Chapter Eleven

JOINT VENTURES:
Strategic Marketing Boosts 11 and 12

I’VE SAVED THESE FINAL Strategic Marketing Boosts on joint ventures until last for a reason. It’s been my experience that joint ventures work best once you have your initial marketing campaign up and running. There are a number of different types of joint venture relationships, some of which require that you have a substantial list of subscribers. Granted, the term “substantial” is relative and will vary depending on what niche you’re in. As your list grows, you’ll find that our next Strategic Marketing Boosts will produce solid results.

A joint venture is simply a collaboration with someone else with the goal of making money for both of you. In order to identify good joint venture (JV) partners, you want to ask yourself, “Who else has relationships with the types of people I want as customers or clients?”

These are the people you want to connect with to determine if there is some way that you can jointly market your services. I’ll show you how to identify these people and build a relationship with them shortly.

Once you’ve developed these relationships, there are lots of joint-marketing activities you can engage in. You can

    •  Share a booth at a trade show

    •  Do a webinar or a teleseminar together

    •  Combine the products or services that each of you offers individually into a collaborative new program

    •  Refer business to one another and receive referral fees

The process can be as simple as having a JV partner introduce you to their contacts and vice versa. Alternatively, you might create a whole new business and market it together. I entered the training business largely due to a joint venture relationship. I had the content, my partner had the training expertise, and together we developed a highly profitable seminar business based on my book about using stories to more effectively sell services.

In Strategic Marketing Boost 11, you’ll do the preparatory work of researching and identifying joint venture partners. It’s important that you learn as much as you can about who might be good JV partners well in advance of going into business together. As part of this due diligence process, it’s a smart move to get on their mailing list and, as much as your budget allows, invest in their products. You want to feel comfortable that what they’re offering is something you can recommend with a clear conscience.

In Strategic Marketing Boost 12, we begin to build relationships with these potential JV partners. This may include directly reaching out to them by phone or email, attending conferences where they are likely to be, or even proactively recommending their products or services to your list of subscribers. (This strategy can be highly effective if someone with whom you want to build a relationship is difficult to reach.) The goal of this boost is to begin the process for getting these people to trust you enough to recommend your products and services.

The success of any joint venture relationship ultimately hinges on trust, and this takes time. Simply calling someone and suggesting that you cross-promote each other’s products or services seldom has a positive result. However, if you can develop the right relationships, joint ventures can be extremely effective and add significant dollars to your bottom line.

Finding the Right Partners

The ideal JV partners are people selling complementary (as opposed to directly competitive) products or services to the same customer base as you. Finding these people starts with the questions, “Who already has relationships with the people that I’m trying to sell to? How does what I have fit with what these people are already selling to their market?”

Sometimes there’s a natural fit: Realtors are a natural JV partner for mortgage brokers. Financial advisors and estate-planning lawyers make obvious sense. Chiropractors fit nicely with personal injury attorneys and sports coaches. Sometimes the connection is obvious; sometimes it’s buried a bit deeper.

Keep in mind that the most obvious joint venture partnerships will also have been obvious to your competitors. Most Realtors know that developing referral relationships with mortgage brokers makes a lot of sense. Thus, if you’re going to pursue the most obvious connections, you’re going to have to think of creative or compelling ways to get them to pay attention to you. In many cases, putting in the time to develop a list of less obvious JV partners makes a lot of sense since there is less competition.

This is what we refer to as the fishing-hole analogy. Do you want to fish at a pond where you know there are lots of fish, but so does everyone else—so the banks are teeming with other fishermen; or do you want to seek out the ponds where there are perhaps fewer fish, but far less competition? There are advantages and disadvantages to both approaches, but it’s worth developing a list of potential JV partners that’s beyond just the obvious ones.

One great idea if you’re having trouble is to talk with some of your customers. What types of products or services (aside from your own) would they be interested in? Is there anything that comes before the sale of your service that would be helpful for them? Is there anything they need after they have bought your product or service? Thinking and asking your current clients about these “before” and “after” scenarios may unlock some creative ideas for potential JV partners.

For example, one of the first things people do when they buy a new home is redecorate. Thus, developing relationships with Realtors may make sense for some interior decorators. How about chiropractors and health food store owners? Those that are open to alternative methods of medical treatment are also likely to be interested in natural and healthy foods.

