CHAPTER FIVE: PREFERRED CUSTOMER PROGRAM

Market Australia is primed and positioned to revolutionize the direct sales industry, if not the very fabric of business and marketing, with its powerful UnFranchise® Business Development System and its implementation of One-to-One marketing and mass customization. The Preferred Customer Program has been developed and initiated by Market Australia as the foundational element in which to engage the One-to-One marketing and mass customization concepts. The strategic direction and successful integration of the Preferred Customer Program into the UnFranchise System will pave the way for Market Australia and its field of UnFranchise owners to transport twentieth-century business and commerce into the next millennium.

SEC. 1 ONE-TO-ONE MARKETING

The concept of One-to-One marketing is based on the best-selling book by Dr. Martha Rogers and Don Peppers, The One to One Future: Building Relationships one Customer at a Time. One-to-One marketing borrows from several proven marketing concepts: relationship marketing, database marketing, and customer satisfaction initiatives. Market Australia is perfectly equipped to implement these principles given the company’s highly successful sales and distribution force; its Professional Service Package, a computerized personnel and data management program utilized by its UnFranchise owners; and Market Australia’s continued introduction of high-quality market-driven products. Market Australia’s Preferred Customer Program, based largely on the principles set forth in The One to One Future, involves UnFranchise owners voluntarily registering their most stable, consistent, and valued customers with the company. These “Preferred Customers” participate in interactive programs, provide data respective of their individual wants and needs, and in return, enjoy frequent buyer program discounts, coupon offers, new product promotions, and much more. In addition, the Preferred Customer Program’s customer interaction and database development provides the infrastructure for delivering customized products to customers according to their indicated wants and needs.

SEC. 2 MASS CUSTOMIZATION

Much of Market Australia’s present and future is being directed towards a concept called “mass customization,” originally developed by B. Joseph Pine, II, in his book Mass Customization: The New Frontier in Business Competition. Market Australia via its Preferred Customer Program is implementing Pine’s principles and turning mass customization theory into reality. The theory of mass customization is based on traditional notions of mass marketing and centers on the idea that products can be supplied and prices can be reduced by mass-producing items that are in demand. Customers increase and search out these products for purchase, creating very large markets and profits. Manufacturers utilize mass media to promote the product and use multiple retail outlets as the means of distribution. This entire system is made possible through technological advances; however, the fundamentals of this system of sales and distribution originated during the era of the Industrial Revolution. Today, technology continues to evolve to the point where mass-production lines can be altered to produce customized products without being cost-prohibitive to customers or manufacturers. Market Australia is providing manufacturers with a sales and distribution method in which to make mass-customized products available to customers via the UnFranchise System. Since every UnFranchise owner’s objective is to personally manage ten to twenty Preferred Customers, Market Australia is able to collect an enormous amount of data on each of the UnFranchise owner’s Preferred Customer base and provide it to manufacturers for customized product development. The manufacturer is able to produce customized products and Market Australia can deliver these products to the UnFranchise owner’s Preferred Customers without any waste or leftover product. It is a win-win situation for the customer, the UnFranchise owner, the manufacturer, and Market Australia.

SEC. 3 PREFERRED CUSTOMER DEVELOPMENT

The very first step in creating a Preferred Customer is to establish the largest retail customer base possible. From this initial retail customer base the UnFranchise owner will have many of these customers repurchasing the same product(s) on a consistent and frequent basis. It is important to remember that a fundamental principle of One-to-One marketing is to focus on increasing the share of customer (i.e., selling more products to each customer) versus increasing customer share (i.e., selling fewer products to more customers). Each interaction between the customer and the UnFranchise owner should result in the introduction and sale of additional products, establishing rapport, and the development of an ongoing relationship. This relationship will generate increased and frequent sales to the respective customer, and

Ch. 5 Ed. 1 – June 2002 1

CHAPTER FIVE: PREFERRED CUSTOMER PROGRAM

effect ongoing dialogue regarding the quality of the products they are purchasing. At this point the UnFranchise® owner should share the potential business opportunity associated with the sale of these products. If the customer is interested in the business, schedule an appointment for a One-on-One Business Presentation. If the customer is not interested in the business, reward this valued customer by introducing and enrolling them in Market Australia’s Preferred Customer Program.

PREFERRED CUSTOMER BENEFITS: Becoming a Preferred Customer entitles the customer to receive purchase discounts. Making two (2) purchases within a quarter qualifies the Preferred Customer and earns a 5% discount on every purchase thereafter. To receive additional discounts and benefits from our Preferred Customer program achieve the Ruby, Emerald, or Diamond status levels as follows:

Ruby Status: Requirements: Minimum purchases of $400* or more quarterly. After the initial quarterly purchases, customer must maintain a purchase minimum of $400 quarterly. Benefits: 10% discount on Market Australia product sales only.

Emerald Status:

Requirements: Minimum purchases of $600* quarterly. After the initial quarterly purchases, customer must maintain a purchase minimum of $600 quarterly. Benefits: 10% discount on Market Australia product sales only.

