Our Proven Business Model That Has Worked For Thousands
Finding The Right Business Model Is Key To Online Success ~ Ryan Nelson
Why Do More Home Business Entrepreneurs Have Success With Our System?
As you’ve already begun to notice, Vertical Rising goes beyond the scope of any other system, empowering you with the right mindset and knowledge to build a real, complete, successful Internet home business. Unlike other “systems,” VR makes sure you clearly understand that not all Internet businesses are the same and helps you know ahead of time if what you’re going to be selling can actually make the level of income you want.
So let’s start with some basics. Building a profitable Internet “sales funnel” requires more than just one product. As you have read, Vertical Rising introduces you to a carefully planned series of products that help you profit from all levels of your Internet traffic. Many new Internet entrepreneurs take a year or more to assemble a winning combination of the right products, and without a system like VR most are never able to do so.
For the next few minutes we’ll be exploring exactly why it really matters which types of products you choose to market in your business. You’ll start to see precisely why you’ll need to follow our proven Business Model, The Business Model responsible for creating the most six, multiple-six and even seven figure earners in the industry, period.
Retail vs. Opportunity Products
Most Internet marketing programs or home business “systems” don’t take the time to explain what you’ll be marketing (if they even have anything) let alone teach you the difference or importance of various products. So let’s get clear on a few concepts right now so you can fully understand how products affect your income potential.
Read the following article from a personal blog post:
“Product Matters: Why Some People Get Rich With Online Marketing”
Your Product Line is just one component of your online marketing business (the way we teach this stuff there is Traffic, Funnel, Filter, Follow Up, and Product Line) and we are not going to go so far as to say that it’s the MOST important, but it does have a unique place in the process of your business, for three reasons.
1. Your product is the multiplier that all other efforts are compounded by in computing your profit. You could say that the profitability of your online business equals (Traffic + Funnel + Filter + Follow Up) multiplied times the profitability of your chosen product line.
2. Assuming you’re a reseller, affiliate, consultant, etc. (ie not the manufacturer) it’s the one part of your business you don’t control and you are stuck with what another company gives you to work with, so you better be pretty confident in the company you’re relying on.
3. Your product line determines the other key factors…
- Traffic – What type? How much? What will you pay?
- Funnel – Who builds it? How much content? How much is revealed vs held back? How deep does it go? How long is it’s tail?
- Filter – What is your Filter mechanism? Is it cost-based, skill-based, experience-based?
- Follow Up – Who does it? How automated is it?
You can’t really answer any of these questions until you know what you’re marketing. So let’s get clear on the issues around choosing a Product Line so we can move on to other things.
Basic Product Types
There are lots of “either/or” ways to classify products. Physical vs Digital, Online vs Offline, Mom and Pop vs Big Brand, Staples vs non-essentials, etc.
But in discussing product line selection for building an online marketing business I want to divide the spectrum along a different line…
Whether you consider yourself a marketer or a salesman (two very different things), the product lines you may choose to sell or market will fit into one of two categories (or sometimes both as we’ll see). These two categories are what I call Retail Products and Opportunity Products.
Retail Products are things you “use” or “consume”. Cars, soap, cell phone minutes, and cookies are Retail Products. You buy them because whatever they were designed for is something you want to do, ie get to work, clean your skin, talk to people, eat dessert, etc.
On the other hand, Opportunity Products are something you buy (or perhaps “invest in” is the better word), because of the opportunity to achieve some result that is contained in the product. There are different-types of opportunity products but usually they fit into one of a few categories:
• Business Opportunities (franchises, network marketing distributorships, online marketing systems, etc.)
• Romance Opportunities (dating services, dating websites, etc.)
• Personal Growth Opportunities (seminars, weight loss pills/equipment, continuing education, etc.)
Some Opportunity Products are Retail Products with an optional “opportunity” attached to it (what I call ‘Hybrids’ – think Herbalife vitamins). With Hybrids you might not even know there is an opportunity attached (“It cured my tennis elbow… who knew I could have been making money for all the people I talked it up to?”)
On the other hand what we call Pure Opportunity Products would make no sense outside the opportunity they present. Think of owning a McDonald’s franchise (a franchise is technically a product)… nobody’s gonna pay a million dollars just to be able to have free Big Macs whenever they want. A McDonald’s franchise investment makes no sense outside of the opportunity it presents to make money.
Another example of a Pure Opportunity Product is a matchmaker service. It wouldn’t make sense to pay someone to send you profiles of eligible men or women were it not for the opportunity of romance.
Retail Product Pricing
One more important distinction between Retail Products and Opportunity Products is the way they are priced. This is very important to us as marketers because it affects our profit potential.
Retail Products are usually priced by a simple formula: (cost to produce + cost to distribute + profit margin = price).
