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Retail Bucks
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No matter what the economy is, down or up, no matter what the market is, Bull or Bear, small local businesses always need special help to get more customers because of their limited resources.
Unlike gigantic national chain stores who usually have access to millions or billions of dollars even if they are losing money in bad times, small local stores cannot afford to work in a negative cash flow and many times will cut back on advertising dollars when sales slow down.
But when sales are down businesses need to advertise even more. Big businesses do this because stock holders or investors allow the business to post a large loss in order to gain customers for future profits. So what can the small business without large investors and tons of cash reserves do?
They can get smarter and more efficient with their marketing, and this is where Retail Bucks comes into play. First, I need to educate non business owners and anyone thinking of opening a small retail or wholesale business just a tiny bit about some business fundamentals.
If you take a walk down any street or shopping center that has a lot of small shops you can quite accurately assume that very few of them are grossing less than $100,000 a year in sales. Most restaurants, including fast food chains, must gross at least 1 million dollars annually or they have to shut the doors. Unless you have run a small shop you probably are shocked to hear this, but this is important for you to understand.
Look inside a shop and just think about the money that has to be coming through the doors just for them to stay open. Do you see 3 employees working? Then even at minimum wage with taxes they are costing the business over $50,000.00 per year. Do you see the inventory? Is there about 1 million dollars worth? The interest on the loan from the bank for this inventory is costing them about $70,000.00 per year or more. How about the rent on the building? Probably about $25,000 to $75,000 per year. How about the utilities, parking lot maintenance, insurance, accounting, lawyers, cleaning service, light bulbs, displays, signs, banners, and more?
You can assume a small shop like this has basic costs of no less than $150,000 per year. These are all called fixed costs which means whether or not the business makes any sales at all they still have to pay these expenses. Now let's assume the business has a gross profit margin of 33%, which is average for retail. (Restaurants have a much higher gross profit margin). That means this business, not counting advertising, has to gross at least $600,000 per year just to keep the doors open. (In other words all sales are $600,000.00. The products cost the store $402,000.00 leaving $198,000.00 left over to pay the $150,000.00 fixed costs and all the other variable costs of operating the business.) Advertising budgets for all businesses are different, but you can easily assume that a business that is grossing $600,000.00 per year is spending $30,000 per year on some type of marketing or advertising. That means the owner of this business at this level has a $0 profit, they are just at the break even point.
But a business owner is not in business just for fun, or to just make a pay check, they want to make a large profit so they can save money for expanding their business, and be able to retire someday, or at least do better than working for someone else. So as you can see when I say very few businesses do less than $100,000 per year and 1 million per year is common, that I am not stretching the truth, and now you have been educated just a bit on fundamentals so you can more intelligently see what goes into running a business. Now back to how we can help businesses improve their marketing whether the economy is, down or up, or whether the market is, Bull or Bear, The best type of marketing, any business will admit, is word of mouth. Businesses also know it is very expensive to find new customers and it is much more efficient to keep your current customer's longer.
A new customer rewards program called Retail Bucks will do this for small businesses, and it is extremely affordable per year. Now with what you know about the basic business fundamentals I have taught you, you will see that the cost per year is nothing at all for a business to spend on marketing. In most cases, if a small store gains just 1 more customer it will more than pay them back what they are going to spend on Retail Bucks. Have you ever been to one of these large chain stores that give you a plastic card to either go in your purse, billfold, or a very small one that fits on your key chain, which you then show them each time you shop?
The large stores use these to give you a reward for shopping there. They hope it will help you to return more often and to purchase more. They know that it is very expensive to find new customers so it is much cheaper for them to give away some rewards, such as discounts or future spending credits for their store in order to keep you from leaving them as a customer. This rewards system works. That is why so many large chain stores use them. However, small stores cannot participate with this type of service because it is very very expensive to install and purchase software, computers, and print the magnetic cards to give out to all their customers to handle such a system. Imagine that a small store could get a system like this without spending the big bucks, AND, get a system that goes EVEN one step further?
Imagine a system where the customer is rewarded for shopping and given incentive to keep returning and spending more, BUT also the customers are rewarded for sending in their friends. When a store is part of the Retail Bucks program, their customers can participate and get a percentage of all their purchases in Retail Bucks that they can spend on future visits.
When these customer's refer their friends to the store they also earn a percentage of the purchases their friends make in Retail Bucks. Until now many small stores try to use a punch card reward system, where for each purchase at the store they make a punch in the card and when the customer gets up to 10 to 15 punches, they get something free, usually amounting to about 5 or 10% of the total previous purchases.
However, the customer has to remember to bring in the card, and many do not. Also this does not give the customer incentive to refer friends to the store. With retail bucks the store owner or clerk simply puts in the email address of their customer when they make a purchase, into the Retail Bucks website, and the sale is automatically tracked for both the customer and the store owner. No need for the customer to remember to bring a punch card with them to the store.
The customer at their leisure at home can log into the Retail Bucks website to see how many Retail Bucks they have earned for each of the stores they shop at. In addition they can find more stores offering Retail Bucks from the website, in case they want to participate with other stores. And while on the website the customer can refer friends by simply adding their name and email address.
If their friends then decide to shop at that store, Retail Bucks are earned by both the customer that referred them, and the friend that is shopping at the store. And it is all automatically calculated and totaled on the website. The store owner decides what percentage of the purchases they will allow to go towards Retail Bucks. If the store owner allows 5% for the person shopping, and then 5% for the person that referred the shopper, the store would be allowing 10% of all purchases to go towards retail bucks. And here is a bit of another lesson with business fundamentals. When this 10% is redeemed at the store with the Retail Bucks, it does not really cost the store owner 10%.
If the store owner's gross margin of profit is 33%, then the Retail Bucks only cost the store about 7% of gross sales. If the store owner's gross margin of profit is 50%, then the Retail Bucks only cost the store about 5% of gross sales. The store owner can decide on what percentage they are comfortable with.
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