Who loves receiving discounts when shopping?
I do!
Shopkeepers know their costs and will never charge a price that will leave their business in jeopardy. So when you get a discount, be glad, because the shopkeeper is still making a profit.
But what really is a discount?
A discount is the amount of money that a shop owner could afford to give off the price of an item and still make a profit.
The customer gets to keep the value of the discount in his wallet.
The discount is not money that the shop keeper ever gets. It is money that he is willing to “give up” in profits.
DISCOUNT = MONEY THAT NEVER LEAVES THE CUSTOMERS’ POCKETS
FlexKom, a German company has implemented an innovative way to use discounts to
- make the customer even more happy and also
- make the shopkeeper happier.
Instead of the total discount remaining in the customer’s pocket, and basically going, “Poof!” to the retailer’s profits, FlexKom has come up with a system that allows the customer to get cash back and other rewards and in the process, assists the shop keeper in gaining loyal customers.
How does FlexKom do that?
FlexKom has introduced a discount loyalty card that gives discounts as cash back to customers on their purchases at all FlexKom affiliated stores and rewards customers on their FlexMoney balances.
When a retailer becomes a FlexKom partner, he receives 1000 cards pre-loaded with 2 Euros which he then registers and gives out freely to his loyal customers. The customer is now permanently linked to him.
How does the discount and cash back work?
Let’s use a simple example with this retailer’s discount.
Photo Courtesy WareHouse Discount Center
- $3,279.98 = The Original Price - $2,131.89 = The Selling Price
Discount
= Original Price – Selling Price
= $3,279.98 – $2,131.89
= $1,148.07
Percentage Discount
= Discount /Original Price x 100
= $1,148.07 / $3,279.98 x 100
= 35%
Now that’s a huge, HUGE discount!
But, rest assured, the retailer is still making some profit, even at the lower price.
Transaction At A FlexKom Non-Affiliated Store
If this transaction is carried out at a FlexKom non-affiliated store, the customer simply pays the $2,131.89 and leaves extremely happy with his bargain product.
The retailer is grateful that the item has been sold and money is in the “kitty”.
However, at a FlexKom affiliated store the transaction would be very different.
Transaction At A FlexKom Affiliated Store
When a retailer agrees to become part of the FlexKom system, he is agreeing to
• give discounts as cash back to customers on their FlexKom Loyalty Card
• give the same value of the customer’s discount to the FlexKom system
Yes, but, how would the money be calculated in the re-distribution of the discount?
Using the example
• 50% goes back to the customer as cash back on his FlexKom card
= 50% x $1,148.07 = $574.03
• 50% goes to FlexKom to run its system, pay commissions, contribute to charity
= $574.03
The customer pays the original full price of the item with his debit card, credit card or cash.
The retailer then goes to the FlexKom terminal and keys in the transaction for the customer to get cash back on his discount loyalty card.
So exactly how much does the retailer get from the $574.03 discounted transaction?
Remember, half of the money goes to the customer and the other half goes to FlexKom.
Here is the exact breakdown of those funds given in the discount, as stated in the illustration.
40% x $574.03 = $229.61 = FlexKom cars, charity and profit
60% x $574.03 = $344.42 =FlexKom shares with team members
Now the $344.42 is shared as follows
40% x $344.42 = $ 137.76
• Global signed shops = 20% / 40% x $137.76 = $68.88
• Shop Owner = 20% / 40% x $137.76 = $68.88
51% x $344.42 =$175.65
• Differential Bonus = 30% / 51% x $175.65 = $103.33
• Leaders Bonus = 15% / 51% x $175.65 = $51.66
• World Pool = 6% / 51%x $175.65 = $20.66
9% x $344.42 = $30.99
• City Co-ordinator = 5% / 9% x $30.99 =$17.22
• Team Co-ordinator = 4% / 9%x $30.99 =$ 13.77
The retailer gets
$2,131.89 – the sale price
$ 68.88 – as a Global signed up shop (extra)
$ 68.88 – shop owner (extra)
$ 2,269.85 – Total
The retailer marks his prices to reflect the cash back figures.
If he is ranked in the FlexKom system, he earns even more of the discounted value, which he would NOT otherwise have received. The entire value of the discount would have stayed with the customer.
In addition, FlexKom pays the retailer 1.2% of all transactions of his loyal customers when they shop at FlexKom affiliated stores.
All of this is achieved through the FlexKom terminal.
Now why would a retailer be interested in being in the FlexKom system?
What’s in it for him?
The FlexKom system views retailers as partners in business and has developed a
structure that will:
• increase profits for the retailer without additional advertising
• increase the retailer’s loyal customer base
• allow advertising for retailers through the FlexKom system
• reduce advertising costs significantly through the FlexKom terminal’s SMS &
video-mail system with which customers can be forwarded information via his
ads in seconds
• place his shop on the internet via the FlexMall, giving him a worldwide presence
• earn him residual income from his loyal customers through the participation of
customers’ purchases in other FlexKom affiliated outlets
• allow customers to make purchases and still get cash back, even though they
don’t have their card
• give the retailer a back office to check his commissions
Real residual income is very much alive and paid instantly in the FlexKom system.
The FlexKom organization also allows the retailer, through the system’s FlexkApp to
• allow customers to make purchases with their smart phones
• make extremely cheap phone calls worldwide - FlexCall
• book cheap vacation packages - FlexHoliday
• stay at 5-star hotels at significantly reduced rates – FlexHotel
The retailer will definitely want to be a part of the FlexKom system.
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