Diamond Status:

Requirements: Minimum purchase of $800 quarterly. After the initial quarterly purchases, customer must maintain a purchase minimum of $800 quarterly.* Benefits: 15% discount on Market Australia product sales only.

* Preferred Customer purchases that accumulate toward discounts include both Market Australia products and products purchased on line through the Market Australia Partner Stores. UNFRANCHISE OWNER BENEFITS: The most significant benefits of having customers enrolled in the Preferred Customer Program are: 1) business volume (BV) generated by the customers' orders may be assigned to any Personally Sponsored Distributor Business Development Center (BDC) in the downline provided the BDC is a participant in the Transfer Buying Program; 2) BV generated by customers who are enrolled in the Preferred Customer Program will not be lost provided the orders were placed through the Company, regardless if the sponsoring UnFranchise owner subsequently quits the business; 3) active Preferred Customers will not be lost if the sponsoring UnFranchise owner subsequently quits the business; and 4) the Company assists UnFranchise owners with introducing new products and marketing additional products to their Preferred Customers. MANAGEMENT PERFORMANCE COMPENSATION PLAN POTENTIAL: The following examples help to demonstrate how successfully implementing the Preferred Customer Program throughout a sales and distribution organization will impact your management performance compensation.

Conservative Assumption:

♦ Average Preferred Customer equals 50 BV/Month ♦ Equates to approximately 12.5 BV/Week ♦ You personally have 10 Preferred Customers (PCs). Your Distributors do what you do, not

what you tell them to do!

Example 1: YOUR BUSINESS DEVELOPMENT CENTER

LEFT RIGHT Your (5) PCs @ 50 BV/Month Your (5) PCs @ 50 BV/Month 10 Dist. with (10) PCs @ 50 BV/Month 10 Dist. with (10) PCs @ 50 BV/Month 5,000 BV/Month* ← TOTAL → 5,000 BV/Month*

* Does not even take into account Transfer Buying, other orders for retail sales, or new Distributor’s qualifying BDCs.

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CHAPTER FIVE: PREFERRED CUSTOMER PROGRAM

Example 2:

YOUR BUSINESS DEVELOPMENT CENTER LEFT RIGHT John’s BDC Jane’s BDC

LEFT RIGHT LEFT RIGHT 10 Dist. with (10) PCs @ 50 BV/month

10 Dist. with (10) PCs @ 50 BV/month

10 Dist. with (10) PCs @ 50 BV/month

10 Dist. with (10) PCs @ 50 BV/month

5000 BV/Month* or 1250 BV per week

←TOTAL→

5000 BV/Month* or 1250 BV per week

5000 BV/Month* or 1250 BV per week

←TOTAL→

5000 BV/Month* or 1250 BV per week

* Does not even take into account Transfer Buying, other orders for retail sales, or new

Distributor’s qualifying BDCs.

Results: ♦ John earns a minimum of $1,500 to $2,100 every month ♦ Jane earns a minimum of $1,500 to $2,100 every month ♦ You earn a minimum of $3,000 to $4,200 every month

DO NOT OVERLOOK THE POWER OF THE PREFERRED CUSTOMER PROGRAM WHEN IMPLEMENTING THE ABC PATTERN OF BUILDING DEPTH.

SEC. 4 ENROLLING AND MAINTAINING PREFERRED CUSTOMERS (A) Registering a Preferred Customer: There is no cost for registering a Preferred Customer. Manually

enter your new Preferred Customer on www.unfranchise.com.au under your Distributor account in the Preferred Customer Area along with the BV assignment of your Preferred Customer. The Distributor/Customer Manager is to contact the new Preferred Customer with their ID and password and welcome them to the Preferred Customer program.

(B) Preferred Customer Orders

(1) A Preferred Customer may only order directly from the Market Australia Independent Distributor/Customer Manager.

(2) When a Preferred Customer orders directly from the Distributor, the Distributor receives 100%

retail profit and 100% BV. The Distributor/Customer Manager is to record this type of sale online at www.unfranchise.com.au under his/her Distributor account. This sale is to be credited to the Preferred Customer by manually entering the sale under the Preferred Customer’s ID. This maintains the Preferred Customer's discount and purchase history.

(C) Changes to Preferred Customer Data

(1) Changes of name, address, BV assignment, and profile information can be made online at www.unfranchise.com.au under your Distributor account in the Preferred Customer Area.

(2) A Preferred Customer is a Customer for life. In the event of a Preferred Customer being assigned

two Preferred Customer ID numbers by accident, the extra Preferred Customer ID number can be deleted online. (NOTE: Preferred Customers are never deleted from our computer system. The information a Preferred Customer has given to us is very valuable and is not sold or distributed outside of Market Australia.)

(3) Preferred Customer subscriptions cannot be transferred from one Preferred Customer to

another.

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(D) Preferred Customer Support: Preferred Customer Support can be reached via e-mail at PCPsupport@morebv.com.

Ch. 5 Ed. 1 – June 2002 4