Understanding the Sales Funnel

It’s no secret that in any business creating a well-thought-out product plan can make a huge difference in the level of success you can ultimately achieve.  With a solid plan you’ll be able to move forward quickly and confidently, knowing that you’ve thought things through to avoid major mistakes and setbacks.

ClickBank recommends following this simple blueprint that has helped thousands of vendors monetize their knowledge over the years.

This image is a graphical representation of the sales funnel blueprint. It begins with a lead capture, which leads to a front-end offering, which leads to a back-end offering. 

Lead Capture

When thinking of a lead, think of someone who is interested in your product but not quite ready to buy (they are also called prospects).  They could be interested in solving a problem or in whatever you’re trying to teach them. However, they are not convinced they want to spend the money yet.  The last thing you want to do is let these people leave and just hope that they’ll come back and buy later. 

What you really want is for the prospect to provide their name and email address so you can cultivate their interest and likelihood of buying by sending them information over time.  This cultivation process builds trust with the prospect so that they will hopefully be comfortable enough to buy from you in the future. 

A typical lead capture offer will give the prospect some piece of relevant and valuable information in exchange for their name and email address.  There are many types of lead capture offers.  It could be a free report, newsletter, or video. 

All in all, your lead capture is a free offer that provides you with the customer’s email address.  You’re then able to send follow-up messages to the prospect so they can get a better feel for your expertise and credibility.  By offering this first, you will ultimately generate many more sales.

Front-end Offerings

The second element in the proven blueprint is the front-end offering.  This is typically the most visible product for sale, and the one prospects will likely buy first. It's at the "front end" of the buying relationship.  It’s often the product you’ll see most prominently displayed when you study any information product vendor’s business.

Your front-end offering could be an e-book, manual, or how-to video.  Front-end products are usually in the low to medium price range.  It’s important to make sure your front-end offerings provide a really good value for the price.  Customers should feel like their money was well spent after purchasing a front-end product.  Satisfied customers are far more likely to buy your back-end products.

Back-end Offerings

Back-end products are most often promoted to buyers of the front-end product. They allow customers to pay more to get more---more information, deeper information, more access to you, and so on. Back-end offerings are usually more expensive than front-end offerings, and they can include things like monthly members-only programs, access to training video libraries, or subscriptions. 

Of course, only a small percentage of customers will want to pay more to get more. However, it doesn’t take very many buyers to generate a lot of money with back-end products. In fact, most successful vendors make most of their money on the back-end.

Vendors should strive to have a continuity program as their back-end offering.  This is usually a monthly subscription or other program where customers agree to a series of recurring purchases.  If it’s appropriate for your niche, you should try to have a continuity program because it provides a steady and predictable stream of income.  As you add subscribers, you’re not only adding to your income for this month, but for every month in the future.

At ClickBank, vendors with continuity programs make three times more money than those just offering front-end products.

Understanding the Model

 This image shows how customer progress through a sales funnel is relatively predictable, based on the conversion rates between stages. The graphic begins with a lead capture, which in this example is viewed by 500 leads. 40% of those leads convert to the front-end offering, which means 200 front-end sales. 30% of those customers purchase the back-end offering, which means 60 back-end sales.

Lead capture is all about wooing prospects:

  • For prospects who are not ready to buy
  • Offers a free piece of related information
  • Asks for a name and email address
  • Acts as a “sample" of you and your info
  • Generally results in 15-25% more sales

Front-end offerings start people buying:

  • Generally the first product purchased
  • Converts prospects/leads into customers
  • Often priced in the low to medium range
  • The lynchpin of an information business
  • Provides lots of value...But not everything

Back-end offerings let people buy more:

  • Often available to existing customers only
  • Allows customers to pay more to get more
  • Usually more expensive than front-ends
  • Purchased by a small portion of customers
  • Generally accounts for 40-60% of profits

Next Step

Visit our article on How to Select a Topic or Niche.

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