[Show Transcript]
I’m Randy Charach from RandyReport.com and THIS is the show that takes you from internet zero to business hero!
In this week’s lesson we’re going to talk about one of my favorite subjects, joint venturing. I’ve built most of my businesses on joint ventures and have also experienced the dark side of JVs. Stick around and you’ll learn how you can take advantage of the incredible leveraging power of joint ventures.
There are many types of joint ventures; and they vary from business-to-business, so let me begin by defining the concept of joint venture as it relates to Internet marketing.
A joint venture occurs when two or more parties participate in a specific project. The joint venture ends when the project is completed.
Now, typically, each party brings to the table a certain set of skills and responsibilities and share in the risk and rewards of the project. There’s joint venture in film production, real estate investment, and even government activities.
So, how can joint ventures help you raise the bar in your business and bring you freedom… well let me count the ways…
Technically, according to my own definition, participating in an affiliate program is not a joint venture. However, loosely speaking, it’s the simplest form of a joint venture. Although it’s not a specific project with a specific ending, it’s a common and very effective way for two parties or more to bring value to the table and share in the profits of an online business.
An affiliate program is hosted by a company that shares a specific percentage or amount of the revenue with the party that directly referrer’s a customer to its website. One party provides the traffic, they’re the gatekeeper… the other party, and the website owner has the obligation to fulfill the service offered by the website and shares the revenue with the gatekeeper.
Taking this to another level, that more of a joint venture in a truer sense of the structure, a specific and separate agreement from a standard affiliate program could be cut in many different ways. For example, I’ve done many joint ventures where I’ve done physical mailings through the post office to my direct mailing list sending my list members to my joint venture partners website where they put in a special code which gives them a special offer that I worked out with the website owner. The code also tracks the sales which come in through my mailing efforts.
Different revenue-sharing agreements are worked out, depending on several factors including whether the cost of the mailing was paid by me, my joint venture partner, or both of us together. There’s no single formula for how these things work as far as specific percentages and who does what. Typically, though, as you begin to develop your joint venture relationships with other marketers you’ll find a comfort level amongst each other and common ground is easy to find.
Other joint ventures are created when one party forgoes a specific cash payment for something such as placing an advertisement in their online publication, their e-zine. To do this you would approach e-zine publishers and offer them a percentage of the sales of your service or product if they’ll do an endorsement to their list.
If you’ve already created a marketing funnel in your business you can even afford to offer up to 100% of the income to the list owner from a low-cost introductory product. This is a great way to incentivize others to help you build your list and customer base and ultimately your business. It’s exactly how I built several of my very profitable mailing lists, and something I continue to do on a regular basis.
So clearly there are typically two sides of a joint venture. One side has the customers the other side has the product. Usually the side with the product collects the money and pays the person who sends them the new customers. If it’s a new relationship and you have reservations about trusting the other person with the money, then you can insist that either you collect the money, or have some way of verifying and enforcing payment. If you’re really uncomfortable with the situation, then chances are you shouldn’t be doing business with that person anyway.
There is a dark side to joint ventures, and typically that’s when the other party decides to cheat you and not fulfill their obligation. Usually that obligation relates to sharing of revenue, but also includes situations where the other person simply does not do what they agree to do. To help avoid this do your due diligence, trust your instincts, and put measures in place to protect yourself. Always start off with new people on a very limited basis with a small joint venture and see how that goes before committing to something bigger with that party. If you follow these tips then you can’t get hurt too badly. From each small bad experience you’ll grow as a business person and learn how to better safeguard yourself and your business in the future.
Not all joint ventures come in the form of gatekeeper and service provider. Maybe you’re are a really good copywriter, and you team up with a great web programmer, and together you create a membership site for a specific niche and share the cost and time to promote and maintain the site and share the revenues.
Or perhaps you have a steady and successful stream of business in a specific target market and you joint venture with a noncompeting business that serves that same market. Now, how about if you provide a special offer from your joint venture partner to your customers once they complete an order with you. Of course, this offer is trackable and you get half of the revenue. On the other end, your joint venture partner does the exact same thing for you — – offers his customers a special offer from you.
You can also trade ads in auto responders, exit pop-ups, newsletters; do banner exchanges, feature advertorials in blogs, all sorts of things. How about if you host a webinar or teleseminar for your customers, bringing in at special guest expert that can provide excellent content and at the end of the event make a special offer to your audience. Now you’ve done something really nice for your customers and of course you share in the revenue from the offer. If you’re an expert and your guest expert also has an audience then you flip over the microphone and the cash register, and next time you conduct the seminar for her customers, make a special offer and share the revenue with your host.
As you can see there are many ways to structure and participating in joint ventures. I highly suggest that you be open to them and look for opportunities where you can bring a joint venture to another party, who can benefit from what you have to offer, while providing something that can help you raise the bar in your business. Just be sure to be a great joint venture partner, and always do more than what’s expected of you. It’s important you always protect yourself and your reputation and be careful who you do business with.
Do your due diligence. And don’t ever approach someone to do a joint venture until you have a solid, glitch-free, proven system for taking care of your new customers and properly tracking the new business that comes in.
‘QUESTIONS FROM STUDENTS’
Our question today is from Kate S. who asks;
What’s the best way to approach a potential joint venture partner?
That’s a great question Kate and my answer is simple and comes with few exceptions. Courier a brief and specific letter to your potential JV partner. While sending an e-mail is the easiest, and also the worst way to approach someone since it will likely qualify as spam and will almost certainly get ignored, sending a letter via courier is almost guaranteed to get read. Think about it, not everybody opens and reads their own e-mail, but almost everybody opens and looks at the content of a couriered packaged that comes addressed directly to them.
Of course, your first goal is to get something in the hands of the person you want to do business with. Once in their hands it needs to be concise, specific and appealing in order for you to get a positive response.
A brief introduction as to who you are, why you’ve written to the specific recipient, a link, sample or description of the product or service that you bring to the table as well as what you’d like from the other person needs to be included. Compelling reasons as to why your potential JV partner should say yes would include such things as statistics related to customer conversion and satisfaction as well as an easy way for the person reading the letter to respond and proceed with you.
If sending a courier is not feasible for you, then second-best is mailing a letter or picking up the phone and calling the person with a very specific and to the point proposition.
Today you learned of the many advantages to joint ventures. You heard what my definition of a joint venture is, along with several examples of joint ventures that you can participate in. I shared with you the potential dark side of joint ventures, and how to avoid bad situations. And, thanks to the question Kate submitted at Randyreport.com you discovered the best way to approach your next joint venture partner.
[End of Show Transcript]
