I love my Nespresso coffee machine. You couldn’t pry it away from me for all the tea in China. Ironically though, I fought long and hard against getting one with comments to Barbara like, “I want a variety of coffee nespressoand don’t want to be locked into a system where I have no choice…”

Suffice to say, many years later I’m still a major fan and drink copious quantities of the strongest blend.

So what’s this got to do with marketing? Well, everything…

Marketing is about two fundamental concepts – psychology and maths.

Psychology is understanding your clients and what turns them on. And maths is knowing exactly what your clients are worth over their lifetime – which tells you how much you can pay to get them to your door.

And yes, every business that is here for the long haul has to buy clients. i.e. You must fork out for advertising, promotions, referral fees etc.

Sure you might think you get all your business from referrals, or free listings on Google, but if that’s all you rely on, one day you could be in for a rude shock when your referral source moves on. Or Google (as it inevitably does) changes its algorithm and you disappear from the listings.

But back to Nespresso…

If you’re familiar with Nespresso, you’d know they’re a great example of a “closed” system. Once you’ve bought a compatible machine, you have to keep buying their coffee capsules if you want to enjoy their coffee.

While Nespresso enjoyed a virtual monopoly for over 20 years, recently the competition has moved in. You can get far cheaper coffee blends in compatible capsules from other manufacturers.

As a result they’ve been ramping up their marketing – squarely targeted at the greed and get something for nothing glands.

Received this from them the other day:

“To celebrate the launch of the new Limited Editions Trieste and Napoli, Nespresso is offering one lucky Club Member a bespoke and authentic Italian Dinner Party at your home.

The winner and five of their chosen guests will be treated to an exquisite three course Italian set menu dinner party at home which will be prepared and hosted by James Kidman – Executive Chef at Signorelli Gastronomia Sydney.

To enter the competition to win this exclusive and luxurious prize valued at up to $5,000, Nespresso Club Members must simply visit the Nespresso Boutique in Pitt St Mall on Monday 8th of April 2013, and make a purchase. Your details will then be automatically entered into the prize draw *.

Visit the Nespresso Boutique in Pitt St Mall on Monday 8th of April 2013 and discover the new Limited Editions Trieste and Napoli together, and appreciate their unique characters through a coffee tasting tour.

Italian inspired bites will also be served during the morning to enhance your coffee tasting moments. You might also have the chance to meet the creator and chef himself, James Kidman.”

Notice a couple of things.

The prize is significant in value. It’s emotional. Who wouldn’t like to be pampered, wined and dined with 5 of their best friends? And it’s not something you would normally do. It’s a luxury item for most of us.

The promotion is only open to “club members”. Membership is free, but it allows Nespresso to send out targeted mailings to buyers.

And to go in the draw you need to physically come into one particular store on one particular day and make a purchase!

They’ve deliberately chosen a Monday which is probably a slower day for foot traffic. And they’ve created a buzz – think about all the people making the effort to come into the store. And once you’re there, you’ll try new blends and are likely to buy more than one thing.

As to the $5,000 value, they may be forking that out, but chances are it’s costing them far less as they would have negotiated a wholesale rate! And they know the number of sales on the day and beyond will make this expense pale into insignificance.

Years ago a high end boutique owner related how he’d done a deal with Mercedes.

Every car buyer was given a $400 voucher for an expensive garment at his boutique. The catch was you had to go in and collect it in person.

Do you reckon these ladies went in and just picked up the free gift? Some probably did, but the vast majority spent upwards of another $2,000 or more in the store.

The boutique owner knew a couple of secrets.

He understood psychology. He knew we all want something for nothing and most people would take him up on his offer and come to the store. And once there reciprocity would kick in – “you’ve given me something, so I feel obligated to do something in return”, leading to more sales.

In effect he was “buying” his client.

As to the maths… He knew his numbers, what people were likely to spend, calculated the lifetime value and made the decision to give away the $400 to make $2,000+. And equally importantly, he knew these people had money – they’d just bought a luxury car, after all.

But what if you offer a professional service rather than a product? How could this apply to you?

The best way is to give away your best advice!

Huh? I hear you saying… If you give it away, why would they come back and pay?

Our friends Daryl and Andrew Grant run major 4 day internet marketing workshops and essentially tell you how you can emulate their success.

They hold nothing back and nothing gives them greater pleasure than bringing a previous participant who’s taken their free stuff and made money, back on stage to tell the new audience about it.

Nothing quite like that to boost your credibility.

So why do they do it? Daryl and Andrew know the vast majority of people won’t or can’t do it without their help which is where they make their money.

Barbara and I apply these principles by virtually giving away significant knowledge and value through our low cost workshops.

Our goal is to give prospects a taste of what we can offer – effectively risk free. We then offer free business focus sessions and smaller programs to build up trust. Some people stop there, but most realise they can’t do it themselves and move onto larger marketing and sales implementation projects.

My parting thought is…

How much can you spend to “buy” a client.   To do this you need to know the lifetime value they represent.

I have a Lifetime Value Calculator I’m happy to send you – just reply to this email with LIFETIME VALUE CALCULATOR to get it. Trust me, the numbers will open your eyes to how much more you could be making from each sale.

Rashid & Barbara.

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