What is a Backend Product?

In this series I will be discussing an very powerful concept that if you implement in your business, you will see dramatic results! As a Denver Marketing Consultant , no matter what type of business you are in, or whether you market your products online or offline, the backend offers are the ones which determine whether you are going to make marginal or staggering profits.

Many business owners seldom realize how important reselling their existing customers is. They solely focus on acquiring as many new customers as possible. They fail to understand how revolutionary the backend marketing concept is.

We must keep in mind that a ‘backend’ is different from an ‘upsell’, and not confuse the two. The products or services you provide your customers with after the initial sale are referred to as ‘backend’. These products and services can be your own as well as of others, which you will be reselling. Usually initial sales are followed by backend offers after a certain time lapse.

On the other hand, the additional products and services that are offered to customers while selling something and before the sale has been completed is known as ‘upsell’…..just like at McDonalds…”would you like fries with your order”?.

Think about how you can start using this in your business today! 

Why Is The Money In The Backend?

Think of it like this: you already did what you did and spent what you spent to get your last customer….now with proper follow up tools and systems, you can “monetize” that list with backend sales to boost profit. 

The reasons why applying the backend concept in your business can ensure unlimited profit are as follows:

There will be no customer acquisition cost, as you will be selling to customers you have already acquired.

You can cash in on your goodwill… If you have properly established a firm relationship of trust between you and your customer, as general statistics show, about 35% of your customers will purchase from you again.

For example:

Suppose you sell information products.

Assume that the selling price of your initial product (frontend) is $97, while its original cost price is $30. You run an advertisement for $600, which got you ten customers.

Your gross profit will be $670 ($97 X 10 customers) - ($30 X 10 customers), while your net profit will be $70 ($670 gross profit - $600 ad costs) for 10 customers.

Without having applied the ‘backend’ concept, your net profit would only have been $70 for 10 customers. However, if you offer these 10 customers with the backend product or service, which gets sold for $250 a few days later, and 30% of these customers take it on average, you will make another $750($250 X 3 customers). Overall, you will make a profit of $820.

This is an example of how powerful the ‘backend’ concept can prove to be. Even if you do not make profit from your initial sale, you can make it up from your ‘backend’ sale.

The backend concept can really help you to raise your profit margin by several notches. Keep supplying your existing customers with additional product offers, as money really lies in backend sale.
The Importance of a Backend Strategy

When you start thinking about your sales and profits, you’re likely to think that you need to create many and varied items for the backend. But you’ll find that you need to take an approach that is going to leverage your lists of products when anyone buys any of those products.

First, consider putting some polish on your current products and also the “experience” your customer has while going through your sales and buying process Next, you need to develop a backend product which is related to your front-end product, be it an accompaniment or complementary.

Then, when this second product is ready, announce it to your list of existing customers, who have already brought your first product. If they liked it, they’re very likely to purchase the new product, which is likely to suit their needs as well.

In fact, the saying, “there’s gold in the list” is often used to refer to the many marketers who have built vast fortunes and created multi-million dollar empires by selling, not similar things to different customers, but different things to the same clientele.

You need to do several things:

First, you need to keep every customer for life. Even if an investment of $50 can get you a paying customer, it’s more desirable, evidently, to make a $10,000 profit off him/her over the years rather than a one-time $47 profit.

You should also create an efficient backend strategy for your information products which is tailored to your customers’ needs. Pick their brains without letting them know that it is simply for product-creating. As Seth Godin say’s in “Meatball Sundae” you need to focus on what your customers NEED and then go out and sell it to them!

This should actually be rather easy. People like being asked for their opinion—creating a poll or questionnaire and mailing it to your list should garner you a lot of information about what your customers want.

And while your follow-up products are being created, continue supplying questions and/or useful information to your clientele, so they don’t feel used.

Remember, don’t constantly send them sales-pitches. Once their names are added to your list, start sending them some bits of helpful information that they can access for free. Once they’ve begun to somewhat trust you, and you’ve proven that you’re working in their best interest, they’ll not mind buying from you again and again.

If you’ve gained the trust of your clientele, they’ll help you profit over the years. You merely need to discover what they want and over-deliver with the products you create for them.

