The Front End Secret to Profitable Growth. The Small Business Growth Series. By Greg Black
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1 The Front End Secret to Profitable Growth The Small Business Growth Series By Greg Black
2 Introduction This is a very short report about a VERY important concept. It s not something that is commonly talked about. It is an approach to marketing that is used successfully by the most savvy of marketers to consistently pull in new customers whilst consistently growing revenues and profits long term. This report will show you why you should view your business as having a front end and a back end. This strategy won t work for every business, but more than you may initially think. What is the Front End? The front end is the products and services, sales and marketing that first brings customers through the door. What is the Back End? The back end is made up of the products and services, sales and marketing that happens after you have acquired a customer. Why is the Distinction Important? It is important to distinguish between the front end and the back end as they have two very different objectives. The first is to attract new customers 2 Ver: 1.0
3 The second is to retain and grow customers Where do Most Businesses Get it Wrong? Most small businesses don t make the distinction, they therefore approach all of their sales and marketing in the same way. They rarely think about how these different objectives need a very different approach. Most want to make profit on every transaction but as we will show you, this isn t the way, strangely, to maximise profits. Where do we Start? Let s start by looking at the function of the front end and the back end. The front end needs to be set up to attract the maximum number of new paying customers. The back end needs to be set up to maximise the lifetime customer value. How does this work Financially? In order to maximise the number of new customers, we suggest that the front end should be self-liquidating. Basically, we shouldn t be looking to make profit on the front end. We should look at what we expect a customer to be worth to us over the life of their custom and set a budget to acquire new customers, this is our: 3 Ver: 1.0
4 Allowable Acquisition Cost (AAC) Our spend on the front end can go on advertising, affiliate fees, discounted products etc. Our aim is to try and bring in new customers for that cost. Only once a customer is over the threshold, when they join the back-end will we be looking to make a profit. What Does the Front End Look Like? If you have been through the business growth training provided by InTouch, you will know the importance of picking a market and knowing your customer. With this in mind we will want to construct an offer or series of offers to bring in as many new customers as possible, many of whom, if we do things right, will stick around and become loyal customers. Most approaches will see us delivering more value than the customer would expect, in many respects we will over-deliver, because we know we have the back-end. This is a sure-fire way to crush your competition who don t know this strategy. I so wish I knew all this when I started out in business. Some example approaches are: If you sell high ticket consulting services, that will become your back end, then create a smaller productised offering that gives amazing value at a relatively small price for the front end; something that prospects just can t help but say yes to. 4 Ver: 1.0
5 If you have a restaurant you have a huge amount of options with happy hours, taster menus, special evenings etc to create that compelling front end offer. If you have retail business it would be wise to find a number of products that you can use as front end offers to acquire new customers in your niche. For example if you have a pet store, you may find a really amazing dog toy, you could discount this toy and market the hell out of it. Then when you acquire all these new customers, they will become part of your backend where you can present them with profitable offers like dog food, dog health products, other dog toys, dog beds etc. As you can see from these three diverse examples it can work for many different types of business. Where Should I Focus? It can be argued that 80% of your attention should be focused on the front end, certainly whilst your business is working towards getting to critical mass. This is the life blood of your business and the hardest part to get working at maximum capacity. A well structured front end in full flow can see your business growth sky rocket. 5 Ver: 1.0
6 Summary Don t try and make profit off every transaction Build a front end products, services, offers Focus on the front end Maximise the number of new customers coming into your business Use the front end to feed the back end where your profit will be made To your success! Don t forget to like the InTouch Facebook page dedicated to helping small businesses succeed. 6 Ver: 1.0
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