In part one of this series on the Sales Funnel, I related my story of becoming a customer of the Double Your Dating information product business, and how I experienced the sales funnel used by David DeAngelo, to sell his dating products.
The sales funnel is a systematic marketing process where you progressively filter your prospects into customers and further refine them into hyper-responsive customers. Your customer base becomes smaller and your profits increase as you sell higher priced items to your hyper-responsives in the back end of your sales funnel.
Before any of this can happen, at the top of the funnel you need to attract prospects, and it’s at this point where your marketing creativity can really shine.
The front-end is the most dynamic aspect of the sales funnel and the area that requires continuous experimentation. There are literally endless techniques available at the front-end, limited only by your resources and imagination.
As the Internet changes and evolves, new methods to market and capture leads surface thanks to advances in technology and ideas from Internet entrepreneurs. In the “old days” leads were generated via methods like banners and newsletter advertising, which are still common marketing tools today, but are now joined by more sophisticated options such as pay per click advertising, social media, blogging, podcasting and other Web 2.0 tools and toys.
The focus at the front-end is to attract and qualify people who may have an inclination to purchase your products further down the sales funnel. At this stage you begin the process of refining your target customer and educating them of the possibilities you and your products present.
In most cases the qualification occurs when a person opts-in to receive something from you. It’s this opting-in step that transforms your everyday web surfer into a prospect, since they have just taken an action that indicates they have at least some desire for what you offer.
The first step of building your sales funnel is to create front end mechanisms that capture the attention of people. You then give them the option to opt-in, which can occur in many ways.
Here are some examples of how marketers attract and draw people into their sales funnel. These are all front end marketing tools.
- Signing up for an email newsletter, for example my own Blog Traffic Tips email newsletter or the Double Your Dating newsletter.
- Subscribing to a blog via RSS or email notifications.
- Opting-in with your name and email to download a free report, white paper, ebook, audio download, video file or any media. A great example is Rich Schefren’s Profit Vault.
- Registering for a free online service, for example MySpace, Facebook, LinkedIn, Yahoo! Games, Flickr, Skype – pretty much anything where you have to register with some form of contact details.
- Ticking a box to receive further information about a topic/product when registering for something (co-registration).
Strictly speaking, for someone to have entered your funnel as a prospect, to stick their hand up and say “I’m a lead”, they must have agreed to receive some form of communication from you. This is permission marketing, where your prospects give you permission to contact them with further materials, all of which is part of your marketing and sales funnel.
In today’s online marketing world, I prefer a looser definition of a lead, where a user doesn’t necessarily have to opt-in to your marketing stream, they just need to pay attention to you.
Perhaps they are reading your content via RSS or directly from your blog, or are listening to your podcast or watching your video. The point is that you have their attention. You don’t necessarily have permission to continue to market to them, however because you are providing value you have their attention, so they choose to receive more from you. This is a subtle difference, but a key point for marketing online today. Your relationship with prospects counts more than whether they gave you their email address or not.
Of course there’s no reason why you can’t take the people currently paying attention to whatever you do and funnel them into an opt-in list of some kind, which essentially asks them to create a stronger relationship with you, since they now offer you both their attention and permission to contact them in the future. That is what the front end is all about.
The Price You Pay
Since email marketing is the most prevalent communication tool to do business online, often the process of handing over your email is the initial “price you pay” when you enter a sales funnel. From that point onwards you feed prospects value, disqualify those prospects who are not ideally suited for what you offer, and start to offer front end products.
Disqualifying leads is a very important process that must occur at all points of the sales funnel. If someone doesn’t receive value from what you offer, then they won’t continue to purchase more further down your sales funnel. Assuming of course that there IS a group of people that love what you provide, it’s your job to focus attention on them and filter away everyone else. If no one likes what you do or it’s a very small group, then perhaps you need to refine your target market or the offer you present.
Profits Are Not In The Front End
A common focus for many Internet business entrepreneurs – and I’ve made this mistake myself – is to think about launching your first product as the big ticket to wealth. You focus so much energy on releasing your ebook or program or course, thinking it will make you rich, that you don’t realize that the real profits are made at the back end.
Double Your Dating is a fantastic example of this principle. You may not realize this, but the Double Your Dating affiliate program pays out 200% to affiliates. Yes, that’s right – they pay out $40 to affiliates for every $20 sale of the front end ebook they refer. They can afford to lose $20 because they know how much they will make on the back end.
I’ll go into more detail about how they can do this in the next sales funnel article, so for now just remember that your front end products are lead generation tools – they are not necessarily your profit centers.
That’s not a hard and fast rule, there are companies that make their money strictly from front end sales, but in most cases by adding a back end, the profits of the business will explode.
The front end is all about capturing attention and drawing people into your sales funnel. Since there are many ways to capture traffic online you should never run out of options for generating leads.
