Converting Traffic Into Sales Part 2: Profiting From The Back-End
We are continuing our series on Converting Traffic Into Sales and if you have not read the introduction and part 1 of this series, be sure to catch up on Spreading The Word: Turbocharge Your Traffic a...
This is where the profits are really made and it’s important to understand how it links together with the front end of the sales funnel as discussed in the previous articles. Furthermore I will provide you with an example of how the back end process works and in a future article you will see practically how to apply the back end to your Internet business.
What Is The Back End?
It’s very easy to use these terms in your Internet business and assume that most people know what it means. I want to go back to basics and explain what the back end is. When a prospect purchases your products or services at the front end for the first time you are building a relationship with them and they become a customer of your business. Hopefully if your products or services have provided value for them, then they will be more inclined to come back and purchase more. This is where the back end starts to take place and offer your customers higher priced items. As mentioned before your back end is your most profitable avenue.
The back end consists of products and services of significant value to a customer which generates higher profit margins and referral sales. It’s basically meeting the same needs for a customer with different media. Examples of products provided in the back end are
•CDs, DVDs, MP3s or Podcasts (audi0)
•Video or Movies (visual)
•Conferences, Seminars, Workshops or Retreats (live)
•Phone Calls or Coaching (personal or private)
Essentially the biggest difference between the back end and front end of the sales funnel is how a customer perceives your product or service and the price they pay. These customers have already sampled your products and services at the front end and because they have enjoyed them so much, they are eager to purchase more from you. This is an ideal customer to have and it makes the sales process much easier.
Back End Profits
Most of the time front end products are sold for under $100, whilst back end products are priced in the range of a few hundred to a few thousand. The idea behind having these different prices is to create value and offer something extra to a customer. In turn the back end has significantly higher profit margins compared to the front end. As a result your relationship with them is stronger and they become a loyal customer who will make repeat purchases and referrals. Not only will you be more profitable but have the additional time to look after these customers who will become your AAA client base.
Let’s take a look at how a back end works successfully and helps profit an Internet business. A friend of mine recently wrote an eBook on the topic of “Saving For The Rainy Day” and created an exceptional full-page sales advertisement on his website. This eBook was actually given away for free even though it costed him a couple hundred to get the cover designed and to have it proof read. Since it was given away for free, readers logged onto his website and over 10,000 people downloaded the book and subscribed to his database. This is the front end of the sales funnel.
A few days later, he sent an email out to these people to offer a special promotion to attend a one-day “How To Build Wealth Saving” seminar that was valued at $199. The offer was to attend the seminar for only $49. It created such a buzz that over 100 people came along, profiting him almost $5,000 minus the costs of renting the venue. It was the first of many. But ultimately his goal was not to run the seminars, but to find potential students to coach which he could charge $10,000 a year to coach them to build their wealth. Essentially that’s what the back end process allowed my friend to do and helps build a long term sustainable Internet business.
The Future Of Back End Internet Businesses
Many successful Internet businesses with a significant back end today will outlast many other businesses without it for many decades to come. Personally when I ran my Dragonboat business I did not have a strong back end which means there was still huge potential. This raised questions such as:
1.What are all the additional purchases my customer should be making in using their existing paddle?
2.How can I offer additional services to help maintain their dragonboat equipment?
By simply asking those questions, it allowed me to see what additional back end products and services could be offered to generate more revenue. Take some time to ask yourself what additional products and services can I offer to my existing customers? Please add your comments below as I would love to hear what your thoughts are.
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ABOUT THE AUTHOR
Tyrone Shum is an internet business marketer. You can read more Internet business articles at http://www.internetbusinesspath.com