Maximize Your Marketing Leverage--- Think Outside The Box!
Leverage your time and marketing dollars and enter into joint ventures with other businesses.
If you agree that your customers are your business' most valuable asset, then you should see the potential profits available if another business will make their customers available to you. Available, that is, in the form of an endorsement, consignment of goods or more integrated joint venture.
Joint ventures can work in one of two basic ways: first, you let other companies play off your customer base - and then take a percentage of each resulting sale. Or second, you work a deal with other companies to make their customers available to you and pay them a portion of each sale. The underlying principle of why this works is simple. Every business spends time, money, resources, and sweat developing relationships with its customers. These customers will have a level of confidence in that company, which will increase their willingness to respond to, offers made by them.
For instance, a company might spend $100,000 a year on advertising, $160,000 a year on commissioned salespeople, and $15,000 a month for prime retail space. These three factors alone - not to mention dozens of other expenses - account for almost $275,000 spent a year to develop customer relationships.
Now, if you work a joint venture with the owner of this company, you can access all of that money spent for the cost of a letter. Let me give you an example of what I mean.
If True Value Can Do It...So Can You
I heard of a joint venture engineered for the owner of a True Value Hardware store in a town of about 150,000 people. The owner had spent an enormous amount of money on inventory, advertising, and leased space over the nine years he'd been in business. During that time he developed a list of 1,600 loyal customers - people he literally knew by name and came to him whenever they had a question about anything related to fixing or improving their homes.
The joint venture involved more than 30 companies that offered all types of home improvement and repair products and services. All of the businesses became members of the True Value Service Center - a place where customers could find answers to questions about anything around the house.
Each business that wanted to participate was carefully screened and evaluated to make sure they would offer True Value's customers outstanding service and value. Only one business from each industry was permitted to participate. Each business then paid a $100 fee to join, which was used to build the in-store service counter as well as to send promotional materials to customers.
At $100 apiece, we immediately raised $3,500 - more than enough to build the in-store service counter. But the $3,500 was only the tip of the iceberg. We also negotiated deals with each of the businesses for a percentage of each sale that resulted from his customer's use of the service center. The percentage ranged anywhere from 5% to 15% depending on the business and the kind of margins the sale would bring.
Our True Value Hardware was able to leverage the entire operation of over 30 businesses. In essence, he became a landscaper, a drywall technician, a carpet cleaner, a fence builder, etc...without having to make an investment in those areas. His customers wanted those products and services and they trusted his judgment.
There are thousands of ways to construct joint venture deals. You have to be willing to actively pursue and put together deals. When you present another business owner with a proposition, your approach is all-important. Just like all good marketing efforts, you want to engage them immediately. Don't just say "Will you endorse my product to your customers?" You have to paint the picture first. You have to help them understand how it works. Not everyone understands the dynamics and leverage of a joint venture like you do.
This concept can be applied to almost any kind of business successfully. We've used joint ventures with retail, business to business, consultants, professionals, and any other business you can name.
Bottom-line, think outside the box and you can leverage the goodwill and marketing dollars spent by your joint venture partner and significantly increase your revenue!
Learn more about the author, Phil Germer.
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- joint venture
- customer relationships
- working with companies
- business ventures
- market strategy
- business consulting
- public relation