Make sure barter transactions succeed.
There are two simple ways to keep your corporate-barter agreement successful in the long run:
- The goods or services provided by the barter ﬁrm (fulﬁllment) can be used by the client.
- These goods or services are competitively priced; that is, priced at levels the client typically pays.
Even then, there are other things that can cause a perfectly good barter transaction to go south, including:
- The recipient of the fulﬁllment (the buyer) becomes uncooperative. Unfortunately, the actual end users of corporate-barter fulfillmentThe process through which ICON delivers the goods and services clients have purchased from ICON using trade credit or cash or both. Also referred to as the back end of a corporate barter transaction. are sometimes not involved in the transaction – until she is needed to purchase something from this new channel. Result: She feels circumvented, and rightly so. (See Getting your operating managers on board.)
- The agency objects. In a transaction that involves media, the barter ﬁrm becomes, in effect, a conduit between the company and its advertising agency of record. Sometimes the agency opposes corporate barterThe creation of value by exchanging a client's unwanted or undervalued asset for the promise to purchase over a period of time from the corporate-barter company a defined set of goods and/or services, called fulfillment. (Sometimes mistakenly referred to as Corporate Trade.) – erroneously believing that the quality, price or timing of the media buys will somehow suffer. In fact, reputable barter ﬁrms welcome the participation of a client's established experts, since the goal of a barter ﬁrm precisely mirrors that of the client's agency: to further the client's best interests.
- The client's circumstances change. To avoid being whipsawed by events (business downturns, mergers, personnel changes, etc.), the barter ﬁrm and the client must remain committed to the transaction and be willing to make reasonable adjustments to see that it stays on track.
- An asset is badly remarketed. Good barter ﬁrms are not liquidators: They don't simply dump a company's assets onto the open market. In fact, they tend to be highly skilled at disposing of a surplus with nary a ripple in a client's brand image. Still, a company must take the steps necessary to educate a barter ﬁrm about its cultural values, brand identity and business practices.
Want to know more?
We wrote the book on corporate barter, literally. The passages in this section of the site have been excerpted from Unlock Financial Value with Corporate Barter by ICON founders John Kramer and Clarence Lee. To receive a complimentary copy (e-book or hard cover) and jump-start your understanding of how corporate barter creates value, click here now or call 203.328.2300