By Mike Enlow
[January 12th, 2000]

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[This is the second part of a three part article. The first part can be read here].

Dear Customers and Friends,

Last week my wife and I were browsing through the many Christmas card binders to select a suitable Christmas card to mail to you, our customer, to express our appreciation for your patronage.

Of the many hundreds of Christmas cards we had to select from we couldn't find a single card that expressed our heart felt feelings and appreciation to you as a customer. After all, it is customers like you that helped us to send our two children through college and build our business to be one of the most successful pharmacies in the city. Frankly, I decided to say thank you in a very special way - with actions, not words.

Let me explain.

One of my dearest friends is a local jeweler, who has the largest selection of diamonds, rubies, emeralds, watches, and other inventory in the area, but more importantly, he has developed an incredible method of wholesale purchasing that allows him to save a fortune.

As we were talking, I explained how I wanted to do something very special for my friends and customers this Christmas that would express my gratitude for your business. I further explained how I wanted to do something that would benefit you and thus express my thanks with ACTIONS rather than just WORDS in a Christmas card.

After a bit of "arm twisting" he agreed to allow my customers who bring in this letter to his store, during their Christmas shopping, to have a 20% discount! This is good for any purchase you may wish to make this year. In doing this I am saying Thank you to you in my own special way. Since he is providing you with the finest quality jewelry he believes that you will continue to be his customer for years to come. He agreed.

So, feel free to take this letter to XYZ Jewelers anytime between now and Christmas and you will receive a "privileged discount" of 20 percent off any purchases as well as VIP treatment from my friend.

Since almost everyone buys jewelry during Christmas my wife and I felt this to be a much better way of saying thank you than any card we may ever send.

Enjoy, and Merry Christmas.

Don and Susan Smith, XYZ Pharmacy

PS. Oh yea, he did request that I ask you to "slide this letter" to him in an inconspicuous way so his other customers won't feel slighted. They aren't getting this VIP discount. Please do me this kind favor when you go in.

This letter of endorsement became the pharmacy's "Christmas Card" for this past year. We had pre-arranged a special deal where XYZ Pharmacy would receive half of the new found profits from everyone who came in. Because of that we earned an incredible $87,550 mailing Christmas cards instead of the $2500 loss one would normally have when mailing 10,000 people.

The jeweler was delighted after a brief "marketing education" of how a certain percentage of these new-found customers would become lifelong customers.

This education is the key to getting the most from deals like this.

Let me share the approach...

First, you have to understand that most people fail to realize the lifetime value of a customer. This is where the Joint Venture associate you wish to approach has to be educated.

Few realize the "residual value" of newfound customers. Not all customers will come back again. This will be true even if you give them the best quality, pricing and service. However, a certain percentage of them will come back. In this case over 2780 people took the pharmacist up on his offer. The jeweler gave away the lion's share of the front end profit but he will earn *much more* than most realize. Here's a hypothetical example:

Assume only 10 percent of those who took advantage of the offer were to return, the following year and the average purchase the following year was only $500. The jeweler not only profited from the initial deal but he will earn an additional $70,000 he may have never had if it wasn't for the pharmacist's referral. Jewelry is generally "keystone" pricing (meaning the jeweler sells for approximately a 100% mark-up). If only ten percent of the people return and spend an average of $500 that will bring in an additional $139,000.

At keystone pricing that's an additional $69,500 profit the jeweler will enjoy from this deal!

This doesn't even take into account the fact that satisfied customers may return year after year creating profits the jeweler would have never enjoyed without the referral and Joint Venture of the pharmacist. Are you beginning to see the possibilities? They are astronomical!

Deals like these can be made with car dealers, contractors, dentists, restaurants and almost any kind of business you can imagine. The beauty of it is that this is a win/win deal for everyone and you get paid for arranging the deals.

More: Other approaches...