Preneur Marketing Blog – Pete Williams | Author Entrepreneur

I’ve spoken a lot on this blog, about my love of trade exchanges like Bartercard – and how it can help improve your business; by giving you new customers and generating a new stream of business income.

In a post today on his blog, Seth Godin, talks about the principle that makes a trade exchange so effective.

I like to think of margin as the money left over after you’ve paid the direct costs for making an item, the last one of the day.

If you’re not operating at capacity, the key word here is margin. The marginal profit of one more pizza is high. You’ve already paid for the rent, the oven, the sign, the ad in the Yellow Pages, the hourly wage, the uniforms, all of it. Whether you sell that last pizza of the day or not, all those costs are fixed. So, if your ingredients cost $2, your gross margin is $8.

This is the exact same thought process and calculations, you need to “GET”, to make a trade exchange like Bartercard work for you… The sales you make in a trade exchange, need to be treated as additional (other wise lost) sales- “the last one of the day” as Seth puts it.

The ‘cost’ of those sales are simply your raw/direct costs, as the overheads are taken care of …

Seth continues – “If someone offers to run a coupon in the Welcome Wagon envelope that goes to new residents, and the rules are, “one per customer, new customers only”, and the coupon offers a large pizza for $2, is it worth it for you to run it? That’s 80% off! Surely, this is too expensive. You can’t afford 80% off.

On the margin, of course you can. You got a new customer for free. Unless your store is at capacity, with people waiting in line, one more pizza sold at cost is a great way to build your business (unless there are too many coupons and unless it changes your positioning as a high-end place, but that’s a story for a different day).”

The great thing about trade exchanges is that you can apply this principle, get a customer for less than cost, and still make a profit as you still get paid the full $10 for the pizza.

Yes the $10 is in ‘trade dollars’, but you can then go and spend that trade on off-setting business costs or other ways to grow your business

… and for those you have experienced ‘over-pricing’ in a trade exchange; technically you could pay 5x the price off-setting a business cost, and you’ve still got that new customer for free, as this best selling business author suggests.

A real frustration faced by a great deal of business owners, especially businesses who must quote prior to order, is getting customers to say ‘Yes, I will take up your offer TODAY’. In a world which offers consumers an over abundance of choices you need to put together an offer which will motivate the prospect to make an instant decision and purchase today.

If your prospect does not place the order, walks out of the store, and basically doesn’t take action immediately chances are they never will. That’s why you have to present an offer that gets the attention of your prospects and encourages them to immediate action.

One powerful way to get customers to purchase today is by “adding value” to your offer. A ‘value add” is an addition to your basic offer, which is perceived to have enough extra value it motivates them to take immediate action. All pretty obvious, right ?

The most commonly used ‘value add” is a FREE BONUS GIFT.

Free Gifts by themselves however are not enough to get your prospects motivated to take action TODAY. For a Free Gift to be an effective ‘bonus’ they must be combined with 2 other elements:
1. Limited Time
2. Perceived Value

Looking at the first element ‘Limited Time’; means making the free gift only valid for a specific time period. Your ‘Value Add’ must have a deadline if you are going effectively motivate your prospects to take action.

For example, ONLY offer the free gift to clients who order at time of quotation, or book at time of inquiry etc. By adding a deadline, it will motivate your prospect, as it’s their only opportunity to get the ‘Valued Gift’.

Speaking of ‘Valued Gift’, whatever it is you are giving away free, as a limited time bonus to motivate immediate response, it must be of great value to your prospects. You can easily create the importance of the gift by simply stating its value: “For TODAY ONLY – If you take up this offer and place your order TODAY you will receive a XXXXX valued at $79.95 FREE.”

So lets look at how BARTERCARD CAN GET YOUR CUSTOMERS TO ORDER TODAY.

You’ve guessed it, you can use your trade dollars (or interest free line of credit) to purchase the gift you will be using as your ‘value add’, which will motivate your fencing sitting prospects to do business with you…. and don’t forget; due to your ‘cost of trade’ you’ll be picking these up at a fraction of your typical cash cost.

Here are some examples:

• A Restaurant could offer a free bottle of wine to any customer who pre-books their next meal at the restaurant, at time of their current meal.
• A Gardener could offer a free window clean to any customer who takes up his quote on the day of issue.
• A Concreter could offer a voucher for a Hi-Pressure Clean for use 6month after the original job, if they book within 10 days.
• A Furniture Shop could offer a free carpet clean for people who place an order during a specific promotional period.

