangrance oils and fancy votives.

splintering-image3

Shopify is one of the most dominant players in the ecommerce shopping cart space.  Their software is used to run over 100,000 ecommerce storefronts across the web.

One of the features of their core offer is the ability to sell products directly through Facebook.  But they also “splinter” that feature and make it available as a stand alone offer.

splintering-image4

By “splintering” their core offer they are able to promote to the same list of leads without making the same old offer.  And they can do this for each and every feature in the software package.

Pretty dang smart.

Here’s an example from a service business…

One of our clients provides search engine optimization and pay per click services to local businesses.  Their marketing consisted mainly of setting up a booth at a trade show and offering $500 to $2,000 a month SEO and PPC services.

Here’s a picture of them at a locksmith conference…

splintering-image5

But they were stuck.  Most local businesses aren’t willing to pony up 100’s of dollars a month on an unproven agency they just met at a trade show.  Too risky.

Sales were terrible.  They’d be lucky to pull 2 or 3 new clients out of a 5,000 attendee trade show.  (Let me save you the trouble of doing the math — that’s a bad conversion rate)

Asking a small business owner to hand over $2,000 a month is a bit like proposing on the first date.
So here’s what we did… instead of trying to sell the “be all, end all” SEO/PPC service we offered to get these business owners set up with a Google+ listing and Google AdWords for just $20.

There was no profit in this work… we just wanted to acquire buyers.  And this was a service that was already bundled with the main offer so it made sense to “splinter” it off and offer it at dead cost.

Here were the results…

  • 2,000 trade show attendees
  • 87 purchased “splintered” service for $20
  • 19 converted to $500/mo main offer
  • 23 more converted after follow up

Before they were converting an average of 3 new clients at $500 per month.  After they “splintered” the $20 offer they acquired 42 new clients at $500 a month or $21,300 a month from a single trade show.

That’s the power of lowering the barrier of entry with Product Splintering.

Here are a few more examples of Product Splintering

  • A web designer that sells logos
  • A dentist that sells teeth whitening at dead cost
  • A roofer that offers gutter cleaning
  • A website hosting service that sells website templates
  • A lawn care service that offers to fertilize off-season at dead cost

When you splinter your existing product or service, your promotional opportunities become endless, and that is how you make more sales from the leads and prospects you already have.

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Digital Marketer Lab Member Extra

Access your ‘How to Create Your First Lead Magnet’ Execution Plan in Digital Marketer Lab.

Build your Lead Magnet and put the processes in place to increase the number of customers you are attracting to your offers.

Click here to access your Execution Plan

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About Ryan Deiss

Ryan Deiss is the founder and CEO of DigitalMarketer. Over the last 36 months Ryan and his team have invested over $15,000,000 on marketing tests, generated tens of millions of unique visitors, sent well over a BILLION emails, and run approximately 3,000 split and multi-variant tests. Ryan is also a highly sought after speaker and consultant whose work has impacted over 200,000 businesses in 68 different countries. Connect with Ryan on Twitter.

View all Posts by Ryan Deiss