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June 21, 2011

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer... 06/21/2011

Half Of U.S. Businesses Operate From Home

The Census Bureau says that 51.6% of all U.S. businesses are operated primarily from a home. Most are small, with 93.1% having annual revenue of less than $250,000. Of those, 57.1% have revenues of less than $25,000 and 62.9% have no employees.

Question On Last Week�s Groupon Article

A reader had a question regarding last week�s article �Astute Entrepreneurs Know That Joining Groupon Is NOT The Way To Go,� regarding Groupon�s pricing. The question was: What percentage of the normal selling price does the retailer end up with?

Here�s an actual example of a company that offers a tour of San Francisco�s Chinatown. Groupon sells a tour voucher for $12 (half off the normal $24 tour price). Then Groupon takes a 50% cut � $6 from the voucher cost. Bottomline, working with Groupon will earn the retailer 25% of the normal retail price.

Customers Are Tradable Asset

A business can look at its customers and by ascertaining their value (to other businesses) can construct barter deals. For example, an enterprising business owner trades with airlines for travel by providing access to his client list. He also trades with marketing people for advice and sales techniques, in return for giving them �profile� (new leads) from his customer base.

Gift Cards May Soon Be Used To Pay Everyday Bills

Would you like to use those gift cards received at Christmas to pay for utility, car, or mortgage payments? Within the next two months it will be a possibility.

New software from ChargeSmart, a San Francisco-based online bill payment portal, and Plastic Jungle, one of the largest gift card exchanges in the U.S., have created a system where consumers can basically turn their gift cards into cash (up to 92% of the full value of the card) to pay household bills. It�s estimated that there�s an aggregate of about $30 billion in balances on unused gift cards.

Bond Guru Says U.S. In Bad Financial Shape

The U.S. is actually in worse financial shape than Greece and other debt-ridden European countries, says Bill Gross. Gross is the CEO of Pimco, the world�s largest bond-trading organization, and makes that bold statement in reference to all the money now owed to cover future U.S. liabilities like Social Security, Medicare, Medicaid, pensions of government workers, the military, etc. Add it all together and Gross says the total is nearly $100 trillion.

Entrepreneurs Are Waiting In The Wings

According to the Bureau of Labor Statistics, entrepreneurs started 505,473 businesses in the last 12 months. It was the weakest growth since the tracking of numbers started in the 1990s. The weak economy and uncertainty is creating the wariness among entrepreneurs.

A Changing America � Back To The 1950s

Recent census data show that the number of Americans ages 25 to 34 living with their parents has jumped to about 5.5 million -- a figure that accounts for roughly 13% of that age range. Compounding this full-house phenomenon, the grandparent generation is �doubling up� too, as the sociological literature says.

A recent Pew Center report, �The Return of the Multi-Generational Family Household,� chronicles the trend: during the first year of the Great Recession, 2.6 million more Americans found themselves living with relatives. All told, 16% of the population was living in multi-generational households in the 1950s.

All back issues of "From the Desk...� can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a �box� at the end of the newsletter for your convenience. See you next week. . .)

IMS Barter Platinum Sponsor For Upcoming IRTA Convention

IRTA is proud to announce that International Monetary Systems,, one of the strongest barter companies in the world, will be the Platinum Sponsor for their upcoming convention on September 19 through 21. The International Reciprocal Trade Association�s nation convention will be held at the Aventura Spa Place Resort in Riviera Maya, Mexico.

IMS Chairman of the Board Donald Mardak commented, �Our continued sponsorship of IRTA conventions is a testament to the meaningful advocacy work the association does day-in and day-out to preserve and protect the barter industry. We are delighted to help IRTA with their 32nd annual convention, and look forward to an informative and fun convention at the beautiful Aventura resort.�

To register for the 32nd IRTA International Convention click here.