In recent years an increasing amount of new business has come to me through joint ventures. Since we focus on developing and implementing marketing campaigns for our clients, great JV partners for us are marketing consultants who sell “how to” information to small businesses. After clients have bought their books and audio programs or attended their seminars, it is likely there will be a percentage who want someone to actually do the work for them. When these JV partners refer these clients to us, it’s a win/win/win for everyone. The JV partner gets a commission, we get new business, and the client gets a marketing program that helps him or her grow their business. Thinking about this model may unlock some ideas for the types of businesses you should be contacting.

Another approach is to research the types of associations potential JV partners belong to. It’s surprisingly easy to find out. Simply Google whatever their business is and the word “association.” Alternatively, you can do this the old-fashioned way and check the Encyclopedia of Associations, which is available in many public libraries.

Most associations publish a list of members. Sometimes you can purchase the list directly; other times you have to be a member. Personally, if I discover a group that has a lot of JV partner potential, I’ll go ahead and join. There are a number of benefits for doing so.

One of the main ones, which surprisingly few people take advantage of, is attending the meetings and conferences. I know that I told you earlier that attending conferences was largely a waste of effort, and that’s true if you’re there seeking customers. However, when you’re looking for JV partners, attending meetings actually enables you to stand out from the other attendees and can be a great investment of time. For example, let’s say that you decide the sales promotion industry offers some great potential for joint venture relationships. At the conferences, the vast majority of people will be in that particular field. The halls and meeting areas will be chock-a-block with people who make their living selling pens, T-shirts, and coffee cups. However, if you’re a sales trainer, an Internet marketer, or a copywriter, it’s conceivable that you’ll be the only person there in your particular field. One of the frustrations people have at industry conferences is that all day long the only people they’re meeting are the competition. If you’re there with a pitch about how the two of you can partner together to help grow each other’s businesses, you’ll get a lot of welcome attention. In fact, we’ve had a number of clients who have further leveraged this idea by speaking at industry conferences about how to establish joint venture relationships. It’s an idea definitely worth considering.

The Mindset of Your Potential Joint Venture Partners

On the surface, setting up joint ventures seems so obvious that one wonders why so few of them produce much in the way of tangible results. After all, there’s a compelling financial proposition that’s hard to argue against: “Let’s refer each other clients and make money together.” However, there’s a huge barrier to successful joint ventures that can be summed up in one word: trust.

I remember the first time I attempted to establish some joint venture relationships. With the benefit of hindsight, I realize my strategy was flawed from the beginning. I never focused on the “relationship.” To my way of thinking, if I could make a strong financial argument for what I proposed, it should be a “no-brainer.” (As an aside, if you ever come up with an idea that seems like a no-brainer, that’s usually an indication that you haven’t thought it through enough.)

Much to my dismay, my no-brainer joint venture business proposal fell completely on deaf ears. For a long time I couldn’t quite figure out what was wrong. Then I noticed that the few joint venture relationships I had that worked were exactly that—relationships.

This is an important point. While there are undoubtedly exceptions, the most valuable joint venture partnerships are those in which the relationship already exists before you decide to do business together.

When you think about it, that’s the overall theme to the One Week Marketing Plan. We’re not trying to get people to immediately buy from us, since all that’s going to do is scare people away. Rather, we focus first on building a relationship and establishing trust.

That same lesson holds true for building mutually rewarding joint ventures.

Think about the clients you currently have. I would imagine that you worked hard to get them. Now suppose I (whom you’ve never met) called you up and said words to the effect of, “Hi, I realize you don’t know me and have no idea about the quality of what I do, but I can give you a really big commission if you’ll let me offer my very cool gizmo-service to your clients.”

Okay, I’d say it a bit more elegantly, but I’m sure you get my point.

Although common sense would dictate otherwise, this somewhat exaggerated example is what most people do when they attempt to develop joint ventures. They think of them as purely financial transactions and forget how important the bond of trust is between a company and their clients. Sure, we all want to make more money, but potentially damaging the relationships with our current clients by referring them to someone offering shoddy services trumps any short-term financial benefit that might occur.

There’s an old saying in relationship building: “Go slow to go long.” We’d all love to build a dozen great joint venture relationships by tomorrow, but realistically, that just isn’t going to happen. This is why cold calling people you don’t know saying why they should joint venture with you is a rather pointless exercise.

Although you don’t necessarily have to meet all your JV partners face-to-face, it certainly helps if you can. This underscores the benefits of attending the conferences and events where large numbers of potential JV partners may be. However, there’s another angle that’s often underutilized, which is to volunteer to be a resource in other people’s marketing activities. Let me share an example.

