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 and Converting Traffic Into Sales Part 1.

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.

Tyrone Shum
Learning To Profit From Back End

Converting Traffic Into Sales Part 1: Generating Leads

In Spreading The Word: Turbocharge Your Traffic, I discussed about the different ways of driving more traffic to your Internet business using social networks such as Twitter, Facebook and MySpace. Once you have an increased amount of traffic to your website, what do you do next? In today’s post I will be talking about how to convert this traffic into leads which will be part one of a three part series of Converting Traffic Into Sales.

For reference, I will be using the term “sales funnel” instead of “converting traffic into sales” for simplicity.

To understand how the sales funnel works we look will look at it from a systematic process, starting at where your prospects come from, to how we will pro-actively guide them through the sales process and become a long-term client. Before any of this can happen, we need to look at how to capture these prospects into a database using some creative flair.

Generating Leads From Traffic
Generating Leads is the most challenging, though fun aspect of the sales funnel. It requires constant testing and monitoring using endless proven methods, which are only limited by your resources and imagination. Where we capture all of this information is from the front-end, or the face of your business on the Internet. As soon as a prospect is interested in a product or service you may offer, we want to qualify and encourage them to opt-in on your website. When this occurs, it starts the first step of the sales funnel and begins to transform an everyday web surfer into a lead showing their interest in receiving more information.

There are many ways for a person to opt-in on your website and it’s crucial to have these mechanisms set up to begin generating leads. Here are some examples of how other Internet businesses capture leads:

• Subscribing to a blog via RSS subscription
• Signing up for a Free Report such as my Internet Business Blueprint located in the column on the right
• Registering for a free online service, for example MySpace, Facebook, LinkedIn, Flickr.
• Ticking a box to receive further information when purchasing an product or service from another site. For example, telephone companies such as Telstra always has a little tick box allowing you to opt-in to receive further marketing material whenever you complete a transaction with them.

When a potential prospect opts-in to your website, then they are agreeing to receive information from you. This is called permission marketing and it was first coined by Seth Godin. If you haven’t read his book Permission Marketing, you can get grab a copy of it on his website or buy it at any book store.

Now I must point out, some Internet marketers have been very successful in selling their products straight off the front-end and have made a lot of money doing so. Though you have to see what type of authority they have in the market and the systems they have in place to do this. I can assure you it has taken them many years and lots of resources to set this up and it’s not an overnight get rich story. Rich Schefren is a classic example of this and has extremely refined front-end and back-end systems that help him continue to generate profits even if his not working. My point here is, not to start selling any products to your new leads but to offer them value through content and building strong rapport with them first. The front-end is a mechanism to generate and qualify leads for your Internet business and is probably the least profitable.

In the next Converting Traffic Into Sales article I’ll go into more detail about how the back-end process works together with front-end and you will realise that the front-end are mostly ways to generate leads and are not necessarily profit centers. You will also learn why the back-end process will be the most important aspect for the long term growth of your Internet business and how it will outlast your competition.

Continue to Converting Traffic Into Sales Part 2: Profiting From The Back-End

Tyrone Shum
Lead Generator