Do The Math: How to Develop Your Own Automatic Internet Income Funnel...

By Terry Dean

• If you're a public speaker, the eBook can help you find new promoters and events to speak at.
• If you're a web designer, an eBook on web design can give you new clients.
• If you sell martial arts equipment, an eBook on martial arts can give you credibility.
• If you sell paintball equipment, an eBook on paintball strategies can open more doors.
• If you do gardening, then an eBook on elements of gardening makes perfect sense.

So a low cost product, preferably a simple eBook or report is the first lead generating product. You make sales easily to your visitors and start them into your funnel of product sales.

At this point, you start selling them your primary product or service... OR you may have a catalog of possible options for your customers to purchase. The key is to have more than one product to sell... and have a variety of price levels for your customers.

For example, if you were the Search Engine guru, you could have your $17 report for people who want to learn about search engine positioning. You could have a $19.95 a month subscription for constantly updated results. You could also have a $100 a month service for top positioning in 3 engines.

You could also have a $500 a month option for top listings on Yahoo and 7 other major sites (you probably could even charge a lot more for this kind of option). You may also offer your $3,000  3-day seminar, to teach others how to be search engine experts.

You could then joint venture with other types of Internet marketing information products, sites, and tools (such as web hosting, autoresponders, etc.). You could offer other people's seminars to your list. You could sign up for affiliate programs to promote.

This gives you multiple profit streams from the same audience of customers.

The key to Internet wealth is to earn multiple streams of income from the same customer base. I've said it over and over. Don't think about having 1,000,000 customers. Think about having 1,000 customers and offering them everything they need to reach their goals.

How the Funnel Works

You must build an opt-in email list. I talk about this point again and again, because it is essential to the success of your online business. Having a list opens the door to Internet money-on-demand (cash anytime you need it) and the constant growth of your business, while your list grows.

Key point: The key to an Internet Wealth Funnel is building your opt-in list and really working it - in both of it's major forms (one opt-in list for prospects who haven't purchased yet and then another one for customers who have purchased from you).

When we usually speak of opt-in lists, most of the time they are "prospect" lists. While we're covering this point though, I need to mention that you should also be building a "customer" list.
These are people who've not only raised their hands and have asked for information... but they have also voted with their wallets and are willing to BUY from you.

Your customer list is 100 times more valuable than your prospect list. You need to keep the email addresses of your customers and offer Customer Only specials... and even send out specials by "snail mail" to your list. Personally I like sending out postcard mailings to my list once in a while by regular mail, but marketers such as Jim Daniels have said they have great profits from sending out hard copy catalogs to their customer list.

Once you start working your customer list, you'll find a very interesting trend. A good percentage of customers will buy again and again from you if you've provided them with good experiences.
In other words, if you "Wow" them with wonderful products, you can count on 25% to 75% of your customers continually buying new products and services you release.

The actual statistic most often quoted about this is that it is 7 times easier to sell to an existing customer than it is to produce a new one. This means it will cost you 7 times as much in expenses to generate a new customer than it would to go back and make an offer to a current customer.

This is why I'll recommend an advertising source in the "Ad Results" section if I break even or even make a small profit. I don't have to earn 10 times my money from an ad to be happy with the results. My real money isn't in the first sale. I may make a few bucks or even a few thousand bucks on the first offer. It really doesn't matter. The real money comes from future sales!

The true danger of the Internet hype and lies of the "Make $50,000 in 30 Days" comes into play here. It puts most beginners out of business online. They run an ad and break even or only make a small profit. They try again and the same thing happens.

They keep going and earning a little money... losing a little money. They think they're doing something horribly wrong because they're not getting rich in 90 days like the Internet guru told them. They give up because they can't seem to get ahead.

Let me assure you. If you're breaking even or earning a small profit on your first sale, then you are doing good! Most businesses don't earn a profit their first year (or even their first few years). An Internet business can be quite different though and can be profitable almost immediately because of the low overhead we deal with.

The small profit you're earning today can be easily turned into a GOLDMINE once you realize it's only the beginning of your relationship with each customer. This is called the lifetime value of a customer. How much will each customer be worth to you over the lifetime of your business relationship with them?

Each customer is not worth the $17 they spent on the first eBook they bought from you. They may be worth $1,000 once you count the average of the ebooks they will buy, affiliate programs they may join, conferences they'll attend, consulting they'll purchase, etc.

Looking at each new customer this way will build a fire on the inside of you. You made 15 sales today for $255. NO... you generated 15 new customers for a future net worth of $15,000 in your business. This is where you're missing it.

Let's take Average Joe Affiliate for a moment. He signs up for a free affiliate program and places ads to promote it. It may cost $100 for the ad. It does really well and $300 in sales occur. His share may be $120.

