For most Internet businesses, back-end selling can make up to 80% of an individual or company's total sales.  Back-end selling is simply the sales of products or services that you do with an existing customer after the first sale.

Don't be fooled into believing that you will make a ton of money on the Internet with only *one* product or service, unless it is a breakthrough product or service.  You need multiple products and repeat business to truly make it work.

Many people sell their first product or service as a loss leader.  This means that they purposely discount their first product to a very low price in  order to develop an in-house customer list.

Ken Evoy is a prime example of an Internet marketer who depends on back-end sales to drive his profits.  He first started selling his "Make Your Site Sell" ebook for a ridiculously low price of only $17 and many people could not understand why he charges so little for so much.

Ken has a number of back-end products to sell and he knew by giving the customer more than what they wanted with his "Make Your Site Sell" ebook, they would be more inclined to purchase his back-end products.

His back-end products are not cheap, but he has sold thousands of his back-end ebooks after the launch of "Make Your Site Sell."

Back-end selling is much easier than the first time sale because you already have an established in-house customer list.  These are people who already purchased from you and are delighted with your product or service (or at least they should be.)

Many individuals and companies make the mistake of trying to find new customers.  This can become costly and it is always harder to sell something to a new customer versus an old customer.

Your customers are worth a lot more than just the first sale.  For any business that has multiple products or services, you can calculate the *lifetime* value of a new customer.  How do you calculate the lifetime value of your customer?

In (3) easy steps:

1. First calculate the average profit that you make on sales.   Just take your total sales minus your total expenses divided by the number of sales transactions.

2. Look back at your history records and determine how many times the average customer purchases from you in a three-year period.

3. Now, after calculating the first two steps you can now determine the average amount of profit that you will make from an average customer.

Here is an example to further illustrate my point.

Jimmy the record man wants to know the lifetime value of a customer who buys a record from his store.

Revenues = $100,000

Expenses = $20,000

Net = $80,000

Sales = 8,000

Average Profit Per Sale = $10

The average customer purchases about 7 times in three years from Jimmy.  That means the lifetime value a customer for Jimmy is:

$10 x 7 = $70

So even if Jimmy gave away his first album for a ridiculously low price or even at a loss, he will eventually recoup his costs over time.

How do you think Columbia House and BMG, who practically give a bunch of CDs free at first, make money in the long run?

Back-end sales!

If you are currently selling only one product or service, look around on the Internet for complimentary products or even join an affiliate program that offers products that you think your existing customers will be interested in.

Bottom line, your in-house customer list is a goldmine.
 

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