The money we make up front on a campaign is known as “the front end.” The money we make on subsequent purchases is known as “the back end.” Together, these figures make up the lifetime value of a customer. Lifetime value and customer acquisition cost are two of the key numbers you need to know to measure marketing effectiveness. The other statistics, like response rates and conversion rates, in themselves are useless. We just use them to determine these two figures, which give us a true picture of how our marketing is performing. If you don’t know what these numbers are in your business, then now’s the time to start measuring and making your marketing accountable. Constantly testing, measuring and improving these numbers is how you build a high-growth business. Your “front end” offer is the offer that gets seen by prospects (people who aren’t yet your customers). These are people who don’t know you and have no reason to like or trust you. In general, the goal of your front end offer is to create a customer and make enough profit from the first transaction to at least cover the customer acquisition cost. This makes it very sustainable to keep advertising. The real profit is made on the “back end” through repeat purchases by existing customers. Sometimes it makes sense to “go negative,” that is losing money on the front end, because you know for certain you’ll make it up and more on the back end. This is often the case with subscription businesses or businesses that have a high lifetime value. If you don’t know your numbers, this can be a risky strategy, so stick to the goal of having your front end pay for your customer acquisition cost until you have a good handle on your lifetime value numbers. In Chapter 8, we’ll talk more about the back end and increasing customer lifetime value. This can revolutionize your business and turn losing campaigns into winners. Credit: 1 Page Marketing Plan. 'Subscribe' to this Podcast 📻 to stay updated on all future episodes. Do share your feedback, dm @digitalentrepreneur247 on Instagram, write to me 'umran@digitalentrepreneur247.com'. Download QuikMeet, do instant video conferences with your family, friends, and colleagues.

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