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Discounting with others’ money

DISCOUNTING can work, particularly if you are discounting with someone else’s money, says Austwide Resources principal Jeff Miles.

Mr Miles told a Quality Business Institute breakfast that working together with businesses that provided complementary services to yours was a way to provide ‘discounts’ to customers.

He used the example of a fashion boutique forming an alliance with a nearby hairdresser.

The boutique would not offer a discount off its stock but instead offer a free, or heavily discounted, haircut from the hairdresser.

Mr Miles said the boutique benefited because it was able to offer an extra to its product at no extra cost.

He said the hairdresser benefited by gaining a potential long-term customer.

Mr Miles said businesses should make better use of what he called the ‘circle of life’.

This meant forming an alliance with businesses that complemented a company’s products.

Mr Miles showed how, with a little brainstorming, such businesses could be easily identified.

For example, a builder providing a pergola for a customer could approach a local barbecue retailer because barbecues seem synonymous with pergolas.

In return for the referral, the barbecue retailer could promote the builder’s services.

The barbecue retailer could go to the local butcher and arrange to have a meat tray included with a barbecue sale.

Mr Miles said that Business Enterprise Centres produced a book of the profit margins on which most businesses operated.

He said using this resource was a good way to avoid making outrageous suggestions to businesses for assistance.

“It’s relationship marketing. It’s very targeted and it works,” Mr Miles said.

He said one of the biggest problems he found with business owners was that they did not know how much they needed to be earning.

“You need to generate an after tax profit of $90,000 a year to fund a retirement of twenty years to provide an average income of $30,000 for each of those years,” Mr Miles said.

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