It’s common sense… take what a product costs to make and distribute then tack on your profit and that’s what you can sell it for. A number of market factors, primarily competition from other companies with similar products, usually keep the profit that gets tacked on pretty thin. Companies that manufacture and distribute retail products can rarely just add a bunch of profit into the price without losing market share. But what they lack in pricing flexibility they often make up for in volume.
Companies that do a high volume of product sales win on two fronts… they can survive on less profit per item AND they can usually get better pricing on the materials and/or labor needed to produce or sell their product. Think Revlon (cosmetics manufacturer) and Wal-Mart (vendor of most everything). The little guy can’t compete.
Volume matters even on higher-priced retail products (cars, boats, houses) where you’d think the profit per item would be higher. Quite a few of these type of items have to be sold per month for a company to make much money, particularly because the distributorships for these products typically have high overhead (think car dealership). And the salesman (or affiliate or reseller) usually ends up with peanuts.
The reason all this matters to most of us reading this article is because it’s just as true on the Internet as it is off.
For online and offline marketers – most Retail Products have a low value per item.
Opportunity Product Pricing
Opportunity Products are priced according to a different formula from Retail Products.
Something more like this: (cost to produce + cost to distribute + IP + desire)
Let me explain.
The first two factors are the same… cost to produce and cost to distribute. The good news with most Opportunity Products is they tend to be much easier (and less costly) to physically produce and distribute. This gives us an immediate pricing advantage over Retail Products that are rooted to their “hard cost” in setting the price (and profit margin).
Many Opportunity Products are service-based and have little to no “production” or “distribution” cost at all. Think dating services, plastic surgery, education, or a franchise concept (which is basically just an operations manual and a set of legal agreements). While other Opportunity Products are able to spread their production cost across several customers at once (think seminars and education).
Now let’s look at the last 2 factors in Opportunity Product pricing. This is where it gets exciting for marketers.
IP and Desire
IP is short for Intellectual Property. Defined loosely… IP means what makes your product special or difficult to duplicate. IP is something that the product creator knows that others don’t (eHarmony’s “matching” algorithm), or is willing to do that others aren’t (Apples’ attention to design), or that competitors are unable to use because of a patent or other protection (most prescription drugs).
Most importantly for us as marketers IP can be charged for. If your product is difficult to duplicate then people have to buy it from you. If they have to buy it from you then you control pricing (because you have less competition) and can (and in most cases should) price your product higher accordingly.
Finally you have Desire. How badly do people want what you sell? The most unique and impossible to duplicate system in the world for teaching azaleas to read Russian is not likely to sell for much. No one has any desire for that. But figure out a non-duplicatable way to prevent male-pattern baldness, or augment female breasts without surgery, and you’ve got yourself an Opportunity Product you can charge out the wazoo for!
Obviously Retail Products also have a ‘Desire’ component, but it is much harder to upcharge for it since these products have more costs of production and distribution and more competition, though there are some exceptions we can learn a lot from. Companies like Apple Computers and Mercedes-Benz clearly are charging for consumers’ Desire for their products and some sort of proprietary “uniqueness” (IP) but I would argue that that part of their pricing is actually more like ‘Opportunity’ Pricing and perhaps their products are actually Hybrids.
Remember Opportunity doesn’t always mean making money… I’m suggesting that someone buying an iPhone is paying for the “opportunity” to appear a certain way and perhaps even attract others who appear that way. You don’t pay an extra $200 for a phone because of the touchscreen or the app store.
Ditto driving a Mercedes… just about everything that makes Mercedes a great car can be found in some other car with a lower price tag.
But it’s not a Mercedes.
In fact you could even say that if you do have your heart set on creating a Retail Product and trying to compete with the big boys then you better create a brand with an ‘Opportunity’ built into it to differentiate it (and charge more for). Something like Under Armor comes to mind – a guy figured out that if he gave his stretchy t-shirts to athletes then others would pay a lot more for the ‘Opportunity’ to dress like an athlete.
Interesting concept that warrants another article I suppose.
But back on track…
Obviously the higher the IP and Desire components of our product line the higher it can be priced relative to the hard cost of creating it.
So what does this mean for us?
There’s a lot more that could be said about the difference between Opportunity Products and Retail Products but for now let’s just say that Retail Products tend to be a tough way to make a living online. You have to do so much volume and the competition is so stiff that there’s hardly any margin to pay affiliates (which is what you are unless you have your own product).
Hybrid Products are what we would expect… Better for marketers because of the pricing flexibility that comes from the Opportunity component, however still with the hard costs and competitive factors of retail products.
