Part 2 - Vertical Scaling

Welcome to Part 2 of our Network playbook. Today, we're diving deep into vertical scaling - the art of selling more to your existing customers.

Specifically we’re aiming at boosting our customer Lifetime Value (LTV).

Let’s get started

Why Start with Vertical Scaling?

Here’s a maxim to live and die by.

It's far easier to sell to people who have already purchased from you than to new customers.

Do not chase new customers if you can sell more to existing customers.

Why? Because existing customers have already gone through the BATON process - Audience, Tribe, Offer. That trust has been built, making subsequent sales much easier than cold selling to a new lead.

(If, of course, your products and services are good! I’ll assume this is a given!)

This is why we're starting our scaling journey here. We're playing to our strengths, focusing on the customers who already know, like, and trust us.

Increasing Customer Lifetime Value (LTV)

The name of the game here is LTV - the $ value of each customer who comes through our funnel. If each customer is currently worth $500 over their lifetime with us, how do we increase this to $1,000? $5,000?? $10,000???

How you do this depends on your niche and your customers, so it's impossible for me to tell you the exact methods. But ultimately, it's about how we provide them more value. Come back to that principle, and you won't go wrong.

Specifically, we're talking about ensuring the delivery of that value by taking a greater stake in their success. Let's use an example:

Say we're helping people start a personal coaching business. We might have different levels of delivery:

1. A free checklist

2. A low-cost recorded mini-course

3. A core course + resource pack and community

4. A premium group mastermind

5. An ultra-premium 1:1 coaching with you

All of these steps provide the same basic outcome - starting your own coaching business. But as the levels increase, the probability of success increases.

At higher levels, there's more accountability, more supervision, more hand-holding, and (let's be honest) more polite but firm kicks up the backside when needed.

Extending Your Sales Funnel

The first step in vertical scaling is simply extending your sales funnel. Always be adding the "next step". There's really no limit to how far you can take this.

Let's use this prompt to come up with ideas at increasing price points and lower volume

You are an AI assistant specialising in business strategy and vertical scaling. Your task is to help the user extend their sales funnel with higher-value offerings. Use the following context and framework to guide your response:

Context:
Vertical scaling involves selling more to existing customers by providing higher-value offerings. This increases the Customer Lifetime Value (LTV) and deepens customer relationships.

Instructions:
1. Ask the user to provide the following information:
   a. Their current sales funnel (products/services and price points)
   b. The main customer problem(s) they're solving
   c. Their target audience characteristics

2. Based on the provided information, create a hierarchy of 5 additional offerings, each more expensive, lower volume, and more exclusive than the last. For each new offering:
   a. Provide a name and brief description
   b. Suggest a price point (relative to their current highest offering)
   c. Explain how it provides more value or increases the probability of customer success
   d. Describe its exclusivity or limited availability

3. For each new offering, explain how it logically follows from the previous level and leads to the next.

4. Suggest how these new offerings can be positioned to highlight their increased value and exclusivity.

5. Provide brief guidance on how to introduce these new offerings to existing customers.

This prompt will help you create a hierarchy of next sales, each more expensive, lower volume, and more exclusive than the last. At each step up you should be charging more and serving less people. By design.

Review them and start to add the ones you believe will add more value to your customers (and allow you to charge accordingly more!)

Mechanisms to Increase Basket Value

Now, let's talk about some specific mechanisms to increase each basket value

1. The Upsell: Look at your product and service line and see which ones lead into the next step up. When someone is in a buying mood, they're much more likely to make another purchase - it's a hot streak. This can be a One Time Offer (OTO) or a bump sale at checkout.

2. The Cross-sell: This is selling a complementary product or service that goes well with the first sale. Think chips (or, okay, fries!) with that burger.

3. The Down-sell: If they didn't take the initial sale, perhaps a lower-priced/value product or service can be offered. This is a way to help increase average LTV because something is at least being sold. Be careful not to rely on discounts too much though, as they can devalue your products.

Let's use another prompt to identify these opportunities

You are an AI assistant specialising in sales strategy and customer value optimisation. Your task is to help the user identify opportunities to increase basket value through upsells, cross-sells, and downsells. Use the following context and framework to guide your response:

Context:
Increasing basket value involves offering additional or alternative products/services at the point of sale. This can be done through upsells (higher-value options), cross-sells (complementary items), and downsells (lower-priced alternatives).

Instructions:
1. Ask the user to provide their current sales funnel, including:
   a. List of products/services with price points
   b. Any existing upsell or cross-sell strategies

2. Based on the provided information, suggest:
   a. 3 upsell opportunities, including:
      - The original product and the suggested upsell
      - How to position the upsell for maximum appeal
   b. 3 cross-sell opportunities, including:
      - Complementary products/services to pair
      - How these enhance the customer's experience
   c. 2 downsell opportunities, including:
      - When to offer the downsell
      - How to present it without devaluing your main offering

3. Identify 2-3 potential new products or services that could fill gaps in the current funnel, considering:
   - Natural progression of customer needs
   - Complementary skills or knowledge areas
   - Different formats or delivery methods

4. Provide suggestions on how to implement these strategies, such as:
   - One-time offers (OTOs) during the checkout process
   - Follow-up emails with exclusive offers
   - Bundle deals for cross-sell items

5. Offer brief guidance on testing and measuring the success of these new strategies.

This prompt will suggest upsell, cross-sell, and downsell opportunities within your existing products and services. It will also identify potential new products or services where gaps exist.

Remember, vertical scaling is all about selling MORE to the same people. It's about maximising the value of each customer you've worked so hard to obtain.

In the next Part, we'll look at horizontal scaling - selling to MORE people. We'll explore strategies to expand your reach and tap into new markets.