If you are a business owner who wants to significantly increase your market reach, break down entry barriers to a new market, or simply generate skyrocketing profits in a short amount of time then a joint venture may well be in your future.
Hopefully you've heard of joint venture marketing (JVM) and have at least a basic understanding of what it's all about. In all honesty, joint ventures (JV's) are what business is made of. They are one of the simplest and quickest ways to make a lot of money in a very short amount of time. Joint ventures work so well, that Fortune 500 companies do them all the time – McDonalds does them, Wal-Mart does them, and so should you.
JV partnerships can be one of the most rewarding and profitable methods used to influence your online business in a financially positive way. If you're not utilizing this strategic weapon, chances are your competition is (or will soon be) using this to their competitive advantage, quite possibly against you. According to the Commonwealth Alliance Program, businesses estimated that in 2005, 25% of their total revenue (40 trillion dollars) was the result of joint ventures.
A joint venture is defined as a cooperative arrangement or partnership that will mutually benefit two or more companies or individuals that have complimentary products and / or services.
Let me give you an example of a simple JV:
Company X sells home study computer courses on various topics including: word processing, email, the internet etc. Company Y sells computers online at an average of about 100 per week. Company X thinks that Company Y would be a good JV partner, so they call them up and agree to form a mutually beneficial partnership. Company Y is going to let company X send a sales letter to all of their previous customers from the last four years (100 per week x 52 weeks per year x 4 years à 20,800 customers) in return for 50% of the net sales. Company X sends out a well-written sales letter and receives an industry average response rate of 2%. Since their average sale is approx. $ 50 their total sales are ($ 50 x 20,800 x 2%), or $ 20,800, which they split 50/50 with company Y.
$ 10,400 is a lot of money, especially for only a few hours work sending out a simple sales letter to someone else's email list … but what if we could have somehow increase the response rate? What if we could double it? Then double it again? Is an 8% response, or better, unheard of? Absolutely not! That's what endorsed JVM is all about. You know at the start of this article where I said that JV's are one of the easiest and most successful ways to make money in business? Well … I did not tell you the complete truth! Endorsed joint ventures are without a doubt, are one of the best ways to make a lot of money quickly and easily in any business.
There are many different types of joint ventures, but since this is an internet marketing book, we're going to concentrate primarily on electronic or online joint ventures.
An endorsed JV is when the company or individual that you are partnering with endorses or recommends your products or service to the customers on their mailing list. This is one of the only ways that you can successfully go directly from a prospect to a customer. One of the reasons that this can be so successful is that your partner already has an established relationship with everyone on their list. They have an established rapport with their customer base who values their opinion.
Let me show you an example of why endorsements work so well:
My wife's grandmother was in town (she lives in Bermuda) and had lunch with my wife at a local restaurant. When they returned, I asked them how their lunch was. Her grandmother said that her meal was "heaven," and that she'd just eat some of the best ribs of her life. I love ribs, so the next time we went out for dinner, guess where we went? And guess what I ordered?
Now, if I received a flyer in the mail from Rob's Rib House advertising "Best Ribs You'll Ever Eat?" would I eat there? Maybe, maybe not.
You see the difference is, I know my grandma-in-law – we have an established relationship. I know that she is a very classy lady who has traveled the world many times over, and that she really appreciates good food. If she says something is "heaven" I know it's going to be excellent; and there's an excellent chance next time I have an opportunity to try it, I will.
When you receive a flyer in the mail from a restaurant advertising that they have the best ribs in town, why should you believe them? Is not it possible that their opinion may be a little biased? And exactly what opinion is it anyways?
Still on the topic of ribs, if you read an article written by a renovated restaurant critic, who rated the ribs at Rob's Rib House, number two in the entire country? If you enjoyed ribs as much as I do, might you possibly go a little out of your way to try them? Of course you would.
That's the power of using an endorsement in your marketing. Many large companies have paid celebrities millions to appear in their commercials and ads. Most people know Michael Jordan is not going to put his name to a product that is crap, and risk harmful his reputation; even if he is getting paid to do it. Just the fact that Michael Jordan supports something instantly communicates that the product is quality, and endorses (or gives credibility) to the ad.
Let's take a look at an example of an approved joint venture versus cold mailing:
Let's suppose that you are selling a $ 97 home study course on how to write a book and get it published. Since you do not have a mailing list of your own, you set up a JV with someone in a similar but non-competitive business who has a 10,000 person list. If your mailing goes well, and you get an industry average 2% response rate, your total sales would be $ 19,400 (10,000 x 2% x $ 97). Why is your response rate only 2%? Because people do not know anything about you, your business or your product. You're a stranger. You have not established a relationship with them, and they have no reason to believe what you have to say is true – why should they? Not to mention that they are afraid of being ripped off.
Now, what if you got the owner of the mailing list (who communicates regularly with his clients, and thus has established a relationship with them) to write an endorsement on top of your sales letter? They could let their customers know how great they believe your offer to be, how valuable your product or service is, and how it has positively affected their life. If you took the exact same product, mailing list and sales letter, and did everything else the same, except that now you have the owner of the list endorsing you, do you think that you might be a little more successful?
If your JV partner had most of the key factors in place such as a good relationship with a high quality list, instead of a 2% response rate, you might achieve a success rate of 10% or more. Let's do the math, that's (10,000 x 10% x $ 97) = $ 97,000. That's incredible! One short letter made you five times more money than even the most well written and powerful sales letter ever could. That my friends, is the power of approved joint venture marketing.
Perhaps the best part about JVM is that it creates a win – win – win situation. Your partner wins because they make money with little or no effort, you win because you get a lot more sales than you could get on your own, with little, or no advertising cost, and the customer wins because they get affordable access to a product or service that benefits them.
The benefits of forming a JV partnership really are limitless. Here are 10 of the more potent benefits you might expect:
1. You can increase your credibility by teaming up and getting endorsements from other reputable businesses or experts.
2. You can very cost effectively gain new leads, customers and / or newsletter subscribers.
3. JV's save time and money on marketing and advertising costs.
4. You can easily and conveniently increase your sales and profits.
5. You can offer your customers new products and services.
6. You can target other potential markets, and / or find hidden income streams.
7. You can expand and grow your business quickly.
8. You can spread / reduce risk.
9. You can develop new technology (ie. Software).
10. You can increase product distribution.
There are risks involved with joint ventures, but they pale in comparison with the risk associated if you partook in the same activities alone; and the potential rewards far outweigh the risk. Some of the risk you would expect to shoulder may include any number of the following:
– Wasting your time
– Losing money
– Accomplishing nothing
– Reducing your credibility
As always it is important to completely evaluate the risks involved and do your homework before and during the process.
JVM is also a good way to get started in building your email database. But it suggests a little difficulty, which needs to be overcome. If you are relatively unknown, how do you get someone to agree to let you send out an email to their database?
You do everything you can to make it as easy as possible for them, and make the offer as attractive as you can. Give them a large percentage of the sales that you do with their list. Heck, even if you give them 100% of the sales or profits you make it can still be well worth it in the long run for you on the back-end.
Above all, joint ventures are great for everyone. Everybody wins and there are no losers. JV's are one of the fastest ways to grow your business and is something that you should look into implementing immediately, if you have not already. Always keep a lookout for qualified JV partners.