The Most Important Sale
Often in business, we talk about the importance of customer acquisition. In other words, how do you find clients — from attracting prospects to making the sale? But the reality is, if you’re going to have a sustainable business, then customer acquisition isn’t the most important thing to focus on…
Okay, so we're talking about money in this little mini series here. And I want to talk about one of the absolute, most important things. You have to get this right. And that's this idea of making the second sale.
So, people get really enamored with acquiring the customer. With finding that customer. With reaching out into the interwebs, and somehow attracting someone, having them come in, and buy from you. Getting that initial sale. And that's all great. And frankly, it's something that I did quite a bit in years past.
But, there's one rule that is not going to change. It's continually going to get more expensive to acquire the customer. Advertising costs keep on going up. The cost to reach people keeps going up. That's not going to turn around anytime soon. It's just going to keep getting more expensive to acquire the customer.
So, what you need to do, is you need to focus on the second sale, and the third sale, and the fourth sale. But… the next sale – the back end.
What are you going to sell to people that have already bought from you? Because I'll tell you this, in my experience, it's about 15 times easier to make the second sale, than to make the first sale. It completely changes the way your math works. And often, the second sale, can be at a higher price. And the profitability is so much greater, because you're no longer paying the cost to acquire that customer.
So, you have to focus on the back end. And what that does is, it allows you to spend more money to acquire the customer. So, if your first sale is a hundred dollars, but then, of the people that buy from you, a third of them, make an additional purchase for another hundred dollars, then that means that initial acquisition, well, that person's worth so much more, to bring them into your world. That allows you to spend more to get that initial sale. This will completely change your math.
And at the end of the day, you're competing against other people in your market to acquire that initial customer. And as I said, the costs will keep going up. And your spend is competing against their spend. And so, what you need to do, is add a back end, and hopefully a higher end, back end, that will completely change the math in your business. You just can't survive in a long term effect.
When I look at businesses, and occasionally, I come across one where it's like, wow, that would be really hard to have a back end for that business. Then it would be one I wouldn't even be interested in. The corollary, or I guess, the tangent off that, is almost every business, you can build a back end. But you absolutely have to focus on that back end, on those additional sales, or else, at some point, the cost of acquisition is just going to be way too high for you.
So, I hope this isn't… well I haven't even talked in numbers yet. But I hope this isn't too conceptual, because this is the one thing you have to nail if you're going to have a real, sustainable business.
So, I'm Jeff Walker, wherever you're watching this, scroll down and leave a comment for me, and let's go get 'em this week.