An increasingly popular way to get the word out about your services (as well as stay in touch with your existing clients) is through teleseminars and webinars. People who use these methods are always on the lookout for people who can be guests on their programs. (As Internet radio continues to grow, this same strategy applies for business owners who host shows at places such as BlogTalkRadio and need guests.) Volunteering to be a guest, with no expectation of any personal benefit, can be an excellent way to start building a relationship.

This was a strategy that proved to be successful when I set out to develop a joint venture relationship with financial advisor/marketing guru Annette Bau. My research on potential JV partners identified Annette as someone who marketed her services to one of the niches I also focus on (financial advisors), but who did not offer a “Done For You” type of marketing service. Annette is very successful, with a huge list of followers, and would probably respond with disinterest if I were to instantly ask her to introduce my services to her clients.

However, what I noticed once I subscribed to her list (the importance of doing this for everyone who you might want to joint-venture with cannot be overstated) was that she conducted a number of teleseminars. Further research uncovered a couple of areas in which I might be able to provide value to her listeners that hadn’t been previously covered. Thus, when I reached out to Annette, my pitch was completely focused on how I could be of assistance to her. As one might guess, approaching her in this way was positively received.

There are a couple of benefits to this type of approach. First, there’s a greater likelihood of a positive outcome if your focus is on how you can help the other person, rather than on your personal agenda. But there’s a somewhat sneaky benefit that also occurs that greatly accelerates the potential joint venture relationship. Having me on the teleseminar was a relatively low-risk proposition for Annette. If it was apparent that I didn’t know much, she could easily jump in and take control of the conversation. However, since I did provide value during the program, I built up considerable credibility with Annette. Almost immediately, I became someone Annette could trust.

Thus, when I later approached Annette with the idea of promoting my services to her list of subscribers, it was greeted positively. Today, Annette and I have a very mutually beneficial joint venture relationship. I can trace its origins to appearing on that initial teleseminar. However, none of the later financial benefits would have occurred if I hadn’t first offered to be of assistance to her.

We often hear the saying “you have to give before you get.” To be perfectly honest, for years I was never exactly sure how one did that. However, if you take the time to learn about your potential JV partners, you can often also identify ways in which you can be helpful to them.

The flip side of volunteering to be a guest on other people’s teleseminars or webinars is to invite potential JV partners to be on your programs or to be interviewed for your blog. While this may not be a compelling invitation for the celebrities in your field, most people will be flattered by your interest in having them share their knowledge and perspective. You can gain some additional goodwill by making sure their website, products, or services are heavily promoted during your program.

However, sometimes these strategies won’t work. The person who could take your business to the next level of success already has countless numbers of people banging on the door asking him or her to appear on their teleseminars or webinars or speak at his or her conferences. But, you know that if only you could somehow develop a relationship with this person, it would dramatically elevate your business. How can you ascend Olympus and play with Zeus and the rest of the gang?

It’s actually rather simple, but fair warning, it’s not for the faint of heart.

You buy your way in.

If you want to build joint venture relationships with the Super A-Level players, it sometimes means bringing out the checkbook. There’s a long history of people joining charitable groups and making contributions just so they can be put on committees where they will rub shoulders with those who have the potential to be extremely attractive JV partners.

Again, the focus initially needs to be on building the relationship. You can’t write the check, join the committee, and not be expected to do any work. Your fellow committee members will view how seriously and diligently you fulfill your volunteer tasks as a free preview of the overall quality of the work you do in your day job.

You can also buy your way in by joining high-level Mastermind groups or specialized training programs. For example, I very much wanted to meet former Kodak chief marketing officer and author Jeffrey Hayzlett. Based on my research, I thought he would be an ideal potential JV partner. But I didn’t know Jeff, nor did I know anyone who knew him. However, I went to Twitter and started to follow people he was following. That put me on the radar screen of a person named Larry Benet, who was developing a high-end Mastermind group. The fee to join wasn’t inexpensive, but I noticed that Jeff, legendary marketer Jay Abraham, and book publicity gurus Steve & Bill Harrison were all members. These were all people who, if I approached them cold, would likely ignore my overture. However, after spending a year with them as part of the Mastermind group, I was able to build extremely profitable relationships with all of them.

