Benefits of Trade and Barter for the Coach
Many businesses large and small make the mistake of viewing a sale as an isolated event, meaning that they may look at a sale or the completion of their contract with a client as the end of the relationship or opportunity. This way of doing business is short sighted and can lead to undue stress, or at the very least a very hard and costly road to business growth and success. The sale or the acquisition of a new client can be, if handled correctly the beginning of many more opportunities that sprout from this new relationship. Harvard Business School had this to say about the “lifetime value of a customer”; “The development and retention of profitable customer relationships is vital to the health of every business. Revenues and profits generated in the short term should not be the sole focus of a company’s activity. If firm profits are high for one year, but during that year the core customer base has been alienated, the firm’s prospects of repeating that strong financial performance are significantly diminished. Companies need to be concerned with the future revenue and profit streams associated with the ongoing satisfaction and retention of their core, profitable customer bases. Retaining the right customers over time has a strong impact on company profitability. The companies that fail to recognize this truth overspend in marketing to acquire and retain less profitable or even unprofitable customers and do not spend enough on keeping profitable ones.” (Harvard Business School Publishing 2007)
In a June, 2011 issue of Forbes magazine contributing writer Tom Gillis ( June, 2011) tells this personal story about the “Life Time value of the Customer” :
“About 10 years ago, I bought a pair of khaki pants at Nordstrom. I loved these pants and I wore them often for about a year. One day I noticed the waistband was a little tight. I was really bummed because I didn’t think these pants should have shrunk the way they did. So I took them back to Nordstrom. The clerk was extremely helpful, apologized for the problem I was having, and gave me a new pair of khakis. She even asked the tailor to look them over to make sure they were a proper fit and weren’t going to shrink again. The interesting part of the story is that the pants didn’t shrink at all. The owner’s waistline expanded. But since I was unable to recognize this fact, I was really unhappy about the pants. The response from Nordstrom was so gratifying that to this day I will buy pants only from Nordstrom. Add that up. Over 10 years, I have spent several thousands of dollars at Nordie’s. How much could it have cost them to absorb the allegedly defective khakis? Maybe $20? What an ROI.
For most businesses the net present value of the lifetime value of the customer is often an order of magnitude greater than the value of the transaction at hand. And yet, because they don’t view it this way, many companies let that wildly profitable annuity walk right out the door”. (Gillis, June, 2011)
This business philosophy is equally applicable to both large a small businesses. The Forbes article states that “the net present value of the lifetime value of the customer is often an order of magnitude greater than the value of the transaction at hand.”
This means that the value provided by the customer or client in the initial transaction whether it be paid for in cash or trade, can be much smaller than the value gained in the future. What is important is the beginning of a new relationship that can be nurtured into greater profits later. The satisfied client may or may not come back for more coaching at a later time, but with all things going well, the satisfied client will provide a testimonial and referrals which can create more clients whom may choose to pay cash.
The illustration below shows the process of taking a prospect and cultivating that relationship to the point where they have gone from a prospect to a customer and through to becoming your advocate and eventually they believe in your value so much they become what is called a ‘partner” in your business.
The Growth of Trade and Barter in Today’s Economy
While the coach may offer their services for trade on their website and other marketing materials and processes, trade and barter have become “big business”, especially in North America. In an article titled “Rise of the Barter Economy” by Eric Spitznagel in the April 12, 2012 edition of Bloomberg’s Business Week, he states; “According to the International Reciprocal Trade Association—an organization created to promote “just and equitable standards” in modern bartering—the U.S. barter market is a staggering $12 billion annually. In other words, $12 billion worth of goods and services are traded every year without any currency changing hands.
“ Scott Whitmer, founder of trade exchange company Florida Barter, says that while 2011 saw positive signs of an economic recovery, many small and medium-size companies are still struggling. “Bartering has continued to help many [of these] companies grow and conserve cash,” he says.
