Ecommerce Lifestyle
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Build Your Backend

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Anton shares how much revenue and profit you should earn on the backend of your business, along with how to find reverent products and services to promote to your audience.

 

Learn more @ https://www.ecommercelifestyle.com/

  • Airlines always make those pitches for opening up a credit card (that offers bonus miles). 
  • For earnings for United, the partnership with American Express was 35% of their profit and about 7% of their revenue.
  • We typically look for, in our eCommerce stores, about 10% of our revenue coming from backend offers.
  • Say you sell gym equipment...you can look for backend deals that offer supplements or meal planning services. 
  • You wouldn't be drop shipping them physically, but you would become an affiliate. 
  • This will become a big chunk of extra profit as you would not be doing any of the drop shipping so the cost would be incredibly low.
  • If you don't have a backend yet, build one out. If the backend opportunities aren't easy to figure out. See where you and your competitors are putting ads.
  • Go on influencer pages and see what else they are promoting and talking about.
  • Transcripts

    Hey, everybody. Anton Kraly here from eCommercLifestyle.com. On today's podcast I want to talk about the backend, the backend sales channels for your business, and I wanted to give you some numbers which is really crazy, but they kind of match up with what we see in our own businesses. Basically what happened is this past weekend, today is Monday, when I'm recording this, but on Saturday I flew in to New York and yesterday, on Sunday, I flew back home to Texas, but I was out there for just a concert Saturday night. But when I was flying out there, I was with Delta, and as usual they make their pitch for opening up a SkyMiles card with Amex.

    I was thinking like, obviously, they're making money from this, right? They sell you on the flight and then they make money also from the backend sales channel when they say, "Hey, do you want to sign up for a rewards credit card?" They call their program SkyMiles, their partner there is American Express. You'll earn whatever it is, X amount of miles. I thought, for as long as I can remember flying with Delta, they're making this pitch. So again, I was just like, "I wonder what that actually looks like in terms of revenue and profit for them."

    So I went on my phone, connected to wi-fi, which they normally upsell you on, but have the free points through Amex Platinum. So I went on the internet though, and I googled it like how much does Delta earn from their American Express partnership? What's cool is because they are a public traded company, they put out their earnings reports every year, and that data was actually online. Don't worry, I'll tie this back to e-commerce in a minute. But basically what I found was an article, it was from I think like Q2 of 2018, so almost a year ago.

    But basically what it said was that for earnings, actually how much the company earns, talking about profit, the partnership they have with American Express equaled 35% of the profit. That's massive. 35% of the profit. And it was about 7% of their revenue. So this probably would be a lot easier for me to show you if we were sitting together with a pen and a paper, and I could draw this out, but okay, just picture this. About 7% of the actual revenue, so money in, came from that partnership. But again, about 35% of the company's earnings, meaning money they keep, came from that 7% of revenue.

    I know numbers might be getting a little confusing here. But basically what it means is they are killing it on this partnership. That's why for as long as I can remember, they've been making this pitch, right, on this different Delta flights, it's because it makes up 35% of their earnings every year. Again, the other number, that's 7% of revenue, that's what really stood out to me, because with our e-commerce stores, that's typically, we want to be a little bit more than that, we're typically looking for about 10% of our revenue to come from backend offers. So 10% maybe more, depending on the industry, depending on what we're selling. But I want to make sure, you're going for a backend like that as well.

    Then, as far as the net profit, it typically is much higher because you're not dealing with so many expenses. Especially if your backend is promoting products either through a partnership, or as an affiliate, or through a sponsored ad model. Because if that's your backend, you don't have any cost associated with it. That's why it could make up such a large percentage of profit. Now I'll go through just a couple examples real quick to get your minds working in the right direction here with what backend offers can be. I'll tell you, it's not always easy. I'm actually in the process right now of building out a new e-commerce brand, and that's also why this is on my mind. I'm trying to think of different backend offers for it, and they don't all just pop out as clear as day. So I'll give you an example for how to do some research. But just keep that in mind.

