Where the money is to be made

In this article, we will talk about that is Front End sale and how to make the most out of each customer from the Back End as well. In a related article, we talked about the lifetime value of a customer, and also how you can use joint venture to penetrate new markets, create new revenue centers by creating new products and services and how joint venture is easy to establish.

What is a Front End Sale?

A front end sale is basically the first contact of purchase that your customer or client will have with your business. You could have acquired this customer via advertising, referral, walk in traffic or any other way. There is usually a cost associated with acquiring each of your customer to your business.

For example, let’s say you have run a newspaper advertising which cost you RM3000.00 and you get 10 buying customer to your business. So RM3000 divided by 10 = RM300 per lead. That is the cost of acquisition of your customer for this particular campaign.

The cost of acquisition for your customers can vary from the medium used and the effectiveness of each campaign.

Many businesses spend a lot of money to get customers to buy from them on the front end, and thereafter, never maximize the full potential of each customer also known as the lifetime value of the customer. Usually, the customer will buy from them for that particular promotion, and after that, there are no sequential and continuous marketing to the same customer over a period of time. The lead just turn cold until the next promotion campaign where they hope to reactive the customer again.

This is passive marketing and a recipe for disaster and mediocre business success at best.

The fortune is to be made from the Back End

Most successful businesses know that the true fortune is to be made from the back end of the business. They usually use the Front End of the business just to get the customer into the front door. They do not expect to make a lot of money on the Front End, and sometimes just break even or even take a small loss.

They know that once the prospect has been converted to a buying customer, they can now start to maximize the full lifetime value of the customer.

From the customer’s perspective, after buying from a business for the first time, they have now experience buying from them, experience the level of service and assuming they are happy with that they have gotten, they will have a positive experience from the transaction and will usually re-purchase from the business again.

So the truly successful and profitable business will continuously look to keep in touch with the customers with offers that they might be interested in. These offers can be related to their original purchase, or it can even be totally unrelated to their original purchase.

For example, a customer that has bought health supplement of one kind are likely to buy other kind of health supplement as well. The successful health supplement business will continuously send promotions such as newsletter, fliers, sales letter, etc to the customer to encourage them to buy other items. They may even include special offers to entice them to buy again.

However, this same supplement business can also increase their back end sales by joint venturing with other businesses to create new products or services to be marketed to this customer to increase their back end sales. For example, they can joint venture with an exercise equipment company and sell these equipment to their customer for a share of the profits. They can even joint venture with health clubs, spas, gyms, etc and promote these membership to their customer for a share of the fees collected.

Funnel Vision

The key here is to look at your customer through the lens of a funnel vision. A marketing funnel is basically where a customer buy from you one time, but the relationship doesn’t end there. The front end is where the beginning of this funnel is.

Your customer will then slowly be elevated and moved along the funnel to make new purchases of other items which are usually progressively more expensive and more customized for their needs.

For example, in the personal development area, a customer may initially buy a book from a Guru to learn about the field. This is the front end. The Guru will then slowly up-sell this customer to maybe buy their next level of training: a 2 day training  at RM500.00.

After experiencing the two day training, the customer may want to specialize and learn in greater detail and may then subsequently purchase a more expensive training of RM3000-RM5000 10 days intensive training or mastermind program.

But it doesn’t end there. What can this Guru do after the customer has gone through the whole marketing funnel and he has nothing more to sell?

You got that right! Its time to joint venture with other guru‘s in other field for programs that the customer may be interested in. He may approach gurus in another field that are offering programs that their customer may be interested in and joint venture to promote this new guru’s product to his customers for a share of the profits.

The Back End can keep on going for as long as you keep your customers happy and satisfied. You should always protect your customers interest at all times and not promote products that they do not need or shabby and lousy products and services. After you have gained the trust of your customer, you should do your best to keep that trust and credibility. Once you lose it, it will take a lot of hard work to gain it back again.

It cost 6 times to acquire a new customer

Keeping in mind that it cost you 6 times as much to acquire a new customer than to maintain an existing one.

Once a customer has purchased from your business, you have already paid to acquire that customer through the Front End. Now whether you never market to them again, or sell to them again 1 time or 100 times, you have already paid to acquire this customer. A successful and profitable business will maximize the full lifetime value of the customer through continuous back end sales.

Thank you for reading until the end. Please leave a comment about your thoughts and if you have any joint venture ideas that you would like to explore with us, please leave a comment or get in touch with us via our contact form or via Facebook.

Looking forward to serve you further.