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The Money Is In The Backend

By Larry Lim - MarketingSphere

Backend offers are the determinants of whether you make marginal or staggering profits. This is regardless of the types of business you're in, and is also regardless of whether you're marketing your products and/or services online or offline.

It's a shame that many business owners failed to recognize how important and powerful this marketing concept is, and seldom, if ever, resell their existing customers. Their focus is often on acquiring new one-shot customers. This is a costly mistake and is most unfortunate.

What Is A Backend?

Now, I want to drive home the point that a "backend" is different from an "upsell" as many people are often confused between the two.

A "backend" is products or services that you offer to your existing customers after the initial sale, and can consist of either products or services. These products and services can either be your own or other's that you resell. There's a time lag between the initial sale and the backend offers, and this time lag can vary from a few days to a few weeks or months.

An "upsell" on the other hand, is the additional products or services that you offer to your customers at the point of sale and before the customers complete the order. These can be complementary or more expensive products or services.

Why Is The Money In The Backend?

If you recognize the power of "backend" and apply this concept in your business, you'll almost have an unlimited profit stream for your business.

Here's why...

You'll earn the biggest profits by selling to your existing customers. This is because you've already acquired the customers and the costs of selling to them again is negligible; you don't incur any more customer acquisition costs.

Furthermore, since they're your existing customers, there's already a certain level of trust established between you and your customers which makes it easier for you to sell to them again. Statistics have shown this to be true -- as high as 35% of your existing customers are likely to buy from you again if you've properly cultivated the relationship and generated goodwill. All it takes for you to reap the rewards of this goodwill is to offer them additional products or services.

To make this clearer, consider the following illustration:

Let's assume you're in the business of selling information products.

Assumptions: Your initial product (frontend) sells for $97 and it costs you $30 to develop that product. You ran an ad which costs you $600, and you generated 10 customers.

You gross profit can be calculated as $670 ($97 X 10 customers) - ($30 X 10 customers). Your net profit will be $70 ($670 gross profit - $600 ad costs) for 10 customers.

If you didn't apply the concept of "backend", your net profit would have been only a measly $70 for 10 customers. Now, assuming you present these 10 customers with another product (backend) which sells for $250 one week later, and 30% of these customers took you up on the offer, you'd have made another $750 ($250 X 3 customers). In total, you've made a nice profit of $820 ($70 + $750).

I believe you can now see the power of the concept of "backend" offers. Even if you had broken-even initially, you still make a profit of $750 from the "backend" sale.

Can you imagine what this will do to your bottomline in the long run if you keep "backending" your existing customers with additional product offers? Always remember, the money is in the "backend" sale.

About the Author

Copyright 2005 by Larry Lim, MarketingSphere.com

Larry Lim is a marketing strategist and tactician who dishes out highly effective marketing strategies and tactics that will enable you to successfully start and grow your business on the Internet.

Check out his Internet Marketing Strategy website that is jam-packed with internet marketing secrets and softwares that will skyrocket your sales, and shoot your profits through the roof.

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