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Your EnterQuest Bulletin - Issue 257
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| Thought for the week: "Start with what is right rather than what is acceptable." Franz Kafka |
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In this week's issue:
Why free giveaways work for businesses
Okay, it will probably seem counter-productive to give away your products and services in order to build your business, but people can't resist the lure of receiving something for free. The word 'free', as worn out as it may seem, is still the most powerful word in marketing. It has a hypnotic effect on people.
The reason free giveaways work is twofold. First, prospects who test your product or service risk-free will hopefully recognise its value and continue purchasing what you offer. Or even better, your prospects will get 'hooked' on your product or service and won't be able to live without it.
Second, the fact that your product or service was given to your prospects as a free gift will compel them to return the favour by continuing to buy from you. The principle is called the 'law of reciprocity'. Put simply, people naturally feel an obligation to return favours as a way of expressing their thanks.
The key to safely offering free giveaways is to know your 'total customer value'. This is the amount of profit you will receive from your customer over the total length of your relationship. This figure not only includes business that you will receive from your customer, but also any referrals you may receive from them.
For instance, suppose you own a dry cleaning business and you reckon your average 'total customer value' will be £1,250. How much money would you be willing to invest in free giveaways to acquire a new customer? £50? £100? £200?
The answer is 'yes' to all of the above. Why wouldn't you invest £100 to gain £1,250 in profits? Coincidentally, this is why most small business owners are nervous about offering free giveaways. They don't understand the principle of 'total customer value'.
Ideally it's best to offer free giveaways that are low cost but that have a high perceived value to the person you are giving them to. Information is a great example of a free giveaway that has a low product cost and a high perceived value. This is why it's sensible for small businesses to use special reports containing 'insider' information as free giveaways for new customer lead generation.
Your special report could be a written document, a CD or a DVD containing subject material that your target market would be interested in. Giving away free information can turn a mediocre offer into a valuable and compelling offer.
But beware. If your offer that includes free giveaways appears too good to be true to your prospect or customer, it could decrease its believability and your credibility. To avoid this you should always give the reason as to why you can offer such a great deal.
Make your payment terms and conditions work for you
The current credit crisis means that access to credit has tightened and more businesses are facing trading problems. This may result in more of your customers having payment problems.
To help you overcome the risk of invoices not getting paid, you should have clear payment terms in place. Here are some tips:
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State clearly what your payment terms are - you must receive payment within 30 days, for example. You may also want to show on each invoice the due date you expect the invoice to be paid by.
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State that time for payment is 'of the essence' in order to give you the right to terminate the contract if the buyer fails to pay on time.
You could also include provisions that encourage prompt payment:
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Offer a small discount if payment is made before a set date.
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Include a provision allowing you to charge interest on any outstanding amounts, but don't make it excessive.
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If goods are being delivered by instalments, insert a provision allowing you to withhold further deliveries until payment is made.
You should ensure you use your standard terms and conditions effectively. Standard terms will not be binding on a buyer unless they are effectively incorporated - simply having terms and conditions will not do.
Proper administrative procedures and practices need to be established to ensure your terms and conditions are incorporated into your contracts. You should include your terms and conditions in different forms of communication, including:
If you only place your terms and conditions on the back of your invoices, the contract will usually have already been formed prior to delivery of the invoice. This means your terms and conditions will not be valid unless they have been incorporated through a course of previous dealings with that particular customer.
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Each week we provide you with summaries of some popular or emerging business ideas in the UK and elsewhere around the world.
- Career taster service. UK-based Figuring Out is an example of a career taster service (or career sample service). Its career coaches work with individuals who are unhappy with their current careers, then organise work placements to help them 'figure out' what they really want to do.
Regularly improving your vocabulary is not just about learning a new word and its meaning. It will improve your general knowledge and make you feel and act smarter in all sorts of personal and business situations.
Do you know the meaning of the word 'myopic'?
a) short-sighted; inability to see long-term
b) broad-minded
c) consisting of a great but indefinite number
d) inability to think of others
Answer at the end of the Bulletin.
The following topical business issues have been recently reported in the media. Did your radar pick them up?
1) Research from analysts Mintel has revealed that Britain is fast becoming a nation of e-shoppers. The UK has the highest rate of growth in Europe when it comes to online shopping. Figures from 2005 to 2007 put the rate of growth at which figure?
a) 35%
b) 45%
c) 65%
d) 75%
2) The prices of manufactured goods in the UK have risen their fastest since 1999, according to reports from the Chartered Institute of Purchasing and Supply (CIPS). Its price index rose from 72.7 in February to 76.3 in March. But what do analysts say this rise is indicative of?
a) higher energy and material costs
b) lower order numbers
c) the effect of the credit crunch on the sector
d) higher wages and salaries for manufacturing staff
3) A survey by retailer Virgin Media Group has revealed that 15% of which group of online entrepreneurs in the UK earn around six times their minimum wage equivalent?
a) women entrepreneurs
b) teen entrepreneurs
c) entrepreneurs over 50
d) black and minority ethnic entrepreneurs
Answers at the end of the Bulletin.
Affiliate marketing tips and tools
Affiliate Team is a UK-based affiliate marketing website. It has useful tips and tools for existing or prospective affiliate marketers. There's a searchable directory of affiliate programmes running in the UK, as well as a network directory and tools for merchants. The site also has marketing tips.
Social media e-books from Mashable
Mashable, the social networking news website, has a blog post containing links to 15 free e-books and white papers on the topic of social media. Titles include 'What is Social Media', which will be a good starting point for anyone not familiar with the concept, and 'Using Social Networking for Business', which outlines why social media is important for businesses.
Keep track of legal documents online
Mumboe is a free online service which enables you to create and store business agreements in a central location. There is a range of Mumboe account services on offer which are charged for, but you can try out the service for free.
Google Docs' challenge to Microsoft Office
Google looks set to launch its Google Docs application offline in a move which will challenge the dominance of Microsoft Office. Users normally have to be connected to the Internet in order to access Google Docs, but offline services will soon include the Google Docs word processor. Google Apps looks set to follow Docs in being available offline.
This book helps you to learn a new set of skills that will help you achieve more, establish your working patterns and help you create extra time. It is based on a seven-day week and you will learn one principle per day. Check out:
Just one word answer
The answer is b).
Myopic means short-sighted or inability to see long-term.
The business owner's myopic business plan could jeopardise the business in the next few years. |
How's your business radar? The answers
1) The answer is d) - The UK market for online retail grew by 75%, way ahead of any of its European counterparts, according to Mintel. UK shoppers collectively spend £1 billion a month online.
2) The answer is a) - Higher energy costs and material prices are being blamed for the rise in the price of UK manufacturers' goods.
3) The answer is b) - Virgin surveyed 700 teen entrepreneurs between the ages of 13 and 18 and found that 15% earn £23 an hour by selling online. That's about six times the UK minimum wage for young workers. |
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Good luck
The EnterQuest Team
This information is meant as a starting point only. Whilst all reasonable efforts have been made, the publisher makes no warranties that the information is accurate and up-to-date and will not be responsible for any errors or omissions in the information nor any consequences of any errors or omissions. Professional advice should be sought where appropriate. |
