Remodeling Customer Value Optimization Sales Funnel – Transforming a Digital Business Model

Congratulations – You’ve just unlocked the most valuable marketing resource that we have ever put together in a blog post. You’re about to be introduced to customer value optimization.

This resource is designed for remodelers and contractors unfamiliar with Digital Marketing (DM for short) — and for those salty veterans who want a refresher course on the foundational principles of digital marketing.

It’s also a road map of sorts.

You see — all contractors and remodelers are at various levels of STUCK. There’s just so much to learn.

From beginner to seasoned pro – we are all looking to get better at what we do — always looking for an edge. It’s our defining characteristic.

This page is here to help you master this digital marketing stuff.

And by “stuff” we mean…

The System

It’s the same system Starbucks has used to corner the coffee market.  It’s the same system Amazon uses to dominate ecommerce. It’s how Best Buy, Beach Body (selling workouts like P90X), and Sports Illustrated have become household names.

And perhaps most relevant to you, its why Home Depot & Lowes are typically the first place people think of when considering all home improvement projects. Its also, perhaps most importantly, one of the main reasons why once large, impressive directory companies selling contractor leads (******List, ****Advisor, etc) has failed so bad over the past couple years.

This system works for small and enterprise level businesses. It works small remodeling contracting companies and multi-million dollar remodeling companies with beautiful showrooms. It works whether you sell complete remodeling services, remove and replace, refacing, partial remodels, minor or major…you get the point.

This system works because it exploits each and every aspect of the irrefutable law of business growth:

There are only three ways to grow a business:

• Increase the number of customers
• Increase the average transaction value per customer
• Increase the number of referrals per customer

We call it Remodeling Customer Value Optimization or RCVO.

Read this page carefully. Read it multiple times and commit it to memory.

This is the stuff they don’t teach in business school or when you get your contractor license.

Learn the Steps to Remodeling Customer Value Optimization

The following flowchart outlines the RCVO system.

Download a PDF version here

Print this PDF version and tack it to the wall next to your workstation. If you plan to execute this plan, you’ll need to reference it often.

When you’re learning new tactics like Facebook Advertising, Google Analytics, or SEO, you’ll need to constantly remind yourself of the RCVO process. Otherwise, you’re wasting time and money.

This is a warning: There is little profit in understanding, for example, Pinterest advertising or Search Engine Optimization (SEO) in and of itself. There is enormous profit in understanding how to apply these traffic strategies to the RCVO process.

Here is a flowchart of the Remodeling Customer Value Optimization system…

Here are the steps:

1. Determine Your Market Fit
2. Choose a Traffic Source
3. Offer a Lead Magnet
4. Offer a Tripwire
5. Position Your Free Estimate / Core Offering
6. Offer a Profit Maximizer
7. Create the Referral Path

Lean into this article and pay close attention — we’re about to reveal the EXACT process we use to sell products and services in multiple geographic markets with great success…

Let’s begin with…

Step 1 – Determine Your Market Fit

 

A Remodeler’s business is truthfully pretty simple on the surface.

We get paid to move people from a “Before” state to a desired “After” state.

In the “Before” state, the customer is discontent in some way. They might hate their bathroom or kitchen, have a leaking roof, feel that a space isn’t functional, or unhappy for any number of other reasons. I’m sure you’ve heard it all.

In the “After” state — life is better. They have a bathroom or kitchen they love, a dry home for their family, a functional space that they enjoy being in and just overall happier than when you started.

People don’t buy your cabinets or showers… 

They buy outcomes. They buy access to the mental “After” state.

A great offer will genuinely move a customer to a desired “After” state…

… and great marketing simply articulates the move from the “Before” state to the desired “After” state.

 

Most businesses that fail, particularly at start-up or when entering new markets, do so because either…

They fail to offer a desired “After” state (the offer is no good).

They fail to articulate the movement from “Before” to “After” (the marketing is no good)

90% of the time, a business doesn’t have a traffic or website issue, they have an “After state problem”.

Needless to say — getting clear on the desired outcome your offer delivers is fundamental to the success of your business.

Here’s how to get that clarity…

The 8-Question “Before/After” Grid

Before you create another marketing piece, no matter what the medium — go through this exercise.

Ask yourself these eight questions…

• What does your prospect HAVE in the “Before” state? What does your prospect HAVE in the “After” state?