The key is to know your numbers. Once you know how much a lead is worth to your business, and you can only really know this once your back end is refined, then you go to work building front end marketing tools. This is a process that literally should never stop. As long as there are methods to market you can be out there testing them, see which bring in the most qualified traffic and tweak the process until your conversation rates are sky high.
Obviously the size of your organization dictates how much you can do, since resources are limited. In most cases you will discover a “best” solution that works well for you, which might be writing and publishing free articles or ebooks, or using affiliates, or running teleseminars, or encouraging word of mouth referrals, or posting to a blog or any combination of these tools, or other methods, both online and offline.
Your front end helps to qualify prospects and convince them that your business is worth forming a relationship with. That relationship becomes stronger as customers consume more of your free marketing resources, purchase front end products and learn to trust and appreciate what you do. From there, they enter your back end and make big ticket purchases with high margins.
In the next article in this series on the Sales Funnel I will review the back end process and why it’s the most crucial element for long term business growth and beating the competition.
Part three is now available: The Sales Funnel Part 3: Back End Profits
Loving The Front End
Hey, I just wanted to mention something.
Like you said the company size (small-mid-big) also helps determine the amount and kind of “sale mechanisms”, as you call them, that go into the funnel to attract more sales.
From my experience in a large international company, high-level managers are scared or doubtful of using new mechanisms that have proven to be effective with smaller businesses. Maybe it’s just something time will slowly change.
Another great post!
The “Double Your Dating” affiliate example is especially noteworthy. It’s really important for information marketers to think in terms of “backend profits” and then *funnel* their prospects even through a purchase system.
I heard an excellent example yesterday on the InternetBusinessMastery.com Podcast about focusing your efforts more and more on the “Best Customers” – those who will pay several thousands of dollars for a big product, rather than those who will shell out $50 or so for an ebook.
I’m still processing the wisdom behind that approach…. 🙂
Thanks for answering my burning question about the key to your success. You were the first to respond, so I’ll be featuring you on my blog at Mindful Entrepreneur tomorrow!
Looking forward to more great stuff from Entrepreneur’s Journey…
Very good post, Yaro.
I think you’re doing a great job to emphasise that it’s much more important to focus on quality over quantity when it comes to posting on your blog.
Loving The Front End Too
Hi Ron – Yes, another reason why small dynamic companies are often such a threat to larger, slow reacting, companies.
Jason – Exactly, it’s also so much more satisfying as a business owner to work with people who find it equally satisfying to work with you. Cut the people who don’t benefit and help those that do benefit to do so even more.
David – I’ve often considered sitting down and blogging more often. I’d probably still keep the quality reasonably high, but double my output. I’m curious what sort of effect that would have on my traffic.
However because I’m creating product behind the scenes, which takes a big chunk of my time, for the time being I will stick to my current pace and quality focus here on my blog.
Like you say, in order to offer the sort of commissions that Double Your Dating too, you need to have worked out customer lifetime value, which is not so easy.
I recently found a great book about this subject, from the perspective of branding, called Think Two Products Ahead, by Ben Mack.
A GREAT Post!!
Thank you for all your work!
I agree with everything in your article said. I am currently writing my ebook… ecourse… and getting ready to start production on my CD/DVD series for dating.
My goal is to educate guys on how to be the type of man that they want to be… not just picking up chicks… although that is a good part of it.
Keep up the great articles
As I’ve figured out by now, I’m already in a funnel…yours…but as you so honestly explains, this is such an important aspect to the path of making substantial income online that I’ve already decided on signing up for your mastermind course. I consider you the TOP expert in your field, and I have huge respect for your work and dedication. My goal is to set up a membership site, and make a living at it, period. And looking forward to spending a little money doing so. Thank you for valuable information…(half way trough you membershipsitemasterplan)
Fantastic article, explaining the sales funnel process. There were a few lightbulbs that went on while I was reading. For that I thank you.
I appreciate that it’s likely not your target market, but I think it’s important to point out that the sales funnel process isn’t just limited to information products. It can be applied to physical products as well!
Thank you for posting such valuable content. It’s clearly not cheap and quickly put together in order to grab attention.
Thanks Yaro. I have always used “front-end” as technical term.
This is the first times I “formally” read about “front-end” as the first part of a sales channel.
Thank you very much.
You answered a question for me! I found this page via google search. It is good information.
Great post Yaro, it’s interesting that you point out the importance of rewarding your affiliates at the front end.
200% is big incentive but worth it to recruit the maximum amount of affiliates knowing you will profit on the back end of the funnel.
Another really interesting post.
Enjoy reading your blog, I’ve learnt so much in such a short space of time.
Great content. I am in a physical products business- skin care, I am wondering what the back end offer would be in this case? Any ideas would be very much appreciated
Subscription – offer ongoing skin care products every month.
Packages – offer big packages of products grouped together around solving problems/themes.
Education – offer training on how to use the products you sell.