In todays business Tip from 1Call.biz - The Host/Beneficiary Relationship.
If you’re running a start-up business, one of the fastest ways to get the money coming in is a method that involves creating “host-beneficiary” relationships, with established businesses that cater to a target audience similar to yours. For this to work well, there must be a win/win arrangement that works to the advantage of both organisations.
The main benefit of this type of arrangement is that the start up (the beneficiary) can quickly reach a large number of highly qualified prospects, with the endorsement of the established host business. The host is willing to participate because it’s a way to reward loyal customers without incurring any significant cost. The new business gains new customers, while the older, more established business gains goodwill.
HOW THIS WORKS IN THE REAL WORLD.
Let’s imagine that you sell a premium range of men’s shirts. You work out that there’s a close fit, in terms of profile, between your clientele and that of a premium car dealership. You arrange for the car dealer to send a letter to all their loyal customers, informing them that, as a reward for their continued and valued custom, they’re entitled to a free luxury shirt. All they need do is take the enclosed letter to your store and choose the style of shirt they’d like, to a value of, say, £45.
The actual shirt will cost perhaps £10 to manufacture, so this is the true cost of the promotion. Also, you incur that cost only when someone actually comes to your store. The intention, of course, is that, having once seen your store, the customer will both buy other products there and then AND return in the future, giving you a new loyal customer.
HOW TO MAKE THIS WORK FOR YOU.
This type of marketing is actually a simple and relatively inexpensive process that will deliver great results if you follow a few basic rules:
1. PRECISELY DEFINE YOUR TARGET AUDIENCE. You must create a detailed profile of your target customer. The more areas you can identify, the more potential hosts you can approach. What types of car do your customers drive? Where do they shop? Where do they eat? Are they members of a gym? Do they play golf? Etc…
2. IDENTIFY LOCAL BUSINESSES THAT SERVE THE SAME MARKET SEGMENTS. Look for companies that have customers who match your target profile. That way, not only will you be successful in bringing people into your store for the initial offer, you also increase the likelihood that they’ll return to give you repeat business.
3. DEVELOP A SEPARATE OFFER FOR EACH PARTNER. As far as possible, come up with a free or discounted product or service that has a high perceived value for the consumer. Do as much as possible to make this offer unique to each new partner. Remember that some of your customers may already be customers of several potential partners.
4. HIGHLIGHT THE BENEFITS TO THE HOST BUSINESS. Show them that your plan offers a way for them to reward their customers at minimal expense and with little effort. It’s also a great way for them to reach out to their customers, reminding them of the long-term relationship.
5. SUPPLY A LETTER FOR THE HOST’S USE. Providing a letter that can be sent to the host’s customers on the host’s letterhead will help put the plan into motion quickly. It will also show your potential partner how easy it will be for them to participate.
6. ENSURE YOU HAVE A STRATEGY TO CONVERT THESE LEADS INTO REPEAT CUSTOMERS. This, after all, is your long-term goal. If you were running the shirt company mentioned in the example, the obvious step would be to add new customer to your customer database, allowing you to send them future offers and develop an understanding of their buying patterns.
7. REMEMBER TO TEST AND MEASURE THIS APPROACH. Make sure all the letters have a unique code, so that you can identify the source of the new customers. If the offer is not producing the results you want, you’ll need to make changes until it does.
If you found this tip useful, why not check out the 1Call Bookshop, where you’ll find a selection of great business books, all of which we personally recommend – http://httv.biz/1callbookstore/
Have a great week in business, and think about how you might use a host/beneficiary relationship….
All the best,
Patrick Moore and Mark Shaw
1Call.biz - taking you from a good idea to an established business
