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Breaking Even on the Front End

Written by: Robin Elliott

Article Overview: Combine this strategy with a Joint Venture and you can create the opportunity to access a large base of potential customers, especially if you have a consumable product.

Breaking Even on the Front End

When you have a service or a product that is bought many times over, it makes sense to pay to get a new customer. For example, I showed a hair salon owner client of mine how to invite high-end potential clients for a hair free cut and blow wave. His cost was negligible; however 82% of them were so impressed with the quality of his work that they became regular customers. A Tree Surgeon may offer a free service in order to obtain long-term customers. An accountant or lawyer may offer a free initial consultation.

Combine the above with a Joint Venture and you can create the opportunity to access a large base of potential customers, especially if you have a consumable product. If your research and experience shows that most people who try your product go on to consume it on a regular basis over a period of time, why not ask JV partners to advertise your product and keep 100% of the first sale income for their trouble? Or they might want to give it away to their clients as a gesture of thanks for loyal patronage. The clients who like it can be directed to make all future purchases from you. Smart coffee shop owners can target business people who work in the area with an offer of three free cups of coffee. The prospects will get used to coming in to the shop and probably buy muffins or sandwiches anyway, and if the food and service is really good they could very well become regulars. Three cups of coffee costs about 60 cents. What is your profit on a sandwich?

The Law of Reciprocity works. When most people get something for nothing, accompanied by excellent packaging, friendly service and a good product, they feel obliged to reciprocate. What is the marginal net worth or lifetime value of a customer to you? Being generous and allowing them to taste and experience your products and services at no cost is a smart marketing strategy. People whom you would never have met will have a reason to try your products and services.

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