• How does your prospect FEEL in the “Before” state? How does your prospect FEEL in the “After” state?

• What is an AVERAGE DAY like for your prospect in the “Before” state? What is an AVERAGE DAY like for your prospect in the “After” state?

• What is your prospect’s STATUS in the “Before” state? What is your prospect’s STATUS in the “After” state?

For example, we’ve done some work for a company that offers a product and services to families with a wheelchair bound member.

It’s a very similar process to traditional remodeling, accept all cabinetry is modified to be more easily accessible to the handicapped family member.

It makes kitchen and bathroom more accessible to handicapped individuals.

But it does so much more than that.

I grew up with a grandfather who lost his legs during world war 2. He was traveling through a field and a soldier in his group stepped on a landmine spraying sharp metal objects in an upside cone shape. The end result was my grandfather losing both of his legs at the age of 18. So, I’ve grown up seeing what is like for someone in a wheelchair struggle to navigate daily tasks that come as second nature to us.

I can assure you it is a frustrating experience.

Families who work with this company have their lives transformed…

1. From HAVING hard to reach, inaccessible cabinets to a kitchen you can reach every cabinet in.

2. From FEELING embarrassed and frustrated to confident and in control in your own kitchen or bath.

3. From having an AVERAGE DAY with a relying on others to help you eat and bath to eating and bathing when you choose, on your own.

4. From a STATUS of a “helpless in the kitchen” to the “super-cook”.

The Copy is the Result

Average marketers only articulate what a customer will HAVE if they purchase their product or service. Great marketers speak to how a customer will FEEL, how their AVERAGE DAY will change and how their STATUS will elevate.

With this simple eight-question “Before/After” Grid, any half-decent copywriter will be able to create a marketing message that will have an impact.

The marketing copy writes itself now that you are clear on the “Before” and “After”…

“Dinner time with your family doesn’t have to be a frustrating, embarrassing experience ever again.”

“Say goodbye to relying on someone else to grab a glass or plate for you. You’ll actually be able to easily reach every cabinet in your kitchen.”

“You’ll feel like a “Super-Cook” as you easily navigate your kitchen to cook for your family without any assistance needed.”

Do you see how this copy clearly articulates how the service and products will move a handicapped individual and their family from a “Before” state of frustration and unhappiness to an “After” state of joy and happiness within their own home?

It’s powerful stuff.

But understanding how you will transform your prospect from a “Before” state to a desired “After” state also impacts…

How much you can charge 

What is the distance between the “Before” and desired “After” state?

That distance is called VALUE.

Want to charge more for your products and services?

• Simple — create a greater perceived distance between the “Before” and desired “After” state by either:

• Offering a more relevant product or service (better offer).

• Articulating the movement from “Before” to “After” differently or more clearly (better marketing).

When rolling out a new service or product, expanding in an existing market or moving into a new market — keep it simple.

Get clear on your “Before” and “After.”

If you’re not able to clearly articulate how you can take your prospect from the “Before” state to a desired “After” state — you may have an issue with your Market Fit.

There may be nothing more important how you fit in your market, simply because every other part of the process is dependent upon having a group of willing and able buyers which are defined in this step.

In the next step, we’ll dispel the myth behind traffic generation…

(By the way, I’m teaching a FREE 6-Part course that goes into even more depth about this process called Double Your Sales. If this stuff interests you — join me by clicking here.)

Step 2 – Choose a Traffic Source

This might shock you but you DO NOT have a traffic problem. Like, at all.

You might have a business model problem, an offer problem, or a measurement problem.

But you DO NOT have a traffic problem. And you DO NOT have a website design problem either for that matter.

Here’s why…

What if I told you that every time you get a visitor to a web page you make $10 in profit? Could you get traffic to that web page?

Heck yes you could.

You could pay up to $10 to get a visitor to that web page and still break even. In fact, you’ll be able to pay more than $10 to get a visitor to that page when you truly understand the whole of Remodeling Customer Value Optimization.

A wise businessperson once said,

“He who can spend the most money to acquire a customer, wins.”

And Jeff Bezos, Founder and CEO of Amazon.com, once said (in a tongue-and-cheek warning to his competitors)…

“Your margin is my opportunity.”

