May
31
2009
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.
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.
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
