Ever hear of the host-beneficiary relationship? It’s an “under-the-radar” strategy that not flashy and generates headlines. Those who are truly successful, though, use this strategy all the time to generate new clients and business.
I like to think of host-beneficiary relationships as a way to really “go deep” with your current business networking partners and circle, especially if you’re involved in a BNI-type of group. But as you’ll see, you can work this as a strategy to go out to entirely new business contacts as well.
Simple, yet (highly) effective
This concept doesn’t get much easier than this: A host beneficiary relationship is when you and another business enter into a loose partnership, and help each other make extra profits. A simple example of this is when a hairdresser might offer a free haircut or styling to the database of a health spa. In this way, the hairdresser gains new clients, while the beauty salon receives more customer loyalty—they appreciate the ‘gift’ from the spa owner.
While this strategy is designed for business owners you don’t know, you can also use this with networking contacts you do know. I’ll explain more about that later in this post.
You need to go through seven steps to begin and strengthen your host-beneficiary relationships with business owners you don’t yet know. Each step covers an important aspect of host beneficiaries, and represents a cornerstone of a great strategy. The individual steps also are things you must give careful consideration to.
In the process of performing these steps, though, you might be surprised by how much this exercise reveals about your business. It may get you thinking about important issues in your business that have never crossed your mind. That’s always a good thing.
Here are the seven steps:
Determine if this is right for you. You’ve read this far, so you think you’re probably a good candidate for this, right? Well… not so much. Host beneficiary is ideal when you have a specific group of people you want to advertise to, and there are other noncompetitive
businesses already dealing with them. Such a strategy is probably inappropriate for a fast food outlet, as the market is probably too broad. This type of business owner will probably just want to use traditional advertising.
Who is your target end market? Your market needs to be identified in an exact way. A failure to answer this question will lead to failure FOREVER. For example, imagine a company who sells in-ground swimming pools doing a mailing campaign to a block of high-rise rental apartments. I know, right?
To avoid costly mistakes, you need to know who your potential customers are before you start arranging host bens with anyone. Knowing your target market will also enable you to write in a way that your prospect will relate to. Using terms and phrases that are commonly used by your prospects will greatly increase the effectiveness of your letters to the customers of the host business.
Which type of business(es) will work the best for you? The companies you select must be completely non-competitive, must have the same target market as yours, must have databases of their customers (preferably big databases), and must be willing to test responses. For the last point, you need to send just a few letters to test responses before hitting the entire database.
What do you want to say to their customers? Easier said than done, right? The first thing to think about is whether the letter to the customers will be from you or your host business. Generally, the most successful host beneficiary letters come from the host
Next, you’ll write the letter. Even if you decide that the letter will come from the host business, it’s still up to you to write it. They just sign it and put their name to it. Your letter needs to have a clear purpose, and take people from point A to point B. Point A is your headline, which should identify where they are now. The body of the letter leads them to Point B, which is where you tell them why
they should act right now, and how to do it.
There’s many other parts to this section. For a complete report on host bens, see the note at the end of this post.
How do you write your letter? It’s pretty simple, actually. For example, if you’re a masseur/masseuse, your message can be to stressed-out business people and owners, and can be as simple as:
100% less stress in 10 minutes or it’s free … guaranteed.
We come to you
(859) 555-1212 for a FREE introductory session
At the end of the day, people won’t buy from you just because you can write letters so good that a publishing company might offer to produce them as poetry. By the same token, people probably won’t avoid buying from you because you can’t spell quixotic, superfluous or rhetorical. As long as your message is clear, quick and targeted well, your letter will work.
When do you mail your letters? If your product is not seasonal in nature, you don’t have to be too concerned about when to do your strategy. It’s more a question of which day, rather than which time of year. With business clients, it’s usually a good idea to mail them a letter on Tuesday or Wednesday. People are usually feeling too busy on Monday, and pretty uninterested in thinking about anything new on Friday.
If your business is seasonal, you need to approach it differently. For example, a swimming pool builder would find it fruitless mailing a ‘summer letter’ in winter. The business owner would need to adapt the appeal to suit the time of year.
What else do you need to think about? Once you’re happy with your strategy letter, run through and make sure you’re
ready to get started. You need to make sure your staff understands this new strategy, and their role in it. Most important, you need to be ready for a sizable response. Make sure you have enough inventory (if you deal in inventory) and/or staff to deal with it… even though you may not see hundreds of people all at once. There’s nothing worse than having a rush of new customers, only to find you have no stock or are too busy to serve them.
Was your campaign a success?
The answer to this question is simple – if you make more money from the campaign than it cost you, it was a success. Basically any campaign that pays for itself can be considered successful. Before getting started, though, you need to think about a few things in depth:
- Work out your costs, including the cost of printing, envelopes, any implements that you put in the
envelope, phone calls, schmoozing with the other business owners and more.
- Know your margins. By understanding how much you actually make from each sale, you’ll be able to work out the %
response required to make your campaign profitable.
- Lifetime Value. Don’t view each new customer that your campaign brings in as a once-off-sale. The average business needs to sell to a client 2.5 times before it begins to make a profit from them.
With all this in mind you need to focus on bringing the customer back on a regular basis. Therefore any Direct Mail
campaign which covers its cost initially will turn out to be profitable in the long term.
For current relationships, too
As effective as host-beneficiary relationships can be with new contacts, it works especially well with those you already know—business owners and professionals with whom you already have a relationship. These can come from contacts in a Rotary-, BNI- or a leads-type of group. For this strategy to work the best, though, you have to share your databases. Additionally, if you teach the members of your business circle how to do a host-beneficiary relationship campaign themselves, you’ll be seen as an “expert” in that field and in your own area of expertise. You’ll still need to do steps three through seven above, though.
Keep in mind there’s some professionals with who you just won’t be able to do this—mainly lawyers, doctors, investment pros and other who have to keep their client lists and/or identities a secret by law. There’s other ways to network with even those professions, too, and I’ll cover those in other blog posts.
One other quick note. Just like any other marketing plan or campaign, you have to test, test, TEST! See what works best with both current contacts and those to whom you reach out. And then use what you learn to reach others even more quickly and effectively. You’ll be surprised at how well this stuff works.
I have a complete report on how this all works. It’s jam packed with details that I didn’t have room for here (and yes, I know this post is way long as it is). If you’d like a copy, please contact me. I’ll soon have a separate page where you can download this; in the meantime, I wanted to give you a way to obtain this while the page is being built.