The lesson we’ve learned is that once you understand RCVO, you become unstoppable. Amazon.com will sell you something, right now, on the thinnest of margins knowing that acquiring you as a new customer, selling you more, and selling to you more frequently is how they become unstoppable. And it’s exactly what they do.

Let me repeat this because its that important: Traffic is not a problem.

Google, Facebook, Pinterest, Twitter, Yahoo, Bing, just to point out the obvious, are lining up to sell you traffic.  Your Search Engine Optimization agency wants to send you more traffic. Your Pay-Per-Click agency would love nothing more than to send you more clicks. Every news website in your local area would be more than happy to post a banner with your name on it all over their homepage.

You simply need to understand 2 simple things:

• How to measure what traffic is worth.

• How to extract maximum immediate valuefrom that traffic.

Tactics are worthless if you don’t understand the RCVO process.

Odds are, this is why you have ever grown frustrated with any previous digital marketing efforts you may have tried. You have no context. You have no system.

We drive clients traffic through tactics like blogging, content marketing, Google Search, Google Adwords, Facebook Ads, Pinterest, or email marketing every single day, but first they need to understand the system.

The goal, no matter which traffic source you choose, is to drive prospects into the RCVO Sales Funnel.

Become a master of a targeted, steady traffic source. Stay focused on that traffic source and, once mastered, add a second and third traffic source.

These traffic sources are dictated by where you customers are currently hanging out. There are very sophisticated ways to figure this out without wasting tons of money.

It may include…

• Email marketing
• Social Advertising (Facebook/Twitter/YouTube ads, etc)
• Banner Advertising
• Blogging
• Organic Social Media
• SEO

Your traffic strategy (if the goal is acquiring new leads and customers) begins and ends with driving visitors into the RCVO funnel.

It begins with the Lead Magnet…

Step 3 – Offer a Lead Magnet

The next two sections (Offer a Lead Magnet and Offer a Tripwire) show you how to grow your business through the first method of business growth, increase the number of customers.

The Lead Magnet is an irresistible bribe that gives a specific chunk of value to a prospect in exchange for their contact information.

Make no mistake, although no money changes hands, this is a transaction. And, it is often the first transaction you will have with a prospect.

You will need to provide tremendous value with the Lead Magnet.

The Lead Magnet is usually offered on a web page called a landing or squeeze page that is optimized to convert even cold traffic into leads.

The landing page doesn’t need to be fancy. Here’s a high-performing Lead Magnet landing page from IdeaLocal…

The Lead Magnet exists to increase leads. Because the Lead Magnet is the very top of the RCVO Funnel, increasing opt-ins here will pay dividends throughout the rest of the system.

But all Lead Magnets are not created equal. The best will convert north of 30% – 40% of visitors into leads and you’ll be relieved when I tell you that the highest performing Lead Magnets have one very important thing in common…

Specificity: The Key to Getting More Leads

What irresistible bribe could you offer in exchange for a prospect’s contact information?

The good news is that you DO NOT need to create something that is worthy of an award in literature. In fact, we’ve found that the more laser-focused your Lead Magnet is — the better it will convert.

So, for example, this is NOT a good Lead Magnet…

There is no offer in this Lead Magnet, much less a specific one.

But this Lead Magnet isn’t much better.

There is an offer but it isn’t tailored to a specific audience and doesn’t add much value. I know because we ran it for them and it didn’t perform well…

The prospect didn’t want to just get random quotes from contractors they didn’t know. Several companies have already ruined that model. They want to solve a problem. They want an outcome to something specific.

Contrast the prior two Lead Magnets with the specific problem that is addressed in this Lead Magnet…

A Lead Magnet that solves a specific problem for a specific segment of the market will generate more leads…This particular lead magnet offers a quick way to get a design style. A common question that this customer received.

…and more leads means more Tripwires.

Step 4 – Offer a Tripwire

If you understand and execute on this step, you’ll IMMEDIATELY be ahead of most of your competitors in your market.

Remember, our first goal is to increase the number of customers. So far, we have only generated leads through the Lead Magnet. We still haven’t generated new customers.

The Tripwire offer is designed to lower the barrier of entry to become a customer of your business.

This is going to seem a bit foreign because we live in a world of Free Estimate and Free Quotes, but I assure you when done properly, this  will not only convert more customers, but will weed out people who’s only purpose is to waste your time.

