How Well Do You Know Your ‘Back End’?

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How well do you know your ‘back end’?

In simple terms…A back end refers to that part of your business that sits behind your ‘front end’!

Your front end is the products or services your customers initially purchase from you. You might consider these ‘initial’ products or services the mainstay of your business.

A back end creates the opportunity for repeat sales. It means your customers can come back to you again and again.

This makes dealing with that customer far more profitable. Another great benefit is that it reduces your need to go out and win new customers constantly (far more expensive than selling to existing customers), but it does much more than that.

So…let’s find out more about the back end and how to build and maintain one for your business.

Doing so is critical to the longevity of your business and can is essential to achieving the highest profits possible.

A missed opportunity that could be worth thousands

Now not every business can do this…I had a Furniture Removal business and this wasn’t the ‘Key Profit Strategy’ we used.

However for many businesses it is…and for those where it is…many rarely try to resell to their current or previous customers. Most never address the ‘back end’—the residual part of their businesses. Systems need to be developed you can do it Constantly.

Let’s face it—identifying prospects and converting them to customers can be a costly process. Yet what do most businesses do when they’ve got new customers? They ignore them entirely and put all their marketing efforts into gaining more new customers.

That really IS a crazy approach.

Once people have bought from you (assuming, of course, your product or service delivers what you promised), they are THE most likely people to buy again. In fact, one-time customers have a propensity to buy perhaps TEN TIMES more than someone off the street.

This stands to reason. They know you, they know where you are, they trust you and, most importantly, they HAVE PROFILED THEMSELVES as being in the market for your product.

Instead of concentrating only on front end sales, you’ll generate vastly more business and profits when you devote part of your marketing to up-selling, reselling, and cross-selling to existing customers. That is, working the back end.

In its simplest form, ‘back ending’ is learning to leverage second and subsequent sales from the first sale. For example, writing to existing customers to invite them back to your business or advising them of new products or services and having them purchase from you again.

For example…

  • If you sell carpets, your back-end products could include not just MORE carpet, but carpet sweepers, vacuum cleaners, protective sprays, and carpet cleaning services.
  • If you sell computers, your back end can be computer courses, custom software, and computer supplies.
  • If you sell industrial equipment, your back end can be maintenance contracts, supplies, and troubleshooting services.

Regardless of how, the back end is all-important!

And that’s because the profit you generate from working the back end can bring you many times the profit you make just from the initial sale.

That’s why it’s important to identify a back end for your business. If you’re basically a one-product or one-service company, seek out other products, companies, or services to offer your customers as your back end.

Be open-minded about other products, services, and companies that might fit well based on either demographics or specific areas of interest.

How profitable are you really?

Until and unless you can identify how much back-end business you can expect, you won’t know how profitable or unprofitable an ad, sale, customer, or promotion really is. For example, if you spend $10,000 a month in advertising and that produce $9,000 in retail sales, it looks like you’re losing $1,000 or more (not including the cost of the product sold or services furnished). But are you really losing in the long run?

Not if you induce those new customers to purchase a similar product or service from you within 45 days. In that instance, you double the value of the customer. All of a sudden, you’re farther into profit than loss.

If you induce them to come back once every 3 months and repeat the average transaction, you’ve set up an annuity.

All from an original $1,000 loss that you subsidised. But in 3 months or less, the back-end business should offset your subsidy several times over.

Our way of doing things is unique and it’s why it produces unique results for our clients…

We would love the opportunity to help you clear your head on what is the right way for you to accelerate your business… 

We highly recommend you watch this step-by-step case study of how we grew Beefy’s Pies into a Famous Aussie Icon from a small stressed out bakery into a family owned chain. Click here to get all the insights into their success…

Or if you have heard enough about how we work with our small business owners, then let’s have an off the record chat about your current situation and see what we can do to immediately guide you…click this link to see what time best suits you.

Wayne Hutcheson

P.S. Ask if our Boardroom Program intake is open for enrolments…It works best for business owners who see the benefit of having us on as their ‘external partner’ so that they are not alone in the day to day decisions of their business. 

 

 

 

 

 

 

 

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About the Author:

Wayne Hutcheson is a Coach of the highly regarded Grow Business Grow Boardroom Program. He works closely with a hand full of clients to help them achieve growth in their business and to enjoy 'guilt-free' time away from their business without it affecting their profitability.
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