Leaving aside the idea of creating your own Retail Product (with an ‘Opportunity’ brand you can charge extra for) Opportunity Products are where the money is online… And if you look at the tens of thousands of people around the world who are earning a good living online over 99% of them (by my unscientific estimate) are doing so with Opportunity Products – the purer the better!
Now let’s be honest, some people like to take shots at Opportunity Products… and the companies that make or sell them. Some people scoff at the idea of paying $2500 for an Apple Computer. Others think the drug companies are all crooks. And the whole concept of franchising was put under legal review in the first half of the 20th century.
Myself I just scratch my head at the Gucci store. Why pay 10 times more for the Opportunity to have a large G on your apparel?
Loyalists of Opportunity Products usually respond that those people “don’t get it”. For those who wish to explore this topic further let me suggest Simon Sinek’s book Start With Why.
But get them or not, Opportunity Products are a marketer’s dream. And the best type of Opportunity Product is one with minimal production cost and little to no carrying cost.
Exactly like the product line I market on the tail end of my business.
It makes sense… why do people go searching online? They go online looking for love, looking to lose weight, looking to earn extra money. In other words looking for things that they can’t find on the shelves at Wal-Mart and that they may not even want to ask their friends or family for advice on.
See “Opportunities” aren’t always something we feel good about advertising our desire for. Many of us don’t want our friends to know we are starting our own business, or looking for love, or trying to drop 20 pounds. When people in our circle know these things then we are embarrassed if we fall short, or we open ourselves up to their criticism or ridicule.
These are deep-seated insecurities we all feel, so it is no wonder that Opportunity Products thrive in the anonymity of the Internet.
And there the savvy marketer waits, with high-IP, highly desired Opportunities priced accordingly. Trust me when I say from experience, with the right Opportunity for the right person, you only need one sale a month to earn a comfortable living. Sell 10 a month and you are earning 10 comfortable livings!
So Why Do I Need Retail Products?
Why bother with Retail Products at all if it’s the Opportunity Products that make so much money?
Simple: “Waste Not, Want Not.”
Most of us don’t have time or money to waste. And even if we did, why should we waste it? That’s just not good business. But whether you’re brand new or a seasoned marketer, there’s no way around the fact that most of your customers will not buy your Opportunity Product. The standard Internet marketing training will tell you not to waste your time on those, they’re dead end leads so just toss them aside and move on. You might be taught to “drip” on them over time with emails offering some small product or another, but rarely are you told to actually keep actively marketing to these leads.
But that’s exactly what you should do. Let’s be honest, as a new marketer you’re bound to make some mistakes and it will take a little time to perfect your skills. You may find at first that the vast majority of your leads are these so-called “dead ends.” Unfortunately many new marketers spend (waste) all of their money and time attempting to find just a few Opportunity buyers, and when it doesn’t happen they’re already out of business.
Smart business (always our approach here) would be to protect yourself from this by being ready to offer quality Retail Products to the large quantity of customers who won’t purchase your opportunity. Common sense (and statistics) show that most customers who turn down your opportunity are highly unlikely to suddenly say yes to another opportunity you suggest. So you’ll need to have more to offer than just opportunities. The same customers who say no to your opportunity may say yes to the right retail product. For new marketers this fact can be the difference between going broke and making money in the first 3-6 months.
Monetize Your List
That’s “Internet marketing speak” for “make money from your list of leads.” Here at VR we want you to learn how to do this skillfully so you don’t send people rushing to the “unsubscribe” button.
Let’s prevent wasted time and money, “monetize your list” as it grows and turn those “dead ends” into cash for your business. The affiliate products at VR will enable you to do that.
Statistically an online marketing system is considered successful if just 2% of it’s leads covert into actual paying customers. NOT acceptable at Vertical Rising. Our system is designed to increase your bottom line and give you the tools to convert more than 8 to 12% of your leads into buyers of at least one product.
This is known as a “funded proposal.” It means that the money coming in from your diversity of income streams literally “funds” your new business. It is the life blood that can keep your advertising budget going while you build up momentum.
The 100k Opportunity
Basic Concepts You’ll Need To Know:
Feeder Product: Used in both traditional and online marketing, a feeder product is a basic item used to attract customers. Those same customers may then be interested in other, more profitable products you’re offering.
Funded Proposal: Products that are sold in a sales funnel to help fund the marketing and advertising necessary to continue to attract customers. A funded proposal is generally not profitable unless it is paired with a “primary offer.”
Primary Offer: The main product you are selling; your most profitable item, often an Opportunity Product. Customers area attracted to your feeder products/funded proposal products, find value in them (and in you and your system), then proceed to purchase your primary offer. The primary offer here at VR is Wealth Masters International.
