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Make Money with 'OPC' (Other People's Customers)
David Frey - The Small Business Marketing Bible
Recently, I developed a marketing manual for a niche industry that I service. After reviewing the chapter in the manual about producing television spots I admitted tomyself that it wasn't as strong as most other sections.
Knowing a media consultant that serviced the same industry, I contacted him and inquired as to whether he might want to beef up the chapter on television production and in return I would recommend his services to business owners in the industry.
Sadly, he declined because he considered me to be his competition and he didn't think it would be smart for him to collaborate with me. I kindly smiled and offered my thanks. As I walked away I thought to myself how foolish and short-sighted this fellow was for not taking me up on my offer. He just turned down thousands of dollars in business. I was not only offering him the opportunity to have full access to my customer base, but an endorsed promotion to my customers!
Look Beyond the Walls of Your Own Business
Too many small businesses make the mistake of not looking beyond the walls of their own business to see the vast opportunities of business waiting for them through joint venture marketing. Joint venture (JV) marketing is the process of marketing to the customers of complimentary businesses.
I'm not talking about ruthlessly going after your competition's customers. Not at all. I'm talking about gaining access to new prospects with the express permission and cooperation of the business that acquired
those customers in the first place.
The Key to Joint Venture Marketing - 'The Common Customer'
The common customer is the center of the joint venture marketing concept. Your customers are also customers of other businesses that sell related products. For instance, suppose that you are a personal sports trainer. You help your customers get and stay healthy. Most likely your customers also purchase products and services from:
- Athletic shoe stores
- Athletic apparel stores
- Athletic equipment providers
- Fitness centers
- Health-related mail order catalogs
- Health-related magazines and books
- Health food and nutrition stores
- Sports events
- Health-related television providers
All these businesses market to more or less the same customers. As a personal sports trainer do you have something of value to offer the customers of these other companies?
Joint venture marketing is about developing a special offer and getting the company with the related product or service to present the offer to their customers that results in a win-win for both of you.
Your Only Limitation is Your Imagination
To demonstrate what I'm talking about allow me to share with you some great examples of smart joint venture marketing.
Example # 1
If you own a wallpapering business or deck building business you could offer to provide wallpapering and deck building classes at local do-it-yourself stores in trade for referrals and exposure.
Example # 2
If you sell men's apparel you could approach local dry cleaners to display your store coupons while you offer dry cleaning coupons to your store visitors.
Example # 3
If you are a hair salon owner you might consider giving away free perms by allowing local nail salons to give free perm gift certificates away as a premium. This way the nail salon benefits by offering their customers a valuable freebie and the hair salon benefits by gaining free exposure and new customers.
Example # 4
If you are a transmission repair facility you could assemble a card deck with local tire companies, brake repair shops, lube and oil change businesses, collision repair facilities etc. Charge each participant a production fee for the card deck. Once the card deck is assembled, have each business send a deck to their customer list with a letter endorsing the other related businesses.
Example # 5
As a lawyer you may want to approach your C.P.A. and ask if he would be willing to do an endorsed mailing to his customers and you would do the same for the C.P.A. An endorsed mailing would include a simple letter endorsing the services of someone else and perhaps even include a free consultation. This works very well for professionals.
Example # 6
If you're a chiropractor, you may consider approaching local massage therapists and persuade them to give away free massage gift certificates to friends and associates. Once the customer comes in for their free massage the therapist will endorse your services and refer the customer to you. If the customer comes to you for a free screening you could pay the massage therapist a fee for the free massage that the
customer received.
Joint Ventures with Unrelated Businesses
There is no limit to the types of joint ventures you profitably set up with other related businesses. Actually, you can even do joint ventures with unrelated businesses as well. Recently, on a vacation to Mexico, my wife and I were laying out by the pool. Suddenly we heard an announcement about a fashion show that would be taking place at pool side (right in front of us). The fashion show began and we were introduced to a wonderful line of Caribbean fashions custom designed by a talented lady named Regina Roberts.
The models walked around the pool and allowed all the vacationers to get a good look at some beautiful clothing that was very reasonable priced. After the show the pool-side guests were invited to shop right there (she brought her whole line with her to the pool). Ladies rushed to get first dibs on the most popular pieces.
It turns out that Regina has a joint venture agreement with the hotels to provide fun fashion shows to the hotel's guests while she gets to sell her clothing line.
How to Approach Your Soon-To-Be Venture Partner
The trick to signing on potential JV partners is to ‘show them the money.’ Your approach should be a simple proposition, ‘Mr(s). business owner, would you like to instantly make $10,000 to $20,000 or more without any effort, risk, or investment on your part?'