The Tripwire is an irresistible, super low-ticket offer (usually between $20 and $200 that exists for one reason and one reason only… to convert prospects into buyers. For remodelers selling high-end, custom products and services, Tripwire offers as high as $500 can convert well, also. But aren’t necessarily required.

The goal of the Tripwire is to fundamentally change the relationship from prospect to customer. The conversion of a prospect to a customer, even for $1, is a difference maker in growing a business.

The key is to make a Tripwire Offer that leads are unable to resist.

The most common way to make the Tripwire irresistible is by selling it at cost and, in some cases, at a loss to you. Now before you jump out of your seat, understand that you are already likely doing this with Free Estimates and Quotes. The cost of gas, travel time, your time, estimating time, it all adds up pretty quick and its completely wrong to do.

Important —  you are not trying to make money from selling Tripwire Offers. You are trying to acquire customers because there is nothing more valuable than a list of buyers and no one easier to sell to than an existing customer.

When you understand the rest of the Remodeling Customer Value Optimization process, you will understand how the Tripwire Offer is the single most powerful addition you can make to your business — even though you make no direct profit from it.

To put things in perspective, here is a classic example of a Tripwire Offer comes from Columbia Records from years ago that really shows the power of the Tripwire…

Columbia House took over the music market by making an absolutely irresistible offer (13 records or tapes for $1) because they understood that acquiring a list of buyers is the name of the game.

Types of Tripwire Offers

 Existing Services can make fantastic Tripwire offers…

or pieces of software…

and paid webinars like IdeaLocal’s Black Friday Bootcamp…

And lastly, an a la carte service like a deeply discounted floor or appliance add-on from a refacing remodeling company which is comparable with this ridiculously cheap domain registration service works wonders at acquiring customers…the money is made elsewhere.

Tripwires are all around us.

It’s the ridiculous flat screen TV deal at Best Buy. Or the rock-bottom price of a Kindle Fire. It’s the $20 for $50 worth of Mexican Food Groupon offer. It’s every service offered for a measly five bucks on Fiverr.

The strategy behind the Tripwire is simple:

Convert the maximum number of Lead Magnet leads into paying customers, even at the expense of your profit margin, with the understanding that acquiring a paying customer will deliver profit through the next three steps:

• Core Offer

• Profit Maximizer

• Return Path (Referrals from Existing Customers)

Step 5 – Position the Consultation & Estimate

You likely already have a Core Offer. It’s your flagship service. Its why you are in business.

Most businesses get nowhere by making Core Offers to cold prospects. You’ll see your Core Offer sales explode with the addition of the Lead Magnet and Tripwire Offer.

After all, you’ve already had two successful transactions with your prospect.

This is why it’s critical to over deliver with the Lead Magnet and Tripwire and move them up your value ladder.

Again, this is how you become unstoppable. You build a system in which you can spend more to acquire a customer than your competitors because they don’t truly understand how to convert customers at a high rate. They rely on sales consultants and designers, which are great. But there is a HUGE market that isn’t ready to talk to those people. And when I say huge market, I mean likely much larger than who you reach already.

Your competitors are desperately hoping that everyone who they speak too wants their core offer and is asking for a huge investment from someone whom they haven’t engaged at all. This is poor form of dating and it fails more than it wins. Even when it does win, its typically followed by buyers remorse and “won’t go away” remodeling customer.

Remember, as Jeff Bezos says, your competitor’s margin is an opportunity. It is your opportunity to, for example, spend more on traffic acquisition, conversion rate optimization or increase the value of your offers because when you do you get more leads, leading to more tripwires, leading to more customers.

It might stun you to find out that many of the most successful businesses in the world make no profit until they reach the next two stages, Profit Maximizers, and Return Path.

Here’s where things get very interesting…

Step 6 – Offer a Profit Maximizer

 

The second of the business growth methods is to increase the average transaction value per customer. The Profit Maximizer does just that. The profit maximizer is a piece of content that price conditions your prospects prior to your arriving.

Most businesses don’t have Tripwire Offers and they don’t absolutely don’t have Profit Maximizers. They live and die by waiting for the reaction of a prospect to their price on the spot.

Once a customer is price conditioned, the profit maximizer allows you to easily undercut the price condition and upsell profit heavy products.

