The profit in a direct response business is in the backend.

Transcription

1 From: Todd Brown West Palm Beach, FL Dear Marketing Funnel Superstar: The profit in a direct response business is in the backend. You ve heard that many times. And it s absolutely true. At least it is for the marketers who function with the proper marketing mindset. In this little special report I m going to share with you the way the biggest players in direct response marketing think about, approach, and design their backend marketing campaigns for maximum profits. First, let me very quickly get some basics out of the way. Then we ll get to the good stuff. The Basics Of The Front-End Versus The Backend The front-end of your business is all of the marketing you do with prospects to generate the first sale, the first transaction. The backend of your business is all of the marketing you do with existing customers - with people who have made one or more purchases with you - to increase the average lifetime customer value and to generate profits. Copyright MarketingFunnelAutomation.com

2 The way the big boys of direct response approach those two categories of marketing activities is vastly different. (The fact that they recognize and acknowledge a difference between the two is a lesson in and of itself for you.) The big boys of direct response look at the front-end simply as the vehicle to acquire new customers. In fact, in most scenarios all front-end marketing campaigns are designed to generate maximum new customers at break-even. And, in some cases with savvy companies that have the cash-flow and have an accurate measurement of the average lifetime value of a customer, the front-end is designed to generate maximum new customers at a manageable loss. (We re going to come back to this idea of manageable loss and how it s used for rapid growth in just a bit.) The most difficult not to mention most expensive part of any direct response business is the front-end, the acquisition of new customers. With your front-end marketing, you re not only communicating with people who do not yet have a significant level of trust and rapport with you, you re also making offers in an attempt to identify what things resonate with your market and are in highest demand. And right here is the start of how the big boys of direct response approach the backend. Feeding The Backend First, the front-end successes are used to determine what happens on the backend. Meaning: The top marketers and companies in direct response determine what product offers will be presented on the backend by first looking at what offers, products, etc., were successful on the front-end. The front-end products that are successful get leveraged into backend products and offers. And the front-end products that aren t successful when tested get repurposed or dumped. Of course, the intention of every new front-end product offer is that it will be followed-up with a higher-priced backend offer. However, again, whether it does Copyright MarketingFunnelAutomation.com

3 or does not is determined by how well the new front-end produces and performs when tested. In this way, the top marketers are able to maintain a pulse on what the market wants and what they re responding to. Not out of guesswork, opinions or assumptions. But from data. The key to remember here is this: There is no single greater, more important priority in your business than engineering a front-end (customer acquisition) marketing funnel that allows you to consistently acquire new customers at a reasonable cost (which we ll be discussed a bit in just a minute). Prior to getting at least one front-end funnel performing successfully is NOT the time or place to begin building a backend. The backend doesn t matter until you have a successfully performing customer-acquisition funnel in place. Once you ve got a front-end marketing funnel and product offer in place that allows you to attract new customers at a reasonable cost, then it s time to begin building out the backend for the that particular product/offer. Building The Backend Building the backend is really just about asking yourself, What s next?. What s the next thing your customer will need or want on their journey? The next thing could be: (1) more of the same on a bigger scale or (2) something needed to take the next step in their process. For example: If someone just bought a book as part of the front-end, more of the same on a bigger scale could be a video training course, a coaching program, a mastermind, a live event, an all-day intensive, a multi-day live bootcamp, one-on-one consulting, etc. In fact, each one of those could be a separate backend offer that brings customers deeper and deeper into the topic from the original front-end book purchased. If someone bought a course on setting up their first website, something needed to take the next step in their process could be a program on now getting website Copyright MarketingFunnelAutomation.com

