One big mistake many companies make is selling their product at a profit.
They see advertising as an expense, rather than an investment.
They focus on driving the cost of advertising down, while increasing the amount of exposure they get from ads.
Here is why that doesn’t work…
Especially in the days of Facebook & Google advertising, where anyone can hop online and place ads, we are vulnerable to rising ad costs…
When 10 people are bidding against each other to show ads to the same people, the price rises.
So we need a different way to go about it.
Let’s say you sell a $100 product.
And you think “if I can get customers from Facebook/Google at $50, then I can make $50”.
Which is what everyone is thinking.
So that cost goes up & up & up… until the market saturates and competition starts dropping out.
Let’s say that number is $100: you and your competitors have to pay $100 to acquire a new customer.
The experienced marketers & entrepreneurs rub their hands together in glee, at this point.
The novice marketers & entrepreneurs drop out.
Because the new marketers are advertising to make a profit. Their goal is quick cash, quick results, etc. They need to turn advertising dollars into profit.
The experienced marketer looks at it like this…
I want this marketing campaign to break even so that I can acquire unlimited customers for free. If I can spend $1 on an ad, and get $1 back from this campaign, I pay nothing to get new customers.
This is known as the front end.
The front end is a customer acquisition strategy.
The only goal is to acquire new customers.
We are not trying to make a profit.
We are trying to break even, so that we can go to more channels & get more customers, at zero ad cost.
We are trying to get a high volume of customers… because we know that we have a back end.
A back end is where the profit is made.
A back end is our follow up system.
The back end is where we make all kinds of offers… to people who already know, like & trust us… AKA customers… as opposed to prospects.
When we try to sell to new people, in the front end, our conversion rate is lower.
When we try to sell to existing customers, in the back end, our conversion rate is higher… and the amount of money they will spend seems endless compared to how difficult it would be to make the same amount of money by going around the world trying to tell everyone about our single product that we need to make a profit on.
Rather than expecting our front end product to create a profit, we want to build a “front end” marketing system that sends a high volume of customers into our “back end” selling system that is designed with profit & customer experience in mind.