The post title I’ve just written is one of the longest in years, but it relates to a simple point about marketing and business strategy. If you are in the enviable position where the purchaser of your service doesn’t actually need to pay for it (because a third party will either pay or reimburse the costs), you theoretically have a powerful marketing edge.
Then the challenge is not to sell the actual person or organization who pays the bill, but to show your “client” the advantage of using your service, at no cost. You get the order, and then bill the ultimate payer (who is your true client) at full price.
You’ll find this sort of marketing challenge/opportunity in the world of insurance reimbursements, but the rules are not the same everywhere. Clearly, the organizations actually paying the bills often are less-than-enthusiastic about this marketing strategy, and fight back.
Consider those expensive television ads inviting people to call a 800 number to obtain a personal mobility machine, 100 per cent reimbursed by Medicare. Sounds like a good deal to the person getting the machine, but probably it isn’t so good for the Medicare budget.
You also notice this practice in Ohio, where roofing contractors “storm chase” looking for seemingly hidden problems — I’m sure they have no trouble finding roofs need replacing under most conditions — while telling homeowners that local laws prevent insurers raising rates for claims if the damage is caused by a natural disaster. (See my “Canvassing in Columbus posting.)
Our business practices this model, to some extent, as well. We offer companies free editorial profiles for their businesses — worth thousands of dollars in publicity and marketing resources — in exchange for their permission and references to their suppliers for advertisers. The suppliers, not wishing to offend their best clients, pay the freight.
(We are careful not to abuse this trust and referral process — the Construction Marketing Ideas blog started three years ago as a client service initiative, to provide follow-up marketing consulting and services free for any of our advertisers. I’m confident that anyone who spends a few hundred dollars with us, even to support one of their clients, can receive a few thousand dollars in real value for their investment.)
Another example of the dissociation process are the fees charged for exhibitors at trade shows for table rentals and high-speed Internet service (imagine paying $400 for three days WIFI service), and for full fare business airline tickets. The people renting the booths or flying business class usually don’t pay the outrageous (from a consumer value perspective) price — they pass the bills on to their accounting department or perhaps their clients for reimbursement.
How can you apply this insight into your own business and marketing? First, no one will broadcast their eagerness to pay someone else’s bills and if you know about it from a competitor (say you are an Ohio roofing contractor), you may find the market is already cluttered with competitors playing the same game. (You can see how badly the model falters when it is overused or exploited — just look at the airline industry, as an example.)
Nevertheless, you may find golden opportunities right under your nose. Take a few minutes to review your existing (best) clients, and study whether their is a disconnect between purchase and paying authority. Can you discover other clients who might follow the same model? See if you can create linkages or opportunities in the supply chain, by defining and seeking endorsements from client influencers (like we do, with our special features).
You should also remember that this pricing practice can head you down the slippery slope to abuse. If you build your business and marketing around this approach, remember everything can come crashing down when the rules are changed and the person paying the price pushes back for truly fair value. So do your best to deliver it in the first place.