The first thought in his head will probably be, "I only made $20 today." He may then think that the ad didn't work because he only earned a measly twenty bucks. He'll tell his friends, "Maybe this affiliate program isn't any good because it didn't produce for me."

Another ad is placed... and another small profit is earned...or maybe even a small loss. The whole process begins to look too difficult to accomplish. So, Joe becomes another failure in the trash heap of Internet hype.

This is why I tell every Net-Breakthroughs member that you need to start your own opt-in list. I don't want you to become like Average Joe Affiliate. By having your own web site and signing up visitors for your list FIRST... and then promoting the affiliate programs... you get to build your list (your GOLDMINE) while earning a profit in the affiliate program.

Your viewpoint changes. Instead of saying, "I only earned $20." You tell everyone, "I actually was able to earn $20 while adding 150 new people to my list!" You made money generating new leads for your other products and services!

The first sale to a customer is just LEAD GENERATION... while earning profit.

Examples of Information Products in Each Level

Let me show you three examples of how to create your own Internet Wealth funnel. The first one is by running your own information business. The information business is one of the most profitable businesses to be... since you get to sell high value products at 1000% margins or more regularly instead of being stuck with small 20% to 50% margins.

I want to concentrate on showing you 4 different price levels for your products and what we use each one for in our business. Please note that the below figures are examples and your own business may have some differences in it.

Low Priced Entry Level Items - $5 to $50

An information business will usually generate customers using a low priced entry level product in the $5 to $50 range...although they sometimes will go a little higher (sometimes up to $97 while still in basic lead generation mode).

What's important for you to know is that this is the lead generating product, not the primary income generator for the information business. This is the mistake so many marketers are making. They think this is where the profits come from... and it's simply not.

Small profits are earned at this price level while generating leads for the much higher ticket items on down the road. It's difficult to sell a $1,500 video course to someone if you haven't already impressed them with a $17 book.

Products in this price level most often include eBooks, Books, and Single Audio Tapes... or sometimes a package deal of these types of items. When writing or creating this type of product, your mind should be thinking about what you will be selling on the backend.

How are you going to use this first product to naturally lead your customers into further and greater purchases from your company?
Is it a lead into a complete audio tape course? Does it prepare them for your monthly tele-seminars? Do you have a seminar to promote on the backend?

Once someone purchases this type of entry product from you, you should then have an automatic system of follow-up on them to upgrade them to a higher level of purchase. For example, you may have a series of 7 emails sent to every new customer. The first one can be a thank you for their order.

The second email may be an additional bonus to "Wow" them. A third email may ask them to tell you their opinion of your product and receive a free report. A fourth email may introduce a special price on a higher ticket backend item (maybe a gift certificate for the full amount of your last purchase). For example, if the person bought a $29.97 ebook, you may say they get $30 credit towards your $495 tele-seminar if they order within 21 days... or something similar.

The fifth email may go over a few of the benefits from your upgrade offer. The sixth email could be full of testimonials for it. The seventh email may be a final chance to get the discount price.

While sending out these emails, you may also decide to go even further and send out a direct mail letter OR postcard to your customers on why they should upgrade to the larger purchase option within 21 days.

The key is to follow-up and give them a reason to take action now by giving them a benefit only available to customers for a limited time.

Medium Ticket Bread & Butter Items - $50 to $500

You'll find a large number of products in this medium price level. That's why I like to call it my bread and butter level of information selling. The largest number of sales we make from my company comes inside of this price level. You'll also find that it doesn't require too much work to get an Internet user to purchase at this price.

These products are also some of the quickest and easiest ones to create. It will take you months to write the entry level eBook, but some of these products can be created in 7 days or less. People just don't understand how easy it is to create some of them.

You'll find that Online Package Deals, CD-ROMs, Audio Tape Sets, Video Tapes, and Tele-seminars are most often found in this level. These are some of the easier products to create (much easier than writing a book).

Most Online Package Deals now are usually a collection of eBooks and other items that the owner purchased the reprint rights to. Instead of creating the product original, they just found other products they could sell by paying a one time fee for them. They collected a nice set of these together and did an online package deal.

CD-Roms are also usually collections of materials...sometimes reprint rights items, other times public domain materials, some screen cam videos, etc. They usually contain a few of each and can be created pretty quickly.

The largest percentage of Audio Tape Sets are interviews done with experts OR interviews where someone sits down and interviews you. A 4 to 6 tape set could actually be done in a single day, although you would have more time invested in the scripts and editing of the tapes.

With the growth of digital video, creating your own high quality video products or even DVDs is pretty affordable and within reach for most people (you need a digital video camera, a fast Pentium III or IV computer, and a video input card for about $500). What most people don't even think about is that we live in a TV generation and doing a how-to video is one of the best ways to teach someone.