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Why Do You Need a Backend Marketing Strategy in Your Business?

You have tried every trick in the book but your ecommerce website is not being as successful as you expected it to be. This might be because you have neglected a whole area of business—backend sales. In today’s cut-throat business world, it is important to cash in on backend sales, lest your competition overtake you.

Here are a few reasons why backend sales are so important.

First and foremost, it is far easier to sell a product to an old customer than to convince a new customer. According to marketing estimates, your chances of success are eight times higher when you sell to old customers.

This is primarily because these people have used your products before and know how good it is. They are able to see you as a reliable products and service provider whose products embody some value and usability.

So, to succeed in business, you must care for your old customers. While marketing a new product, it is best to start with these older customers as they are not only more likely to buy your product, but will also be more forthcoming about their complaints and comment about it because they are familiar with your brand, know what it stands for and what expectations to have of it.

Also, giving your older customers some preference helps build trust and opens up lines of communication that you never had access to before. Through this, you are in fact showing your older patrons that you are privileging them, which is bound to rebound on your business in a positive manner.

Offering big rebates to your customers on backend products is also known to be an extremely successful ploy that is often used by internet marketing gurus around the world….and if it’s a model that works online then an offline business can get even better results because it’s not often used!

 These discounts give your brand a chance to re-connect with your customers. It also helps revive inactive customers, which is a lot more important than it sounds.

You need to understand early in business the opportunities an inactive customer offers you. These customers, while they might not be buying anything right now, have in fact bought and used and appreciated your product before, and are in fact only a phone call or an email away from resuming their business relationship with you.

If these are not big enough reasons to get you to understand the importance and worth of successful backend marketing, then nothing ever will. Continuity and a fostering of long-term business relationships is an integral part of a successful business venture.

Your business cannot start and end with just one product. You need to keep providing your customers with new solutions and added benefits to keep your business booming.

Backend Marketing Method

As a Denver Marketing Consultant, I can help you when your business is in need of some kind of a push, you mostly resort to the old method of broadening your clientele. This is not an easy task, and more often than not, you cannot tide over your dipping sales. An easy and innovative answer to your problem is the method of backend marketing. This is the trick that most salesmen have mastered, and it involves nothing but a bit of persuasion to make another sale to a customer who has purchased your product.

This is relatively easy for a salesman because once the client has purchased your product he has shown that he believes in your product and has thus invested his money. This also shows that they trust your services and won’t be averse to buying something recommended by you. You do not have to spend time building up their trust in you by proving that your company has excellent credentials.

You could work out this backend marketing strategy by suggesting a product that aids in the performance of the product your customer has already purchased from you. The key to a higher profit is to recommend a product that has better performance than the one just bought, and hence more expensive.

If you have recently kept an eye on Amazon.com, you must have noticed that a statistical account of the products purchased by each customer is maintained.

Suppose you decide to buy a book through Amazon.com, they will display a list of customers who have bought some other book-perhaps indirectly related to the one you chose- while buying the one you are going to purchase for yourself. They suggest you to check out this related book. You might even like the suggestion and go for both the books, even though you set out to buy just one.

Similarly, if you follow this simple yet effective marketing strategy, you could effortlessly bring in the profit you require and make your customers feel that their needs are being efficiently met with. Meanwhile your clientele-base gets strengthened.

You could offer to knock off a small percentage of the sales price in a bid to sell your expensive product. The customers feel that they are making a good bargain and they buy it!

Simply put, this tactic entails nothing more than first selling a reliable product to your client and then suggesting something more expensive yet useful to aid the aforementioned product.

Mike Saunders, The Automated Marketing Expert, is a Certified Marketing Expert and began www.MarketingHuddle.com during his MBA in Marketing.

Marketing Huddle is a marketing coaching and consulting firm specializing in helping small business owners set up automated marketing tools and systems in their business to reduce expenses and increase revenues.

Do you want a 50 pg. Video E-book on using online marketing in your business? Visit www.MarketingHuddle.com and join our ezine!

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Taking the Advantage of Backend Selling

It’s odd that many companies don’t focus on building a database and taking advantage of backend sales.

