4 Benefits of Creating Backend Offers
The back end offers is what really separates professional marketers making
six to seven, even eight figures a year from most beginning marketers. The back end is what allows the top performers online to make “the big bucks.”
The back end quite literally affects every single thing in your business. It’s the lifeblood of your entire online marketing business. Yet far too often beginning business owners choose to ignore the back end.
What exactly is the back end offer and why is it so critical to success?
What is the Back End?
The “back end” is the products and services that are offered after the first sale. A well constructed back end will have multiple products, in multiple media, sold in multiple ways at multiple price points.
The purpose behind the back end is to maximize the amount of money you get from each and every customer.
Some customers are willing to only pay $50. Others are willing to pay up to $300. While others, about 5% to 10% of your customers, are what’s called your “super loyals” – They’ll buy just about anything you sell.
By offering a range of products and services up and down the price range, you maximize your ability to monetize all your customers.
If a customer wants to spend $50, you’ll make $50. If they want to spend $5,000, you’ll make $5,000.
Most business owners leave a ton of money on the table by not having a back end. Imagine only making $50 sales when your clients are actually willing to pay you $5,000. It’s a tragic waste of potential earnings – Yet it happens all the time.
There are many benefits to creating backend offers.
Here are just a few.
Benefit #1: It’s 7 Times Easier to Sell an Existing Customer Than a New Customer Statistics and tracking results have shown time and time again that it’s far, far easier to sell an existing customer than it is to sell a new customer.
It’s not uncommon for back end offers to get as much as 5%, 10%, even up to 20% conversion. As a rule of thumb, it’s about 7 times easier to sell an existing customer than it is a new customer.
That means that if you’re getting a 1% conversion off your cold traffic, the same offer to someone who’s already bought from you would convert at about 7%. For every 15 return visitors, you’ll make as much as you would have from 100 people seeing the same offer for the first time.
Naturally, this makes selling much easier for you. In addition to making things easier, it’s also simply much more profitable.
Benefit #2: You Can Sell Much Higher Priced Items
Would you ever pay someone you just met $5,000? Possible, but very, very unlikely.
Would you pay someone $5,000 for business consulting – If you’ve known for years, if they’ve already helped you earn $30,000, and they’re guaranteeing you at least make your money back or he’ll give you back every dime?
Much more likely.
The fact is, repeat customers are much more willing to spend money with you, for several reasons:
1.They know firsthand that the quality of the product or service is high.
2.They have more trust for you.
3.They’ve experienced your customer service already.
4.It’s easier to do business with you, someone they already know, than to go out and find another product or service.
“All things being equal, people will do business with people they know
and like. All things not being equal, people will still do business
with people they know and like.”— Bob Burg
If you’re selling high ticket items, you’ll make much more sales from people who already know you.
If you have a customer base already, then it’s time to add high ticket sales. It’s pretty simple: They already know you, trust you and are ready to give you money.
Benefit #3: You’re Building Your Customer Relationships
Truly profitable businesses are built on thriving customer relationships.
Many beginning entrepreneurs try to build businesses based on the first sale. Instead of having their attention on building long-lasting, highly profitable long term relationships, they focus on just making the sale once.
These businesses inevitably fail.
Building long term customer relationships are how you bring in both a high volume of sales and high ticket sales.
But the benefits don’t end there.
There are many benefits to building relationships with customers that you can’t predict.
For example, one speaker eventually found that when he started new businesses ventures and needed investors, the only place he needed to look was his customers. He raised over $5 million dollars simply by asking satisfied customers who had money if they’d invest in his new business.
Another example is that a customer may mention how incredible your product is to an industry leader they know, resulting in speaking or JV opportunities.
The list of potential benefits goes on and on. The magic of human connections is that they’re often unpredictable, but generally when you invest the time and energy into cultivating human relationships, you’ll be paid off. Even if these relationships are online.
Benefit #4: It Increases Your EPC, So You Can Spend More on Advertising and Get More Traffic
Your Earnings Per Click, or EPC, is one of the most important numbers when it comes to customer acquisition.
Here’s a simple breakdown of how EPC works:
Let’s say you have just one product. The product sells for $30. One out of every 100 people on your website buy this product.
That means out of every 100 clicks, you make $30. Each click in turn is worth $0.30. Your Earnings Per Click or EPC is $0.30.
This number is important because it then determines how much you can spend on advertising to get new customers.
If you pay less than $0.30 cents per click, you’re making money. If you pay more than $0.30 cents for a customer, you’re losing money.
There are many sources of traffic you can buy for $0.30 cents a click – And many sources you can’t.
You could probably advertise with Google AdWords and other pay per click engines. You probably couldn’t do banner ads or offline advertising.
In other words, because your EPC is relatively low, you can only advertise in certain mediums.
Now, let’s take a look at how this looks if you have back end products.
Let’s say you have a product that sells at $30 with a 1% conversion. You have another product at $300 that 25% of your existing customers purchase. On top of that, you have a $2,000 six month course that 10% of your buyers will purchase.
That means that every buyer is worth an extra $75 + $200, for a total of an average customer value of $305. That means that instead of having an EPC of
$0.30, you now have an EPC of $3.05.
Instead of only being able to spend $0.30 cents to acquire a customer, you can now spend up to three dollars!
This opens up a whole new range of mediums. You can now afford to place direct response banner ads on high volume websites related to your industry. You may test out magazine advertising in industry magazines.
Increasing your EPC basically allows you to spend more money to acquire each and every visitor. Since you can spend more, this opens up more mediums and allows you to bid for premium positions, resulting in more visitors.
The more visitors you get, the more cash flow you have to play with. This in turn can help you fund more products to build your back end with, which in turn will increase your EPC even further.
The process of building a back end starts you on an upward cycle of higher customer value and acquiring more customers, which will eventually take your business to heights you can only dream about right now.
If You Don’t Have a Back End, You Don’t Have a Business
If you have just one product, then what you have is a product, not a business.
If you want a business that can eventually sustain itself without your everyday input, if you want a business that can produce at least five figures a month consistently, then it’s critical that you build a back end.
The back end is more than just a matter of creating products; it’s a shift in mindsets. It’s a switch from the mindset of making a quick buck by sticking a product online and the mindset of a real business that’s there to create a long term, cash-generating asset.
All The Best,