What sane business person would say no to that proposition? As a matter of fact, they'll probably be more skeptical than excited. Whatever their reaction is, they most assuredly will be curious. Once you have their attention you need to calm their fears about the JV being a 'too-good-to-be-true' proposition. Ensure that you address the following points:
1. Your product or service is absolutely noncompetitive to their product or service. In fact, your product is complimentary to theirs and will be perceived as a caring gesture by the customer.
2. The JV will not harm or take away any profits that they might ordinarily realize.
3. They won't have to do any additional work or spend additional money to roll-out the venture (you are prepared to absorb all production costs). You will indemnify and hold them harmless and you'll include an unconditional guarantee for all your products sold through them. You will have all the orders routed through them for verification and auditing purposes.
These statements will calm any fears that your related company may have. You've just made it a completely risk-free venture.
Unfortunately, many companies still won't understand the concept and how it will benefit them. It's good to have proven marketing materials and processes that will help you quantify the revenue they can expect from the venture.
For instance, if you had a proven sales letter that you have already tested. The sales letter has a proven respectable response rate. You can almost guarantee the amount of money your potential JV partner will make. This is a powerful tool that you can use to persuade your potential partner to say yes.
Hint: You should provide a discount or incentive to your JCV partner's customers as a unique, customer-only private offer. This will make your partner's customers feel as though your partner is doing them a favor by arranging a special promotion just for them.
Handling Potential Objections
As I stated earlier, you will probably encounter some objections as you present your proposal to potential joint venture partners because so few business owners participate in joint venture relationships. The following are some common objections and possible responses.
* Objection # 1 *
‘I don't feel comfortable having you interface with my customers. I don't like having someone else control the relationship with my customers.’
* Response *
‘That's fine. As a matter of fact, it would be better if you interfaced directly with your customers on our behalf. We are more than willing to do all the legwork, which will take the burden off of you. We can have a JV meeting periodically to review how everything is going and to make sure that you’re comfortable with the process.’
* Objection # 2 *
‘How can I be assured that I will get paid my share of the revenues?’
* Response *
‘No problem. You can control all the money. You can pay me periodically. I trust that you'll handle the proceeds from our JV fairly and properly. If you would like we could set up an independent account with a third-party bank with escrow instructions. This way there's no risk for either of us.?
Note: Be completely honest, open, and trusting. Your ultimate goal is to establish an ongoing synergistic relationship with your partner. This will only happen with a win-win relationship based on honesty and trust.
* Objection # 3 *
‘How do I know your proposal is going to make me money?’
* Response *
‘We'll start off the project doing a limited pilot test with a small group of your customers. After the results come in we can review our revenue targets and feedback from your customers. If you are comfortable with the results we'll move forward.’
Note: When negotiating your joint venture deal always try to get an agreement to extend your relationship. For instance, get agreement at the start that if the test goes well, the joint venture will last for the next 12 months. You don't want your partner company stealing your good idea and playing you against your competitors. (Yes, unfortunately there are some unscrupulous business owners out there that would do this)
Take These Steps to Get Your Joint Venture Going
Step 1 - Understand your numbers.
You'll need these to demonstrate how much money your partner could make. For instance, if you're a health club owner, know what your response rate is for a typical direct mail campaign and the dollar value of each new customer.
Step 2 - Make a list of potential complimentary or related products and services.
Don't leave out products or services that aren't necessarily related in which your customer might still be interested.
Step 3 - Make a list of the businesses that sell those products and services.
Specifically note those companies in which you know the owner or have contacts. Then send a letter to those people and propose a meeting to explain your strategy further. Always start by introducing yourself and if they would be interested in making money (use a specific amount) with little to no effort. Make a follow-up phone call to set up the appointment.
Step 4 - Present a compelling fact-based case for a joint venture.
You might even mention that you have a call in to one (or two) of their competitors to present the potential venture to them as well.
Step 5 - Deliver on what you promise with integrity, honesty, ethics and enthusiasm.
Take Your Blinders Off - They're All Around You!
As a small business owner you should always be thinking about establishing joint ventures, even if its just a lead generation joint venture. A chiropractor friend of mine made agreements with several local businesses to place drop boxes at their business locations offering a free back massage and screening. In return, the sign up form is used as a drawing entry to win a free service or product offered by the business hosting the drop box (my friend pays for the free gift). It took him less than a week to pull this off and the businesses were more than happy to help him. He gets lots of referrals without any effort through this simple joint venture
Conclusion
Unfortunately, as small business owners we are taught to fight our competitors to win over their customers. In Joint Venture Marketing you partner with your competitors to win new customers. Potential JV's are all around you waiting for you to take advantage of them.
Stop thinking competitor and start thinking opportunity!
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