This is where most remodelers struggle and you won’t. They end up price haggling with a prospect over the core product jeopardizing initial profit margins. Your negotiations should be centered around profit maximizer upsells with your core service safely in place as the customer already expected a number around your price.

This type of Profit Maximizer is called an immediate upsell…

Best Buy sells laptops and plasma TV’s (Core Offers) on wafer thin margins you can’t resist and makes it up on warranties, installation, and Geek Squad support (Profit Maximizers). The customers are drawn into the sale of the laptops and flat screen TV’s because they are price conditioned on those items. Customers may come in to see kitchen cabinets and leave with a full kitchen remodel perhaps doubling the average customer value!

Another example of this you see every day is with Amazon. Amazon makes a Cross-Sell Profit Maximizer offer when they show you, “People who bought this product, also bought that product” to increase the Average Basket Value, also known as maximizing profit.

But Amazon also makes a Bundle Profit Maximizer offer with their “Frequently Bought Together” offer…

Any offer you make after the core service is a Profit Maximizer.  Because the single biggest expense most companies will incur is the cost of acquiring the customer (which is the job of the Tripwire Offer) and everything else increases the customer’s immediate and lifetime value.

What could you bundle with your Core Product or Service? Flooring? Backsplash? Upgraded Vanity Tops? If a customer came to you and said “

Find your Profit Maximizer and you begin to become unstoppable.

But there is one more way to grow…

Step 7 – Create the Return / Referral Path

The last way to grow a business is to increase the number of transactions per customer. Quite simply, the question you need to ask is “how can I earn more money per each existing customer”.

Enter the Return Path.

The goal of the Return Path is to have frequent, strategic communication with your existing customers that leads to additional sales from that particular account.

Because you have received their positive experience with you, and you’ve already acquired them as a customer, you have the ability to continue marketing to them for no additional costs.

You can offer new opportunities to bring your existing customers back into your business because you have permission to market to them. This is where your referral strategy becomes active.

The Referral Return Path is anything that brings the customer or prospect back with more people who can buy.

The Referral will be treated like its own product. You will create value added for it and pitch it to your existing customer base as if they were a prospect. The only difference, and a big one at that, is that you can skip the first 4 stage of the funnel and move directly to profit maximizing with this group.

• Referral paths can include…
• End of Job Campaigns
• Organic Social Media (like Twitter, Facebook, and LinkedIn)
• Loyalty Programs
• Content Marketing (Need Content Marketing training?
• Outbound Sales Calling
• Ad Retargeting

 … but none is more powerful than automated email follow-up sequence.

The single most impactful action you can take right now is to set up what I call The Referral Machine.

The Machine is the Ultimate Referral Marketing Gameplan and it is… unfortunately… far too involved to cover here at this point.

If you want to learn more about how we do referral marketing (and get more in-depth teaching about the Remodeling Customer Value Optimization process we covered here today)…

You can access the FREE FUNNEL DOUBLE TRAINING PROGRAM HERE…

This training is taught by me and contains 6 Lessons, each of which is designed to (yep… you guessed it) double your sales…

Lesson 1 – The Formula – There is a formula for business growth, and in this lesson, I’ll give it to you.

Lesson 2 – Perfect Product Positioning – Even if you already have a flagship product or service, knowing how to perfectly position your offer so it gives your prospects EXACTLY what they want is the simplest way to increase sales.

Lesson 3 – Doubling Your Leads -You’ll discover the three vital elements of any lead magnet, and see proven examples you can swipe and deploy for your brand…

Lesson 4 – Doubling Your Conversions – In this lesson, you’re going to discover the most under-utilized business asset that can literally double… even TRIPLE your conversion rates overnight. And no… that’s not an exaggeration.

Lesson 5 – Doubling Your Profit – Do you know the three-word phrase that can DOUBLE your average profit per customer? I do, and in this lesson, I’m going to tell you what it is and how you can implement this “Magic Question” in your business.

Lesson 6 – Referral Selling Secrets – In this lesson, I’ll show you how to setup an “Invisible Selling Machines” in your business, so you can deploy automated follow-up to DOUBLE your sales frequency… (<< This is where you’ll learn our email marketing system).

This course is ABSOLUTELY FREE and, if you’ve read this far, I know you will be absolutely stunned by the value you will receive from these lessons.