High Ticket Big Profit Items - $500 +

This price level is where the real money is at in information marketing. It's also one that most information businesses never break into. Look at most of the extremely successful information businesses which do millions of dollars per year in volume... and you'll find them concentrating a lot of this sector of products.

Most beginning information marketers don't even think about this type of product... yet it's the product that separates the $100,000 a year business from the $1,000,000 a year home business. You may have two different Internet marketers who both work full-time, both do around 30 to 40 hours a week, and both sell information products.

They may even have the same number of customers and spend the same amount on advertising. One earns $100,000 a year. The other earns $1,000,000. The separation will often simply be in the price levels.

The biggest key to this higher ticket set of items is specialization.
A video set on Internet marketing may be worth $300. A video set on Internet marketing for real estate agents will be worth $1,500.
A conference where you teach Internet marketing basics will go for $500. One where you teach Financial Professionals could be worth $5,000.

The person who best taught me this lesson was Dan Kennedy.
He'll have a product on marketing he sells for $197. Then, he'll use the same basic material, make a few changes, and target it for chiropractors... then it sells for $495 or more. He make a few different changes to the "same" material and target it for a different market at the higher price.

Remember this rule of Information Marketing: Information is cheap. It's Free on Thousands of Web Sites. Targeted Specialized Information is extremely Valuable... and people are willing to pay a Premium Price For Information Written Personally for Them.

Some examples of products in this level are seminars, consulting packages, reprint rights, and specialized video sets. Each of them can easily be priced at way more than $500. Seminars usually price at $777 to $5,000 (Jay Abraham sometimes charges $20,000 for a single 3 day seminar).

Consulting packages may be $5,000 or more for a protégé program, $2,000 for once a month phone calls, a day of your time for $2,000, etc. These "personal assistance" types of programs are extremely valuable to customers and always come with a very premium price tag. People want personal help and people who are serious about it are willing to pay for it.

Reprint rights focus on a specific group of people who want to have more products to sell. They'll usually go for $500 to as high as $37,000 (Yes I have seen this price on master rights to sell a product)... and will have a lot of people who are interested in buying them. I've actually seen some writers make more money from selling reprint rights to their ebook than they do from selling the ebook themselves!

Specialized video sets will usually be priced from $397 up to $1,500 or more. They may include 5 to 15 videos, a 3-ring binder manual, a few audio tapes, and other bonus items (you'll often see consultation certificates added into the package for good value). Workbooks could be included and step-by-step directions as well.

There are a lot of options for these higher ticket items. You just need to think about what your customers would want in the perfect product.

Residual Profits

This is what I consider my fourth category of income. Residual profits don't create the immediate income you'll get from the higher ticket items, BUT they do give you a nice monthly income.

Think about running your own membership site for a moment. You could be charging anywhere from $9.95 a month to a $100 a month. You sign up 1,000 members. This would generate $9,950 a month at the lowest price level. This is money you can count on a base income every month you run the site.

It is the closest thing you'll get to a regular paycheck in the information business. For my business, since I have iBill doing the processing for Net-Breakthroughs, I get a large check from iBill every 2 weeks... and I know about how much will be on each check a month in advance. I'm working for myself and getting a regular paycheck I can count on.

Plus, I get all the income from the above types of items as well! That's why I love information marketing.

Examples of Affiliate Programs in Each Level

A lot of Net-Breakthroughs members don't want to create any products of their own. They simply want to sign up and sell other people's products in their business. Don't worry. Forget creating products. This same pricing system can also work for you even though you'll be selling other people's products.

If you do your research, you'll find that there are affiliate programs and dealer programs in EVERY niche market with a variety of price levels you can market.

NOTE: The Key to Being a Successful Affiliate is Building your own Opt-in List to Promote to for Multiple Streams of Internet Income.

For this example, I'll take "Internet marketing" since a majority of members are trying to focus here... even if it isn't the best market for them. Below are simple examples of how you could promote multiple streams of income to your Internet marketing email list.

Low Priced Entry Level Items - $5 to $50

You'll find a LARGE number of products available in this price range to promote. The key here though is to find something that sells well and gives you a good profit margin on each sale ($5 per sale for lead generation would be too low).

A good choice in the Internet marketing arena would be a product you own the resell rights to. There are a lot of these types of items out there and we'll be adding some more available ones to Net-Breakthroughs within the next week for you to sell.
eBooks such as this sell well in the $9.97 to $27 range for lead generation... with a large number of them around $17.

An example of another affiliate program in this price level would be the Paperless Newsletter Publisher's Guide we offer for $97. 
The reason it would here is that you would be getting 50% of the money or $48.50 on each sale you make. That is a pretty good income and can lead to a lot of lead generation.