Again, that word “relationships” is key. One factor that’s often overlooked when you start to put this plan into action is that you need to make the commitment to stay in regular and frequent contact. Making a great connection at a conference is only the first step. You can’t call the person up six months later and expect that his or her remember you if that’s the only time you’ve been in touch since the original meeting. In much the same way as we develop relationships with prospective clients through the use of a drip-marketing sequence, you want to make sure that you’re being proactive in communicating with potential JV partners. This is where writing frequent blog entries can pay dividends. I’ve found that by simply adding my JV partners and prospects to the distribution list for my blog, I remain top of mind.

Creating a Letter to Promote Their Product

As I’ve mentioned, one of the best strategies for developing long-term joint venture relationships is to promote their products or services before you ask them to promote yours. One of the easiest ways to do this is to send an email or letter to your subscribers introducing their services. Here’s a template that works quite well:

Hi (First name),

Lately, a lot of my clients have been talking to me about a problem they’re having. They want to (achieve some type of result), but they can’t because of (a particular reason).

I decided to do a little research to see if I could help—and I found a resource I want to share with you. As you know, I don’t make recommendations lightly, but I’d encourage you to learn more about (the joint venture’s products or services).

If (the problem) is something you’re struggling to address, I’d encourage you to learn more by going to (website of your potential JV partner).

I found (name of product or service) to be extremely helpful, and I think you will, too.

This is also highly effective once you’ve established a joint venture partnership and are receiving (and paying) referral commissions. Many businesses that offer products or services over the Internet will set you up with what’s called an affiliate code. It’s simply a specialized URL (that’s www.websiteaddress.com) that tracks the purchasing history of anyone who refers business to a JV partner. You would insert that affiliate link into the email when you send it out to your list. In other instances, referral fees are done on an honor system. It’s been my experience that most JV partners are pretty honest in this regard. After all, there’s little incentive for them to shortchange you a few dollars and risk killing a long-term profitable relationship.

Special Considerations for Internet Joint Venture Partners

As we’ve been discussing, joint ventures can take a number of different forms. If you’re seeking JV partners to promote your products or services largely through the Internet, there are some considerations you need to be aware of.

The size of your subscriber list (the number of people who have opted in to receive your free offer) will play a large role in the types of JV partners you will be able to attract. As a general rule, people will be interested in partnering with you if the size of your list is roughly equal to theirs. It’s difficult for me to get much enthusiasm from someone who has a list of 10,000 subscribers if I only have 100 people on my list. This emphasizes the importance of continuing to add people to your list. The more people you’ve got, the bigger the joint venture arena you’ll be able to play in.

It’s like the dating physical appearance scale, where sixes date sixes, eights are usually dating eights, and tens date tens. If you have a list of 10,000, the best people to approach are people with lists of up to 15,000 subscribers. If your list is 40,000, you can easily approach people with lists of 50,000 on down. If your list is around 1,000 people, you can probably easily approach people with lists of up to 2,000 people. (You have a little more flexibility percentage-wise with smaller lists. People with under 2,000 subscribers will probably say yes to almost anybody. At that point, every new subscriber counts for a lot more.)

That doesn’t mean you can’t “date up.” With joint ventures, just as in the world of romance, the more of a relationship you build, the more you get them to like you, the less the relative size of your list matters. Also, if you develop a list in a very specific niche market, that may be very appealing to others who are also focused on that niche, regardless of your list’s size.

When promoting your joint venture via the Internet, you also want to make sure there is an appropriate financial incentive for others to get involved. Offering someone a 10% commission on your $10 ebook isn’t likely to generate much excitement.

You are much better off creating products or services where you can offer a significantly higher commission on more expensive products and services. There are three ways to do this:

   1.  Bundle together several products and services so that you create a higher-value product with a higher price. This allows you to offer a bigger commission. I would recommend that you sell this product package for a minimum of $500.

   2.  Create a $100 product or service that you’re willing to use as a loss leader to get more customers. Offer 100% commission to your partners. If it’s a physical product, charge separately for shipping so you don’t get hit with the additional expense. This strategy works best if the “product’ is one that can be delivered electronically. Ebooks, PDFs, podcasts, and recorded webinars can be nicely bundled into a $99 package. The advantage of electronic products is that while you’re foregoing making money from the sale, you don’t incur fulfillment costs.