For more information on IRTA call Executive Director Ron Whitney at (757)393-2292 or e-mail

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ECCO�s Symposium On Civil & Defense Offset, International Law

ECCO, the European Club for Countertrade and Offset, organised a symposium in Paris, France, where members and guests of ECCO discussed offset and aspects related to international law with a group of experts.

Prof. Viviane de Beaufort, a European Union law expert and co-director of the European Centre for Law and Economics (C.E.D.E.) in Paris, delved deeper into issues influencing Europe�s competitiveness. Her presentation entitled �Opening Up Of International Government Procurement,� offered a balanced look at the current offset arena and asked the question how reciprocity can be guaranteed.

Mr. Francois Riegiert from the World Trade Organisation (WTO) presented the basic principles of the WTO, focusing on non-military (civil) offset.

Here is a brief look at legislation related to civil offset:

� Countertrade is banned as a quantitative restriction (Article XI, The General Agreement on Tariffs and Trade, GATT 1947).

� Exceptions are included in Article XII: Restrictions to Safeguard the Balance of Payments.

� Article XVIII: Governmental Assistance to Economic Development deal mostly with imports and exports.

These agreements were signed by Canada, European Union, Hong Kong China, Iceland, Israel, Japan, Korea, Liechtenstein, the Netherlands (Aruba), Norway, Singapore, Switzerland, Chinese Taipei and the USA.

The cornerstone principles of the GPA (Government Procurement Agreements) are non-discrimination and transparency. 

The GPA explicitly prohibits the use of offset as measures to encourage local development, or improve the balance-of-payments accounts by means of domestic content, licensing of technology, investment requirements, countertrade, or similar requirements.

Notwithstanding this, Article V of the GPA states that developing countries may negotiate, at the time of their accession, conditions for the use of offsets provided these are used only for the qualification to participate in the procurement process and not as criteria for awarding contracts.

Article XVI of the GPA states that a developing country may at the time of accession negotiate conditions for the use of offsets, such as requirements for the incorporation of domestic content. Such requirements shall be used only for qualification to participate in the procurement process and not as criteria for awarding contracts.

Conditions shall be objective, clearly defined and non-discriminatory and may include precise limitations on the imposition of offsets in any contract subject to the GPA. The existence of such conditions shall be notified to the Committee and included in the notice of intended procurement and other documentation.

Mr. Marc Poulain, policy officer at the European Commission: Director General Trade, Government, Procurement and IPR Unit, talked about the treatment of offset under the international commitments undertaken by the EU on government procurement, including the GPA and bilateral free trade agreements.

His presentation �Treatment Of Foreign Bidders / Goods In Government Procurement Legislation: A Comparison Between The EU And The US Regime� resulted in interesting discussions.

Dr. Katharina Vierlich-Juercke, legal officer at the European Commission: Director General Internal Market, focused on defense government procurement in Europe and the new Directive 2009/81/EC.

The Directive has been adopted in view of developing a true European Defense Equipment Market (EDEM) and the European Defense Technological and Industrial Base (EDTIB). The plan is to implement the Directive on 21 August 2011.

On 6 and 7 September, ECCO will be hosting a symposium focusing on offset in the UAE (United Arab Emirates), and taking the EU debate further. The event will be in Paris.

The following symposium will be 14 to 15 December 2011 in either Paris or Brussels.

For more information or to become a member of ECCO click here.


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(Part 2 of 2)

Listening To Your Customers Necessary For Significant Feedback

By George F. Brown, Jr.

The second goal of a solid program for hearing messages from customers involves learning what customers believe are the characteristics of a best-in-class supplier, one that has the potential to become the subject of future supplier success stories. Best practice approaches aimed at achieving this objective focus on identifying the metrics that customers will use in evaluating their suppliers, with those insights then translated into internal action plans designed to ensure that targets are met.

At Blue Canyon Partners, our own research has identified three clusters within such metrics are concentrated � ones related to the relationship between the supplier and the customer, ones related to the supplier�s implementation competencies and their ability to meet customer expectations, and ones associated with the supplier�s ability to bring high-value innovations (in service as well as in product) to the customer.