4 traffic, then a coaching program on conversion optimization, and maybe finally a multi-day event on monetization models and growth strategies. Point is: When it comes to coming up with backend product ideas, don t overthink it. Let the data on your front-end tests tell you what customers are interested in and what they re spending money on. Once you ve got a reasonable quantity of customers, you need to become prolific with the backend products and offers you re putting out in front of customers. This is one of the keys to backend success. And one of the things that separates the backend of the big boys from the backend of the average. The big boys recognize if there was one segment of their list to be aggressive with - when it comes to making more and more offers - it s the customer segment. Far too many marketers are afraid of pissing-off their customers with too many offers. The result is they don t give customers enough opportunities to fulfill their jones for more. Which leads customers to seek that fulfillment elsewhere (i.e. competitors). Like I ve said before: The thing to be afraid of is NOT making too many offers to customers that they end up pissed off. The thing to be afraid of is not making enough offers to customers that forces them to go spend their money with someone else. (Read the above paragraph as many times as necessary until it s burned into your mind Seriously) The takeaway is just this: If you want to have a backend like the big boys, you have to be prolific and aggressive. You have to make new, frequent special offers to customers on a regular basis. Customers have proven themselves to be buyers. They re willing to spend money. They want to spend money. So, let them. Make them offers. And make them offers frequently and right out of the gate. As you become more aggressive with your backend, the average lifetime value of your customers will increase. In many cases, significantly. Copyright MarketingFunnelAutomation.com

5 Once you know your average lifetime customer value then it s time to do what the big boys of direct response do and get aggressive with what you re willing to invest on the front-end to acquire a new customer. Doing so involves understanding the concept of manageable loss. Fact is: The fastest way to grow any direct response business is to go beyond break-even on the front to the point of acquiring new customers at a loss. A manageable loss. Meaning: You should be willing to invest more to acquire a new customer than what that customer is actually worth from their initial front-end transaction. For example: If the average front-end transaction amount when acquiring a new customer is say $50, you should be willing to invest more than $50 to acquire that new customer. How much of a loss you re able to take is dependent on what is considered a manageable loss for your business. A manageable loss is dependent on three factors: 1. Average lifetime value of a customer 2. Time-frame in-between the initial transaction and second transaction (speed to break even) 3. Your cash-flow position What is considered a manageable loss is different for every business. Obviously, a business with a higher lifetime customer value, a shorter timeframe from initial transaction to second transaction, and the cash-flow to float new customers, will have a bigger manageable loss. It s all about simple arithmetic. It s all about numbers. Knowing the full (lifetime) value of a customer so you can determine what is a reasonable investment to acquire that value. The key to operating on the front-end with a manageable loss is that you know your marketing metrics. You must MUST know your numbers. Period. No ifs ands or buts about it. Copyright MarketingFunnelAutomation.com

6 The big boys of direct response understand that, with an aggressive, prolific backend in place, a new customer is an appreciating asset. An asset that has a lot more value beyond that of just the front-end transaction amount. And, so with that mindset they re willing to invest more to acquire that new customer that new asset above and beyond what their initial first point of return on investment brings them. How much more is based on how much cash they can put out and float before seeing the full return on their money and more. Again, this is different from every business. Here are the big points and big takeaways I want you to get from this little special report: You need to look at your front-end as the vehicle to acquire maximum new customers. Not as a profit generator. You need to use your front-end products and offers as a way to maintain your pulse on what the market wants and what they re willing to pay for. So you need to regularly create new offers and test, test, test. You need to let your front-end successes solely determine your backend products and offers. It goes front-end first, then backend. You need to be prolific and aggressive with your backend product and offer creation to ensure you re giving your customers ample, frequent, immediate opportunities to buy. Be more afraid they will go elsewhere if you don t give them enough chances to invest more in themselves. You need to know your lifetime customer value to see the full value of what new customers are worth to your business. Using your marketing metrics you need to be as aggressive as possible (i.e. manageable loss) with what you re willing to invest to acquire new customers. Recognize that with a backend in place customers have a value far beyond the little value of just their initial transaction. Think like an investor. You re investing in the acquisition of assets that bring you a return on investment in waves. The value of the initial wave should NOT determine what you re willing to invest to acquire them. The full value of their maturation is what you should use to determine how aggressive you should be on the front-end. Copyright MarketingFunnelAutomation.com