By using Bartercard to purchase those ‘Free Gifts’ to use as ‘Value Adds’ you will be able to – if and only if, you are prepared to commit to using this idea in your business… starting today.

i am sure I’m not telling you anything new when I say “By strengthening your guarantee and removing your customers risk it will not only bring you new customers but also reinforce the relationship you have with your existing clients.”

But before we get into the link between Bartercard and Guarantees, I want to delve into the importance of a guarantee. If you are not currently offering, or verbalizing, a guarantee with your products or services you need to start doing it right away!

The challenge for the majority of businesses is believing enough in their products or services to offer a guarantee, let alone announce it to their customers. Most businesses are fearful of offering a powerful guarantee because they are worried about being taken for a ride.

Offering a powerful guarantee boosts your credibility and takes the risk off the buyer. By taking the risk away from the customer it gives your prospect no reason not to buy from you and motivates them to take action. It appeals to their logic, as they can feel secure that they are not going to get value for every dollar spent with you.

Some of the worlds largest and most successful companies offer powerful and effective guarantees so there is no reason you shouldn’t either:

Dominos Pizza: ‘Hot Fresh Pizza Delivered To Your Door Step in 30 Minutes Or Its Free.’

Video Ezy: ‘Get It First Time Or Get It Free’

Now lets look at how BARTERCARD CAN STRENGTHEN YOUR GUARANTEE.

As you would be aware, most guarantees are based on a ‘refund’ system, where if the promise is not fulfilled, the customers investment is refunded. That’s fine and effective, but obviously effects your cash flow if there is a need to honor your guarantee.

The most effective and creative guarantees offer the customers something of real tangible benefit. So lets get creative, involve Bartercard, and offer your customers something a little different. Here are some examples of how you can use your trade dollars and substantiate your guarantee:

A Carpet Cleaner could employ the following guarantee: “If your carpets are not looking like new after our professional clean we will pay for you to get out of the house for a weekend. Yes that’s right we guarantee our service and stand by it 100%, so if you are not happy we will send you to Mildura for a weekend getaway while we reclean your carpet, valued at $149.95.”
– Obviously the accommodation package would be purchased on trade, thus not effecting the business cashflow.

Tradesman, who are renowned for being late, could offer the following: “Unlike the majority of tradesman who turn up late for appointments and keep their customers waiting I respect and value your time. So if I ever keep you waiting by being late, without rescheduling, I will refund your wasted time by not having you need to cook dinner. That’s right I will send you and your family out for dinner at one of a selection of local restaurants – to the value of $60.00”
– Again, this meal voucher would be purchased on trade.

A Jumping Caslte Hire company could offer : “a free carpet clean if his amusements are not so appealing that it keeps the kids out of the loungeroom and in the backyard”

A restaurant could purchase on trade and “give away a free bottle of wine if the meal was late, cold or had a fly in it”

By employing some creativity when designing your guarantee you can create an offer that still reduces the buyers risk while not effecting your cashflow.

Using BARTERCARD TO STRENGTHEN YOUR GUARANTEE, your CASH prospects will be motivated to take action and use your services – if and only if, you are prepared to commit to using this idea in your business… starting today.

Question: How much better would your bottom line be if every cash customer spent an extra $10, $50 or $200 on each and every purchase they make with you?

My guess is a lot healthier. You’d be able to work a little easier, possibly even cut down your hours without effecting your current income, you could spend more time with the family (or on the golf course… my preference). You are lucky, as being a Bartercard member and using your trade dollars effectively, there are a number of ways this can easily be accomplished.

Obviously to get your customers to open their wallets that little bit extra and hand more of their hard-earned money over, you must entice and motivate them to do this with some additional offer and/or added value you are not currently offering. Unfortunately, they won’t do throw money at you simply because you are a nice guy – customers need to be motivated.

Below is the first of many effective and explosive ways you can motivate and entice your customers to spend more CASH on each and every purchase.

TRIGGER RAFFLES:

Trigger raffles are one of the most effective ways to provide your customers with the necessary motivation to have them begging you to take their money.

Trigger raffles are raffles where the customers’ entry in the raffle is TRIGGERED only after a particular cash value is spent. For example the customer receives an entry in the raffle when and only when they spend $50 on a single purchase.

How does this increase customer spending, you ask?
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The team at Wealth Creator Magazine have just released details of the upcoming Entrepreneurs Course bought to you by Bartercard.

I am honored to say I am one of the presenters at the Melbourne event… So if anyone is keen to here me speak, make sure you register as soon as possible as there are strictly limited seats.

To register for this event and more information download brochure (pdf)