Is it good business to try to offer a large gift or kickback in return for a sale?

Answer 1

Earn Business—Don’t “Buy” it!

James A. Carpenter, my grandfather, was in the heavy truck business in Abilene, Texas. He was trained as a mechanic and was one of the greatest and most focused businessmen I have ever known. He had a lesson for everyone!

But perhaps the greatest lesson I had ever learned from him came from a story about him that was told at his funeral service.

A long time ago in Abilene, Texas…

The story was that in the early years of his business (probably the 1950’s or 1960’s, he had approached one of the biggest truck centers in Abilene to ask for the truck repair business. The center had hundreds of trucks and trailers coming and going every day and there was a definite need for a supply of quality mechanics for the business.

The owner told him that he could have all the work he could do and all it would cost him is a case of scotch every week.
Granddad immediately stood up and said, “I came to earn your business, not to buy it,” and walked out.

Two weeks later, the owner called him back and said that he had been thinking about the meeting for the whole two weeks. He said that my Granddad was right and that he didn’t want the mechanic that bought scotch, but the mechanic that did the best work. My granddad was then asked to come in and handle all of the mechanical work for the trucking center.

This was a major account for my Granddad—it really was the start of making his business and brought significant financial reward for the family. I think about how brave and wise he was to turn away the business and to reconcile with the owner later to create a true opportunity.

I think of that event many times and wonder if I would have ever “bought” the business. The lesson was an important one—what if another mechanic had come along and bought “two cases of scotch?” I’d lose the business and have nothing to show for it.

Do you buy your business or earn it?

The lesson I learned was that if you buy the business, then the business is always for sale to the highest bidder. But if you earn the business, it is yours as long as you take care of it.

Over the years, that business has gone through many changes. My Uncle Clayton now runs the business and my cousins Christi and Phillip continue to work there as well. They always tell of how the one defining moment of integrity came to their family and how they have felt the positive effect of it ever since.

Integrity isn’t something you use some of the time, or part of the time. You use it either all of the time or none of the time. Which would you choose?

Answer 2

Yes and no. As long as the large gift does not cost you too much. The gift should also be something that the majority of your customers will want.

I don't wnat type of business you are running but. lets say you sell Electronics. If you someone buys a big screen tv for $5,000, you can give them an ipod worth $300 as a gift. But the ipod is "big" because it is all the rave now but it only cost you about $100 ($300 retail).
So it does not have to be physically big.

Also be sure to factor in the cost of the free gifts in your advertising budget. I think your gifts should be about 10% of your ad budget but this could vary.

Hope this helps

Jerry
AdviceForToday.com

Answer 3

Paul and Jerry both have good points.

Fact is, there are different situations. For example, "kickbacks" like a case of scotch are on the shady side of ethics, and they put you on a slippery slope of expectations.

But there are industries that couldn't survive without "bonus gifts" - for example, start paying attention to the cosmetics business, they're almost entirely driven by "gift with purchase" where in many cases the perceived value of the gift is greater than the makeup. Is that un-ethical? It doesn't bother me.

Then there's Publisher's Clearing House and the whole magazine industry, who once they started using sweepstakes and pocketknives and phones as gifts with purchase, went down a path and now they can't go back.

But as I said, B2B, personal selling has different rules than mass consumer selling.

Scott

Answer 4

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