The great advantage of this collaborative partnership is that the beneficiary is able to gain access to the host’s customer database, giving the new business a good number of potential customers on the spot and the host is able to reward loyal patrons with gifts without any additional cost on his part. And the best part is, both host and beneficiary gained something from each other – the beneficiary having an unstated endorsement from the ‘host’ while the ‘host’ is applauded by customers for its generosity.
Case Study Example: Women’s Clothing and BMWs
This technique was exemplified by a startup high-end women’s clothing boutique which entered into an arrangement with a local BMW dealer, where letters are sent to female customers of BMW saying that they are entitled to a free silk kimono as a token for their past benefaction. The female customers are instructed to pick up their gift from the boutique. The offer was so appealing that more than 600 women trooped to the boutique to claim their gift. Each of them received a $100 kimono which actually cost the store only $16 per piece. All of those 600 women ended up buying other merchandise from the boutique averaging $400 on their first visit. It’s easy to calculate that the $9,600 investment of the startup successfully amassed a sales income of $240,000 not from its own customer base but from that of BMW’s. It’s not difficult to guess how the startup had grown its own client base after that.
The Six Steps to Success
Host-beneficiary is a rather simple and cost-effective marketing technique which guarantees tangible results if you adhere to some basic principles:
1. Accurately identify your target customers. Be more specific with your target client base. “Women 35 to 55” is too broad in scope. If you have clear details of what your customer base will comprise of, the more prospective hosts you can tie-up with. In the case of the startup boutique which utilized this marketing tool, they have clearly identified that their potential client base will have specific preference for types of cars owned or driven, hair salon visited, health club members or those who while away their time playing bridge. A birdseed store, on the other hand may have a customer base of people who are involved in local conservation activities or campaigns or those who frequent outdoor equipment outfitters.
2. Survey local companies with the same market as your business. You will have to think a step ahead and choose tie-up partners who would give potential returning customers and not just on the promo period. Potential good tie-up partners for a cigar store are upscale men’s couture shops, high end shoe stores, luxury car dealers and of course, exclusive country clubs.. Not to be disregarded are civic organizations.
3. Each tie-up partner must have a specific offer relevant to their business. Think of special offers like discounted product or service with a low investment cost but with a high face value for the intended customers. Promotional offers like free computer repair service for two hours given by a computer technical support company to the clients of a local accountant, or free jewellery cleaning by a jewellery store to hair salon customers, will go a long way in building your own client base. Free seminar on how to improve sales was given by a marketing consultant to the advertisers of a local newspaper. A framing shop delighted the first 200 customers of a photo supply store with free photo framing. The idea is to be creative and cost-effective with the promotional offer.
4. Highlight the advantages and benefits of the plan to the host business. Your proposal should look nothing like endorsing your business but more on the name and reputation build-up of the host business. Rewarding customers with gifts at no cost and effort is a proposal that is hard to refuse. You achieve your goal without being obvious.
5. Invest in the letters to be distributed by the host. A well-drafted and ready-to-sign letter which the host partner can send to its customers will expedite the plan and show the host partner how effortless it will be for him to take part in this marketing strategy.
Such letters may be inserted or attached to the monthly bills or newsletters of some businesses for free. There are other businesses that charge certain fee for separate mailing. All things considered, even for a fee, the investment is still small for the marketing mileage it will give your business.
6. Strategize to gain returning customers from original redeemers. This is actually your long-term goal. The strategy of offering free kimono by the women’s boutique had gotten the potential customers to the store and check out other merchandise as well. Instead of just sending the gift straight away, the redeemers were afforded the chance to see and buy the other products in the boutique. A new bakery came up with the concept of giving away chocolate éclair by distributing buy-five-get-one-free VIP card with the free give away pastry. This will see the customers coming back to use the VIP card.
Regardless of the specific strategies, the host-beneficiary marketing tool is one such effective way to instantly reach a huge number of good potential customers to the new business. This is way more effective than the traditional referrals or print adverts in gaining access to customers who will get your cash register ringing endlessly with sales.
And the best part is you are riding on the success of another business that had spent years in building and maintaining a solid customer base. In more ways than one, the need to reinvent the wheel is no longer necessitated as you employ one simple and already used technique or strategy to jumpstart the business - effectively and productively, that is. The challenges are too many for a startup to think about, and this arrangement is one smart business way to do it.
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