   3.  Develop a continuity product, where the customer gets billed every month for more of your product or service. For instance, you could have a main product and add a monthly teleseminar where you interview people from your industry who can give your customers inside information and charge $50 a month. Or you could offer a monthly chiropractic program where clients get one free treatment plus a discount on additional ones, for a monthly fee. Even if your JV partner is only getting $20 for the initial sale, they get an additional $20 per month as long as your customer stays in the program. That works out to $240 per year, which is significantly more lucrative than a one-time $20 commission.

There are no rules in terms of what percentage to give to your referring partner, but there are some guidelines. For a physical product, it’s typical to give between 40% and 50%. To get a person to attend a conference, a seminar, or group coaching, 25–50% is common. If, however, you are giving a commission on something such as individual coaching or a service that requires a significant amount of work on your part, or one in which you have to pay an employee or subcontractor, 10% is a typical commission.

For some people, the total amount that is being paid is more important than the actual percentage. I know one list owner who does lots of joint venture partnerships but requires that her commission be at least $800. She doesn’t particularly care whether that’s 10% or 24% of the retail price—it’s the number that she believes is fair for programs she promotes to her list. While that’s the exception, it does underscore the fact that when it comes to commissions, everything is negotiable.

However, there is one potential issue that you need to keep in the back of your mind. If the joint venture is extremely successful, your partner might start to think that they could make more money if they just offered your service to their list themselves. You don’t want to create your own competition, but unfortunately this sometimes happens.

There’s an easy way to avoid this. Pay your JV partner a large enough incentive so that they feel it’s not worth the bother to become your competitor. For example, let’s pretend I’m successfully partnering with a dental supply company to promote a “How to Market a Dental Business” program. If I only offer this partner a $1,000 commission on a $50,000 product, they’re likely to think, “Hmm, we’re leaving $49,000 on the table every time we refer a client to Mark. It might be worth the effort on our part to create a program where we make all of the money.” But if I offer them $15,000 per sale, they’re more likely to conclude, “It’s just not worth my while to go into this. The time and money required would be better spent on my core business.”

The moral of the story is that the more you make your joint venture partnerships a true win-win, the greater the likelihood that these will become a long-term relationship that can last for years.

The Long-Term JV Partner

One of the nice things about business is finding people you can work with over the long term. When you find someone who you personally like, has high ethics, and has a business that’s complementary to yours, that’s an ideal joint venture relationship. It’s even better when you find someone who is good at the things you’re weak at and vice versa. If you’re fortunate enough to find that person, you may want to consider going beyond just selling each other’s products and services. You could create a new product and perhaps a business to sell it together.

After all, not only are two heads better than one, but if your personalities and capabilities are complementary, you will get more done faster—and better—together than you would by yourself.

Since you each have your own list, you’ll have more people to launch your new service or product to. Plus you will each have your own networks of people to contact for joint ventures, so you can double your capacity that way as well.

Obviously, this is not the kind of thing you want to do right away with someone. However, it’s something to consider as the joint venture relationship builds.

Joint Ventures Versus Subcontracting

In a sense, subcontracting is a very specific type of joint venture. When your business becomes established, you may have a number of subcontractors who implement specific components of the services you offer. Alternatively, you can serve as a subcontractor to others. There are a lot of people who make their living this way and never have clients on their own.

Subcontracts are great when you are starting out and you want to get your feet wet. They give you the opportunity to do the work you want to do, understand the marketplace you’re in, and get paid while you’re still learning.

When I wanted to start out as a speaker to the small business community, I began by working with SkillPath, a company that hires speakers to offer business training seminars and sell various products from the stage. I made some extra money, but more importantly, I learned what it was like to be a professional speaker. Ultimately I decided that while I enjoyed speaking to groups, the demands the profession makes on one’s lifestyle were not a good long-term fit for me. That was extremely valuable knowledge, which I never would have known had I not started out as a subcontractor.

The problem with subcontracting is that you take a hit financially. You earn only a fraction of what you would if the client was yours, plus there are often limits on how much you are allowed to engage with the client.

Although you’re doing a lot of work with the client, the harsh reality is that they are not yours. You didn’t find them and get them to sign the contract. As a result, you’ll earn less and may not even be able to tell others that you’ve worked with a prestigious client. These are some of the greatest frustrations that people experience who only work as a subcontractor. It’s a bit like the old joke about what’s the most important part of chicken soup? It’s the chicken. It’s important, once you’ve identified the niche you want to work with, that you put in place the One Week Marketing Plan so that you have clients of your own.