    But one example would be, if you had a fitness site, your e-commerce store was selling gym equipment, so barbells, whatever, squat racks, all that stuff. Then your backend could be promoting things to your audience, things like supplements, different things to work out to get stronger, things like different meal planning services, even meal deliveries, maybe different electronics like fitness trackers, or even things like instructional videos. Now, all of those products I just mentioned you would not be drop shipping typically. Maybe you would. But typically you'd be promoting them as an affiliate, where again, you're earning money per sale.

    So you promote a supplement that helps with testosterone to increase, then someone buys it through your link, you earn a commission. That's one of your partnerships right there. Again, you should definitely be able to get between that and the other deals you come up with about 10% of your revenue to be coming through those deals, those different partnerships, those different relationships. Again, that can equal a big chunk of extra profit, because there's no cost to fulfill those orders, and they're being offered to people that are already interacting with your company.

    So also things like upsells, those do count as the backend. So if you want to add on, let's just say you sell the barbells, and you want to add on like the weight clamps so the weights don't slide off, something like that would be an upsell that would count as a backend. But the real key here is to basically have a relationship with your audience, meaning your email list oof people that go to your website, and either buy from you or abandon carts, or opt in to receive something. Also to be pixeling everybody that comes to your website so that you can re-market to them on Google, and on Facebook, and on Instagram. Then show them relevant offers for other things they'd be interested in and that is your backend.

    Again, some people think, "Well, is it really worth it? I don't know. I sell barbells, that's what I'm going to focus on." Listen, you should, and you should be profitable, and most of your money is going to come from that, basically what I would call your core business, but don't forget about the backend, because backend sales are, again, for us, typically about 10% of revenue, and a lot of extra profit. Just like with this example I just gave you with Delta and American Express, we see things very similar usually not through direct partnerships, usually through affiliate relationships.

    But the number is, again, it was really interesting to me, because it was pretty much on par with where we're at, and I guess just goes to show what's true in one industry is typically true in another. So, if you don't have a backend yet, build one out. If you're selling something that's not as obvious as to like, "What else would my people want, what other products and services?" What I would recommend you do is look to see where you're advertising, and where you're competitors are advertising and look for different influencers, and different blogs, and see what else they're promoting. So, maybe it's not related at all on the surface level, but what else would your audience possibly be interested in?

    I'm just going to make something up here, all right? Maybe you sell sunglasses, that's your niche, and you're like, "Okay, what would be my backend for sunglasses?" I mean, I don't know, that's tough. So what you could do is look for all the influencers out there on Instagram that promote sunglasses, that when they have [inaudible 00:07:27] they tag your company, you make a bunch of sales. Think, "Okay, what else are they talking about?" Maybe it's some all-inclusive vacation to the Bahamas, and they're talking about that and how much fun it is. Well, then maybe that becomes one of your backend offers.

    You find a travel company that offers those deals, you go ahead and build the relationship with them, most likely as an affiliate, you promote that to your email list, because even though it not directly related to what it is you sell, your target customer is also interested in those things. Again, if you do this right, then it should equal about 10% or more of your revenue and a big chunk of your profit as well, because you have no cost to get those customers for those offers or to fulfill them. So yeah, keep that in mind, guys, definitely implement it if you haven't done it already.

    If you are doing it already, and you're not at that 10%+ of revenue coming in through your backend, put some time into it, set aside a few hours, a few days, whatever, and just dive deep into it, put it into place this year. We still have 10 months left of 2019, and that means there's a lot of extra money to be made. So that's it guys. I'm going to get back to building this new brand I'm working on. As always, if you're listening to this, and you are not part of the community yet, if you want to learn my system from A to Z, just go to dropshiplifestyle.com, click on courses, and you can get enrolled there.

    Or you can get our done for you program where we'll literally build your store for you, set up your social pages, do all the fun stuff that takes time to learn, so you can check that out at dropshiplifestyle.com, go there and click on courses. Yeah, if you're already part of Drop Ship Lifestyle, make sure you get your ticket for Prague. I'm really excited about it. We have the Prague trip coming up in September, so still a little far away, but we're going to start announcing the speakers very soon. When we do that, the prices are going to go up. If you don't have a ticket yet, email me, it's Anton, A-N-T-O-N, @dropshiplifestyle.com. And I will let you know how to get your ticket and join us out there. So, that's it everybody, I'll talk to you all soon, I hope you have a great week, and build out those backends. Talk to you later.

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