Best Of Kanata
How to Explain to your Clients that by Buying your Product or Service, It will be a Negative Cost to Them
My friend, Richard Rutkowski, a former City of Kanata Councillor is an intriguing person—very sure of himself, a good marketer, a good promoter and a sure handed politician (now a successful REALTOR with his own Brokerage.)
I asked Richard a few years ago if he did something else beyond being a REALTOR and, sure enough, he hauls out this cute little magazine called The Best of Kanata. Now this is really low tech—essentially, local businesses advertise in it, so that is one revenue stream for Richard.
It costs about $600 for a half page and there are lots of pages. Then, people buy these books for 20 bucks and in the back of the magazine, there is a ‘member’s card’ about the size of a credit card, which entitles them to 10% off at all stores and services featured in the book.
When I did a Google search at that time, there was no mention of it. So, Richard hadn’t even bothered with a web site.
Well, this is a pretty simple business and local businesses advertise in it like crazy because they like Richard and it works for them and it is relatively inexpensive.
Richard sold around 5,000 copies of the book each year, so you can figure out for yourself the economics pretty easily.
The business model has more depth to it than it might first appear. Revenues are generated from advertisers and book purchasers. But it turns out that Richard’s clients are also his suppliers and his suppliers are also his clients.
Advertisers supply ads, which form the content of the book. Plus they supply the 10% off cards that drive sales to the public. But interestingly, the advertisers also stock the books for sale to members of the public. If you place a half page ad in the book for, say, $350, and you sell the book for $20 of which you get to keep $10, you only need to sell 35 books before your ad costs you nothing.
Think about the compelling value proposition that Richard can present to a single customer—you can buy an ad for a negative cost if you can sell more than 35 books.
In this way, his clients form one of his top sales channels. Another sales channel consists of local charities and other good causes. The Kanata Food Cupboard, for example, sells each book for 20 bucks and they get to keep 15. Minor hockey teams use it too—to raise funds for hockey tournaments, for example.
The cost to start the Best of Kanata was negative—Richard was able to pre-sell enough advertising so that the cost of printing the first book was more than offset by deposits from advertisers. They gave Richard 50% of the cost of their ads upfront because they trust Richard and because they want Richard to succeed since it’s in their best interests that he does.
The value proposition to the retail customer may also involve negative costs. Let’s say you go into a sports store in Kanata to buy your daughter a $800 snow board. You go to the cash to pay up and the clerk tells you: “Why don’t you buy the BOK for $20?” “No thanks,” you say, “I am spending enough already on Brandi!” “What I meant to say is that if you buy the BOK, you get a 10% discount on whatever you buy here and in any other store in Kanata, starting right now.” “If I understand you correctly, if I give you 20 bucks for this Book, you’ll give me $80 off the snowboard?” “That’s right, you give me $20 and I give you $80 so the Book costs you a -$60 and the membership card will work for you until the end of the year…”
Selling a book for a negative cost should be pretty easy even for the most sales-technique challenged clerk.
These kinds of value propositions are not exploited nearly often enough because owners and managers don’t usually spend enough time really understanding their own businesses from their client’s point of view.
I have thought that there is a big, scalable business in this model—how about the Best of Dartmouth, Best of Mississauga, Best of Saskatoon, Best of Manhattan!
I think creating businesses via entrepreneurship should aim to provide an individual with more value than if he or she just had a J.O.B. but maybe there is a more subtle message here.
Perhaps, we should each have one micro business that we hang onto for life; that never gets shared with anyone, no partners, never is pledged to a Bank for a loan and, thus, something that we can fall back on in troubled times.
It would be pretty cool if every man, woman and child on the planet each had a Personal Business (PB) that stayed with us throughout our lives and, if things get messed up, well, we have (as my father would say): a fallback position or an iron reserve. My father lived through two World Wars and he really understood the need for both.
A PB4L does not include things like the guy who tells you: “I can show you how to make a million! Just send me ONE dollar, and I will tell you how.” And, of course, the answer is: “Get a million fools to each send you a dollar to tell them how…”
They have to be real businesses. One way to find inspiration I think would be to go get a copy (from your library) of the Encyclopedia Britannica and look for crafts from the 1930s. Say, for example, making high end paper for socialites and important persons who want acid-free paper to preserve their writings. Who knows what you might find there.
Prof Bruce