When you found Vertical Rising you definitely found an opportunity. After all, it is an opportunity product with both a start-up fee and monthly subscription fees that pays commissions to referring affiliates. But it is NOT the function of VR to serve as the primary opportunity product in your business. Think of VR as the opportunity to market other opportunity and retail products. It’s the training ground and marketing system through which you will build your successful Internet Home Business.
What does Vertical Rising do for your business?
1. Provides training, support, and community
At Vertical Rising it’s our mission to provide you a central place to learn the information, mindset and skills you need to to build and own a real Internet home business that can provide you with an executive level income and then some. And if you’re tuned in to our daily calls and are talking with your business coach you’ve probably already realized we absolutely love what we do; it’s our passion and purpose to help you achieve success in your business. You’ve become part of a dynamic, interactive community, so even though you’re now in business for yourself you’ll never be in business by yourself.
2. Provides tools for your business “infrastructure”
While in training here at Vertical Rising, you’ll actually be “learning by doing.” Step by step you’ll not only learn what you’re supposed to do, you’ll actually set up your web page, blogging alliance, follow up systems, tracking, advertising placement, etc. and get them working for you right away.
3. Serves as a “feeder” product
Statistics show that over 70,000 people just like you are starting a home business every day. With Vertical Rising as your feeder product you can offer these people the same system you’re using, then guide them to your primary “top tier” opportunity product. When they purchase that and start their business with you, you’ll be certain they too will have the tools and training they need.
4. “Funds your proposal”
By automating the sale of other products Vertical Rising can help you “monetize your list,” making the most of all of your leads and providing you with necessary income to run your business.
Read these 4 functions of VR again. Many Internet marketers have spent hundreds of thousands of dollars and countless hours creating an infrastructure like this. Vertical Rising already contains everything you need, AND teaches you how to use it.
But let’s keep things in perspective. Here’s the thing about Vertical Rising as a product… it’s not enough. One of the biggest flaws with other Internet marketing “systems” (and what ultimately sets people up for failure) is that they promise to teach you how to make money marketing online but have no “top tier” primary product offering for you to market. So you just end up “marketing the marketing training.” All feeder and no back end. No one system can be your training, your marketing platform, AND your primary product line. A system designed only to sell itself is a flawed business model. VR works because it’s designed to sell both your ‘funded proposal’ products and your ‘top tier’ opportunity product. We’ve even taken the work out of finding the perfect opportunity product. Proudly, Vertical Rising has a long-standing relationship with the most successful, most lucrative top tier company in the industry: Wealth Masters International. You’re about to learn how to take advantage of this. But first, let’s look at some examples of feeder products/funded proposals.
Examples Of A Feeder Product / Back-End Product Relationship
Think of the last time you drove your car into the auto shop for an oil change. Maybe you were taking advantage of a “special” and getting your oil changed for around $20. Simple math would tell you that when you add up the shop owner’s costs for the oil and other supplies, the technician’s pay and the other costs per hour of running the shop, your oil change is costing him more than $20. So–why sell a service for less than it’s cost?
To attract customers. If you drive a car you’ll eventually need an oil change. And where will you go to get it? Probably the place with the $20 special. And what happens when you get what you need with great service, professional treatment and friendly advice? You now trust this shop and will come back again. Maybe you’ll be one out of the four oil change customers who’s car needs more significant work and repairs. You have them install a new fan belt, fix your radiator, install new brakes. You’re happy. You’ve gotten what you need. And meanwhile the shop has made money.
So the lesson here is to sell something of value at a great price, get in lots of customers, build relationships with them, and then recommend other things they need that you can provide for a good profit. This is how hundreds of thousands of businesses work, and there is nothing unscrupulous about it as long as you’re truly providing what you promise.
So in your business, Vertical Rising (our marketing platform, blogging system and training) is your “oil change.” Remember those 70,000 people per day starting a home business? The market is full of people wanting to learn how to make money online (hundreds of millions of prospective marketers). So we sell a product (Vertical Rising) that teaches people exactly how to do this at a price that’s low enough to attract very large number of them.
If we only sold Vertical Rising without anything on the back end we would have a business like an auto shop that only sold oil changes.
What Is Your Back End?
Let’s continue using our example of the auto shop. Let’s say the oil change actually costs the shop $40. If 20 customers come in one day and only buy the $20 oil change special, that means the shop just lost $400. That is exactly how it would work if all they had to offer was the oil changes.
But what if just 5 of those customers also need some of the back end offers and each spends $50 on things like filters, wiper blades, etc? That’s $250 more revenue. And when just two customers spend $500 or more on alignments, brake jobs, exhaust systems, service plans, and many other things suddenly the shop is in profit!
This is the power of having the right back end offer.
Let’s explore further. Come discover the power of Top Tier Positioning by clicking the Part 2 link below.