Though Florida Barter enjoyed a record 2011—a 12 percent increase in total trade volume; more than $17 million worth of trades among the 1,600 clients—Whitmer says bartering as a business practice is still in its infancy, “on the cusp of exploding.” People often require some encouragement to give bartering a shot. Debbie Lombardi, president and founder of Barter Business Unlimited, a Connecticut-based exchange network, says that despite her company’s track record and 4,000-plus registered members, she still regularly encounters resistance and confusion from prospective customers. “Nobody comes to me and says, ‘I’ve always wanted to try bartering,’ ” she admits. “It’s more like, ‘I don’t get it. Is this some kind of scam?’” It’s no scam, but it can be complicated to the uninitiated. As Lombardi explains, “We run like a little bank.” Members are paid in “barter dollars,” which they can exchange with other members for goods and services. Within the bartering community, it’s the only acceptable currency. “It’s like going to a barter mall,” Lombardi says. “They can do all their holiday shopping. They can get the carpets cleaned. They can pay for their child’s orthodontic work. It’s almost limitless.”
Dave Evans, a Barter Business Unlimited member who operates an online ticket reseller in Plainville, Conn., called EasySeat, was first attracted to bartering as a means to sell distressed inventory. “Our inventory is 100 percent speculative,” he says. “Bartering is a way for us to liquidate inventory that we might not be able to sell for cash.” He’s bartered tickets to New York Yankees championship games and Lady Gaga concerts, and in exchange he’s received everything from a fresh paint job at a company building to an overhauled office alarm service. Sometimes, though, he’s bartered for services that weren’t exactly essential to his business. “I used some of the barter money to get Lasik surgery for myself,” he says. “I guess that’s a little counterintuitive.”
Whitmer of Florida Barter says that limited and strategic bartering is best. “We’re not going to help anybody pay their electric bill or their mortgage,” he says. “But we can help them maintain their business and get sales they never would’ve had otherwise.” The best barters, he says, are for things you might normally have spent cash on anyway, “like printing, advertising, marketing, or promotional T-shirts with your logo on it.”
Florida Barter’s clients cover a vast range of services, from doctors, lawyers, and accountants to electricians, plumbers, and massage therapists. “If a client makes a request and we don’t have it,” he says, “we’ll go get it.” He claims to have more faith in Florida Barter’s “trade dollars”—which aren’t all that different from Barter Business Unlimited’s “barter dollars”—than U.S. government-issued currency. “Trade dollars, unlike U.S. dollars, are backed by goods and services,” he says. “It’s like the gold standard that we dropped.” (Spitznagel, 2012 )
For the coach, potential trade and bartered for services may include but are not limited to the following:
- Home renovations or trades people like plumbers, electricians, landscapers, painters and mechanics
- Business services such as web site development, SEO, or training in social media
- Printing of business cards, brochures etc.
- 10 days in a holiday villa on the Algarve in Portugal or a condo in Hawaii
- 4 hours with a fishing guide
- Professional services from accountants, lawyers and dentists.
- Restaurants
Conclusion
Although receiving cash as payment is almost always the preference, trade and barter can open up opportunities that the coach may have never considered. If a coach is willing to take a longer, wider view of their coaching business, trade and barter can contribute significantly to long term growth in acquiring new clients, reputation, cash paying clients and valuable experience.
References
1. Mitten Steve , Marketing Tips for Coaches,
http://acoach4u.com/articles/marketing_basics_for_new_coaches.htm 2011
2. Harvard Business School Publishing,
http://hbsp.harvard.edu/multimedia/flashtools/cltv/index.html 2007
3. Gillis, Tom, “The Lifetime Value of a Customer”, Forbes Magazine,
customer/ Steve Forbes,
June 2011
4. Payne, Adrian. Christopher, Martin. Peck, Helen.
Relationship Marketing for Competitive Advantage: Winning and Keeping Customers. Butterworth Heinemann, 1995
5. Spitznagel, Eric “Rise of the Barter Economy”, Bloomberg Business Week, Bloomberg L.P, April 2012