Medium Ticket Bread & Butter Items - $50 to $500

Examples of affiliate programs in this level would be Mike Enlow's Package, the NetOfficeToolbox, and Online Automation's Postmaster Software.

All of these items sell pretty well and give you $60 to $200 in commission on each sale. That's a nice chunk of change and can create some pretty good profits when you're marketing each one inside of your "opt-in email" strategy (so you get multiple streams of income from the same prospects).


High Ticket Big Profit Items - $500 +

The best products to market for big profits would be Internet marketing seminars. The one I'm currently involved with Ron Legrand costs $997 and he actually lets you keep $797 of the money when you sell it. Not only that, but they will process the orders for you (they then send you a check for your share minus the credit card fees).

Making an $800 sale beats $5 profits hands down for a lot less work. For his seminar though, he does require that you sign up for one (we have one coming up soon) and then you're allowed to promote that seminar plus any other Internet marketing seminars they schedule later on as well.

Residual Profits

This is becoming another easy stream of income for most affiliates with the large number of sites now doing monthly billing.
The Netbreakthroughs membership site itself is a good option with $5 per month in profits. You can sign up by clicking here.

Another one that sells well is Host4Profit who pays $10 per month for their hosting clients and they are a reliable hosting service (I've started to promote them a little more now that the old Virtualis was bought out and isn't quite giving the same level of service.

As I mentioned up in the information products section, these monthly payouts don't give you quick profits. They do build you up to a reliable income though where you're getting an expected paycheck every month. Currently in my business, I'm getting checks from over 12 different affiliate and dealer programs...besides my own products.

How My Business Works

Most people will never do this for you, but I want to open up to you and reveal the basics of how my own Internet business works... giving you some ideas on how I apply these techniques.

One of the biggest revelations I've had in my business was the one I've been revealing to you here. For the first couple of years in my business, I only sold $97 products or less. This seemed to put a "ceiling" on my income I was never able to breakthrough. Sure, I was doing well. I was full-time. We had a decent income. It just wasn't spectacular like I wanted it to be.

So I did some research into business experts such as Jay Abraham, Gary Halbert, Ted Nicholas, Robert Allen, Bill Myers, etc. I found out some interesting "secrets" most people don't talk about. Their large incomes (millions) occur by having higher ticket items to sell and the items they were most known for were just the lead generators.

This revelation led me to start selling other types of products up to $997. This one change doubled my income instantly without any additional work. Please note that I already had a successful web business. I was already considered an expert. This just took my income immediately to the level I was looking for.
One change = double income.

Here are the basics of how my business works:

Freebie - My most important "product" is one that's free. It's the Web Gold newsletter which is the catalyst to everything else I do. It has over 70,000 subscribers now and generates hundreds of sales whenever I release a new product. It generates income for all my products and helps me to receive over a dozen checks each month from affiliate programs. It is the foundation and the reason I constantly nag you to start your own opt-in list.

Low Level - My current intro product is Scientific Internet Advertising and Internet X-Factor eBooks. They are low priced items and serve as an introduction to me. Most of my customers first get to know me through these eBooks.

Medium Ticket - I have a lot of bread-and-butter types of incomes. They include Instant Cashflow, The Paperless Newsletter Publisher's Guide, and audio tape products I've been developing with my mastermind group of Ted Ciuba and Kirt Christensen.
My largest selection of products is in this level and produces a nice steady stream of income from each.

High Ticket - The two biggest high ticket items I sell are Internet Conferences and the Internet Product Development Bank. The Internet conferences I'm involved with sell for $997 each and the Internet Product Development Bank is also $997. Although we don't sell as many of these packages are we do the lower ticket items, they still add up to a very nice income.

Residual - As you already know, my biggest residual income comes right from Net Breakthroughs and our $19.95 a month access fee. This is my paycheck business and gives us the reliable monthly income (although it is actually less than 30% of our income currently).

Tools To Build Your Business

All of these techniques rely on you following up aggressively on your prospects and your customers. For this I would like to recommend two potential programs:

Postmaster Software - This software is actually better than Postmaster Online for following up on customers (it just hurts me to say this). Postmaster Online's advantage over it is when you have 1,000s of people on a list... sending out through your own computer takes too long. The software really comes in use when you want to follow up on customers (since you will have a lot less of these than prospects).

Netofficetoolbox / Marketer's Choice - This is a complete secure ordering, shopping cart, autoresponder follow-up, customer database, and more...It has everything integrated into one nice neat package for the complete Internet automation system. For example, you have a product with a secure order form. You can plan it to automatically start a personalized follow-up series to anyone who orders that product. You could have different follow-up series in place for each product you sell. It basically has too many features to tell you here. It also has a 30-day free trial to test out.

Terry Dean