Gaining these insights is a challenge, especially in business markets. There are two characteristics of business markets that make it so. First is the fact that the 80/20 rule almost always holds in business markets � a major share (e.g., 80%) of any suppliers sales are concentrated with a relatively small number (e.g., 20%) of significant customers.

And while the three clusters of important metrics almost always apply, how they should best be implemented can differ significantly from one major customer to the next. A solid program of customer listening must be customized to ensure that insights specific to major customers are gained, and not amalgamated together, as doing so can yield an outcome that is right on average, but missing the mark with each individual customer.

The second characteristic of business markets is that it takes insights from many touch points to gain an effective overall picture of the customer relationship. This is far different from consumer markets, where each individual consumer can give a solid picture of their own perspectives. (Did I enjoy the sandwich or not? Did I like the movie or not?) In business markets, a supplier�s relationship with a customer is shaped by the collective experiences of many business functions: design, engineering, manufacturing, logistics, sales, customer support, purchasing, finance, etc.

Only rarely does any single individual know all of the details relevant to each dimension of the supplier�s relationship with their organization. It takes a lot of listening to understand the metrics that matter to a major customer organization, yet that effort is required if a solid portrait is to be developed and this second goal achieved. But, like the first goal of gaining insights about the opportunities and challenges that lay ahead in the future, achievement of this goal is of enormous value.

The third goal is to identify performance improvement opportunities through which the supplier can remedy deficiencies that are determined as important to the customer. In too many instances, this is the only goal that is addressed by the Voice of the Customer program. It is important, but ranked third of the three goals in terms of long-term impact. Elements of a customer-listening program oriented towards this goal should focus on both products and services. It should enable a firm to learn what it can do better along all the dimensions of its interactions with customers.

While this third objective inevitably has a backwards-looking characteristic, we have found in our own practice three important ways in which Voice of the Customer initiatives can address this goal without the overall effort degrading into a focus on �past sins.� The first insight is that topics in this category should only be surfaced after discussions about the future environment and the characteristics of best-in-class suppliers have been completed.

The second is that it is important to distinguish between generic wishes for �better,� from situations in which current performance is bad vis-�-vis competitor performance or some other meaningful benchmark. The third is that it is important to learn whether customers will reward a supplier for improvements in metrics where they say they want �better.�

We have seen countless examples of satisfaction studies which point to areas for improvement in which the sponsors have then invested, with no payoff whatsoever from the gains that resulted from those investments. Avoiding situations in which investments in product or service improvement that aren�t rewarded by customers is as important as learning of improvement needs that are necessary and that will be recognized and rewarded.

Every firm must eventually select a few targets on which to focus investment and management attention. A successful result of Voice of the Customer programs must be held in narrowing the focus to those programs where improvement will make a difference.

One of the ways in which firms have successfully worked with their customers to narrow the list has involved queries designed to learn what the customer would do differently if a certain change were made to product characteristics or service performance. If the answer is �nothing,� then the change should be carefully scrutinized.

On the other hand, if the customer can explain with clarity how they would be able to make changes that leave them better off, then the change has the potential for value creation and capture contributions to both firms. Economics rules in ranking the opportunities for investments in product or service improvements; if the impact isn�t real, the investment probably shouldn�t make the short list that commands scarce resources.

Effective programs for gaining customer insight can make a major contribution to a firm�s business success, enabling them to develop and implement customer-written plans for growth and profitability. While listening to customers is hard, the payoff can be tremendous. Firms that focus on the future, that work to gain insights about how to be a best-in-class supplier, and that cull out those areas where performance improvement will make a real difference will find that their customers have much to say about the pathway to CoDestiny successes.

George F. Brown, Jr., is co-author with Atlee Valentine Pope of the book, CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs. He is also the CEO and cofounder of Blue Canyon Partners Inc., a strategy consulting firm working with leading business suppliers on growth strategy.

For more details click here.

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