This is a continuation of a previous post on backend profits.

After looking back and reading that post, I realized that I had left out the most exciting part of this type of strategy.

Here is a question for you:

How can YOU differentiate YOUR product from everybody else’s in the marketplace?

Actually, the question goes much further than that:

How can you differentiate your AFFILIATE PROGRAM from everybody else’s in the marketplace?

Think about it - you are not only competing for the customer dollar, you are also competing for the affiliate’s promotion.

It isn’t enough to have a great sales letter and an awesome product - you are also going to need affiliates to get the word out so that you can make incredible profits.

Let’s look at it from your affiliate’s point of view: They get an email from you saying that you have some fabulous $97 product that converts at an incredible 10% and that you are willing to give 50% commissions.

How could they resist?

What you forget is that they have 100 other emails in their inbox offering exactly the same thing.

How are YOU going to stand out? Are you going to raise your affiliate commissions to 60%? Maybe 70%? Maybe you’ll give some sort of incentive to promote your program (perhaps bonuses after the first 10 sales).

What if I told you that it is possible to offer 110% commissions and still remain profitable? Would you like to know how?

The answer is in the backend.

(To fully understand what the backend is you will need to read my previous post)

Let’s assume you have the following products in place:

* A $97 course on “Getting Started” in your market (e.g. losing weight, quitting smoking)
* A $47 upsell that includes some videos to complement the course

After they buy this “frontend” product, they are then shown other products later in the process (1 week later, 1 month later, whatever works best):

* A $250 CD course shipped directly to their home
* A $97 per month coaching program complete with teleseminars and monthly reports
* A $1000 home-study course on the same subject, but going into even more details and giving more insights

Now let’s say you put the proper tracking in place, and you find out the following:

1. 35% of people who buy the e-book also buy the upsell.

2. 10% of people who buy the e-book also get the $250 course later on.

3. 5% of people who buy the e-book also get the $97 per month coaching and stay members for 4 months on average.

4. 1% of people who buy the e-book also get the home-study course later on.

Here is the question: How much is each customer worth?

This requires a bit of math, but I’ll do it for you right here so you can see the power behind all of this.

If we didn’t have the backend in place then each customer would be worth $97. If you gave 50% commissions then each customer is worth $48.50 to you.

However, with the tracking we see that 35% take the upsell, 10% get the CD course, 5% get the coaching program, and 1% get the home-study course.

That means that the average customer value is now:

$97 + ($47 x 35%) + ($250 x 10%) + ($97 x 4 months x 5%) + ($1000 x 1%) = $167.85

(Please note: I kept the conversion rates low to show that this works even with bad sales letters - the results would be much higher with better marketing and more products)

This means that for every customer you obtain you will make $167.85.

Could you afford to pay your affiliates 110% commissions? Considering that would be $106.70 the answer is YES!

Would the other 99% of marketers who don’t have this process in place be able to compete with you? NO!

I hope now you are starting to see why the Internet Marketing industry should be treated as a business and not just as a quick “make an e-book and sell it” opportunity. With the right strategic planning you can definitely build a very strong and profitable business.

Yours in marketing,

Matthew Glanfield

P.S. A lot of what I have spoken of was learned from a simple free report written by Rich Schefren. You can download it for free at www.strategicprofits.com/finalchapter/.

P.P.S. Post you comments on what you think!