Posted on October 15 2020
Earlier this week, I touched upon one of my favorite marketing strategies ... host beneficiaries.
Let me detail it a little further here.
The fastest way to get the cash registers ringing is a little-used method that involves forming "host-beneficiary" relationships with established businesses that cater to a target audience similar to yours. Then you promote yourself to their database with a special offer presented as a gift from the other business.
The beauty of this arrangement is that the startup (the beneficiary) can instantly reach large numbers of highly qualified prospects with the tacit endorsement of the established business (the host). The host is willing to participate because it's a way to reward loyal customers without incurring any costs. The rookie gains new customers, while the veteran gains goodwill.
One business I've talker about several times that successfully used this technique was a high-end women's clothing boutique. The store arranged to give a free silk kimono to every female customer of a local BMW dealership who brought in a letter sent by the dealership offering the gown as a gift for their past patronage. The kimono had to be picked up at the boutique.
Six Steps to Success
Host-beneficiary marketing is actually a simple and relatively inexpensive process that will deliver solid results if you follow a few basic rules:
1. Precisely define your target audience.
"Women 35 to 55" might be a start, but it's not enough. Create a detailed profile of your target customer. The more segments you can identify, the more potential hosts you can approach.
The women's clothing boutique that marketed to BMW owners, for example, determined that its likely customers drove certain types of cars, visited a certain tier of hair salon, belonged to a health club, and were likely to play bridge. A birdseed store might come up with a list that includes consumers who shop at outdoor equipment outfitters or are affiliated with local conservation groups.
2. Identify local businesses that serve the same market segments.
That way, you can not only bring people in the door for your initial offer, but also increase the likelihood that they'll return to give you repeat business.
For a cigar store, logical host partners might include better men's clothiers, upscale shoe stores, luxury car dealerships and country clubs.
3. Develop a clear offer for each prospective partner.
Come up with a free or deeply discounted product or service that has a high perceived value for the consumer with a low dollar cost for you.
One new computer support business offered a voucher worth two free hours of computer repair to the small business clients of a local accountant.
A jewelry store offered free jewelry cleaning to clients of a hair salon.
A marketing consultant offered a free seminar on how to optimize social media advertising.
A framing shop offered free photo framing to a photographic supply store's top 200 customers.
4. Pitch the plan, highlighting the benefits to the host business.
Emphasize that it's a way for the established business to reward their customers at no expense ... and with virtually no effort. It's also a way to reach out to customers without overtly trying to make a new sale.
5. Supply a letter for the host's use.
Providing a draft "offer" 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 the partner how easy it will be for him to participate.
6. Develop a strategy to convert redeemers to repeat customers.
This, after all, is your long-term goal. For the women's boutique that gave away a kimono, the strategy was to encourage browsing and lure shoppers into dressing rooms to try the merchandise.
For one new bakery that gave away a chocolate éclair, the approach was to hand out a buy-five-get-one-free VIP card with the free pastry.
Whatever the specific plan, the host-beneficiary method is the single most effective way to quickly attract a critical mass of qualified customers to a new business. Instead of beating the bushes for customers with individual referrals or scattershot ads, you can tap into a targeted group of consumers en masse to jumpstart sales.
Best of all, you're piggybacking on the success of another entrepreneur who has spent years building a solid customer base. In many ways, this eliminates the need to reinvent the wheel. For a startup facing so many other challenges, it's just smart business.