Start-up businesses in every industry face one common challenge: attracting customers. For without them, and the revenue they bring in, you can’t possibly grow your business.
Many have tried and failed to form a client base, using traditional networking events and tactics such as mailings to reach out to the public. Though occasionally effective, these methods tend to fail because they simply don’t produce results quickly enough (and we have bills to pay).
The fastest way to find new customers?—reach out to a business, not a potential client, and form what is known as a host-beneficiary relationship.
What it is:
A host-beneficiary relationship is one in which a start-up business (a beneficiary) is exposed to the customer database of a related business in the industry (a host). In exchange for this exposure, the beneficiary provides something of value to the host that it can pass on to its customers.
Say a small town ski resort is in its first season. To attract visitors, they reach out to a winter sport equipment retailer:
“We’re a start-up ski resort looking to build our customer base. We find your ski equipment to be of excellent quality and would love to enter into a partnership. How does this sound—if we can access your customer database, we’ll run a season-long promotion of your brand, offering all customers who come to our resort with your equipment a 15% discount.”
Why it works:
The host agrees to the relationship because it can only gain from it. Though the equipment retailer and ski resort in the above example have the same target market, the retailer won’t lose customers from a partnership. It is not in competition with the ski resort because it provides a different product (one customers need to ski).
Not only does the retailer not lose—it gains. Avid skiers in search of new gear will be more inclined to shop at this retailer if they know they’ll get a discounted price every time they hit the slopes. Thus, the beneficiary is rewarded with a wealth of qualified prospects and the host gains goodwill in the community and increased customer loyalty.
What to keep in mind:
The number one thing to consider when selecting a host is target market. You want yours to match that of your host. If the customers you gain access to aren’t interested in your services, the relationship is useless.
The most successful business partnerships flourish for precisely this reason. Each season The Biggest Loser features Subway in its series. Because both the show and the restaurant target those looking to get healthy, they both benefit.
Another thing to consider when forming a host-beneficiary relationship is your offer. As beneficiary, you want to provide the host’s customers with something of high perceived value that is low cost to you. From its segments on The Biggest Loser, Subway gains national attention and the endorsement of a huge network. All ABC has to do is scan the contestants as they eat their lunch and ask for comments on the nutritional benefits of the sandwiches.
If you’re a start-up business, start doing some research. Find a business in your area with a target market similar to your own and reach out to them. For additional tips on how to frame your offer, check out this article from Entrepreneur.
As your relationship buds, and your business starts to bloom, you may need assistance managing your additional revenue. Our start-up accounting and CFO services experts can help. Contact us today.