There are, of course, countless examples of the value of building databases: Google, for instance, bought Youtube for $1.6 billion. It is extremely important to maintain and update your database to let your clients be aware of what special promotions you are offering and to keep them forever aware of the existence of your business. Having a good relationship with a large clientele is one of the biggest assets of any business in these consumer-oriented times.

Besides, though most companies focus on front-end sales, the backend is where the most money is to be made…..let me say that again….the backend is where the most money is made!

Your database means you can constantly market new products to your clients, allowing them to effortlessly upgrade, and expand your business further.

Backend sales are all about adding value to your clients’ purchases and persuading them that their main, front-end purchase would be much improved if supplemented by a number of backend purchases. If you market your backend good well enough, you can make a large profit even while seemingly offering the front-end product at a much cheaper price than other businesses.

For instance, let’s suppose company A purchases Toyota Camrys at $18,399 and sells them at $17,999. Company A thus loses $400 on the front-end sale. Meanwhile, other companies, which also obtain the cars at the price company A does, sell them at, say, $18,999. These companies thus technically make a profit of $600.

As people are more likely to purchase cars from company A, the others may justifiably complain that they are losing customers, and wonder whether the owners of company A were procuring cars at a lesser price.

Of course, company A, not being a charitable concern, is in fact making a profit. What company A is doing is concentrating on backend sales. Numerous extras, which would normally cost, say, $3,000 dollars are being offered with the car, for an extra price of, say, $1,400.

 In this way, company makes a profit of $1,000, instead of suffering an apparent loss of $400. In addition, they can offer special discounts on finance, say 4% instead of 6%. This enables company A to build up a loyal clientele and ensure that the customers poached from other car dealerships would not be poached back by them.

 You, too, can utilize backend sales and databases to make large profits.

Getting Started with Your Backend Strategy

As a Denver Marketing Consultant, I can help you with a back end product is what you sell your after you’ve sold your main product.

Building a business requires acquiring new customers. However, that is expensive since marketing costs have to be raised to attract new buyers. According to a research by Fortune magazine it’s easier to sell a product to an old customer than to a new one since buyers are always apprehensive in their first purchase.

An old customer trusts you and this enables him to buy other products from you. A foundation is created on whose basis you can introduce new products to the customer. This enhances their Customer Life Value and brings greater returns on your marketing investments….you DO know what the “lifetime value of your customers” is don’t you?! If not this is a very important concept, please get with someone who can help you with this, it will really open your eyes!

While determining your back end product, remember to keep it compatible with your main product. If you select an inconsistent product the customers will feel that you lack expertise and this can damage the customer’s confidence in your main product also.

If you are undecided then you can always ask your customers’ opinion regarding different products. Your customers will appreciate the gesture and your survey will bring you valuable information.

Conducting Surveys

If you possess a customer list then it is practical to conduct the survey by mail, email or phone. Prepare a simple survey questionnaire and mail it to your customers in self addressed envelopes. If you don’t have the required customer list then get your sales clerk to conduct the survey in person with each sale. However, a one-to-one survey might not be preferable to every customer. Another great idea is to grab your webcam and make a quick video email to sent to your list (you DO create and build your email database don’t you?!). In this way you can ask in a fresh personal way!

Another way of determining your backend product is to check what your competitor is selling. If you have the same target customers then their product will work for you too.

Conclusion…

To sell your backend product successfully you must believe in it yourself. If you are ambivalent about your product it will become evident to your customer soon enough as well. Therefore, a genuine love for your product is necessary to make your business successful.

Mike Saunders, The Automated Marketing Expert, is a Certified Marketing Expert and began www.MarketingHuddle.com during his MBA in Marketing.

Marketing Huddle is a marketing coaching and consulting firm specializing in helping small business owners set up automated marketing tools and systems in their business to reduce expenses and increase revenues.

Do you want a 50 pg. Video E-book on using online marketing in your business? Visit www.MarketingHuddle.com and join our ezine!

Tags: Denver Marketing Consultant, marketing tips, small business marketing, small business marketing plan
Posted in Uncategorized | | No Comments »