How to Gain $3.4 Million of Good Will
One of the best ways I know to leverage your time and marketing dollars is to enter into joint ventures with other businesses.
If you agree that your customers are your businesses' most valuable asset, then you should see the potential profits available if another business will make its customers available to you.
Available, that is, in the form of consignment of goods, an endorsement, or a 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, then pay them a portion of each sale.
The underlying principle of why this works is simple.
A business will spend some finite amount of time, money, resources, and sweat developing a relationship with its customers. The customers will have some level of confidence in that company, which translates into their willingness to respond to offers made by the company.
For instance, a company might spend $50,000 a year in advertising, $80,000 a year on commissioned sales people, and $5,000 a month for prime retail space.
These three factors alone - not to mention dozens of other expenses - account for almost $200,000 spent a year to develop customer relationships.
Now, if you work a joint venture with the owner of that store, you can access all of that money spent for the cost of a letter.
Let me give you a detailed, concrete example of what I mean.
IF TRUE VALUE CAN DO IT, SO CAN YOU
A joint venture for Chris, the owner of the True Value Hardware store mentioned at the beginning of this report, was engineered.
Chris 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 customer list of 1,600 people - people who knew Chris by name.
The joint venture involved over 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 any question about anything around the house.
Each business that wanted to participate was carefully screened and evaluated to make sure that they would offer True Values customers outstanding service and value.
Only one business from each industry was permitted to participate.
Each business then paid a $50 fee to join which was to be used to build the service counter in the store, as well as to send promotional materials to the customers.
At $50 apiece, Chris immediately raised $1,500 - more than enough to build the service counter in the store.
But the $1,500 was only the tip of the iceberg.
Chris negotiated deals with each of the businesses for a percentage of each of the sales that resulted from his customers use of the service center.
The percentage ranged anywhere from 5% to 30% depending on the business and the kind of margins that the sale would bring.
The next step for True Value was to promote the service center.
First, Chris concentrated on his current customers.
A huge grand opening sale was planned for a Saturday in November.
About half of the member businesses participated by setting up booths in the store to show their stuffit became the first annual True Value Home Show.
Each of the 1,600 customers (preferred customers) was mailed an invitation.
They were to enjoy a 20% discount on any merchandise in the store that day, as well as special bonuses for large purchases.
Also, each of the Home Show participants donated prizes that were given away - everyone of the preferred customers was guaranteed to be a winner just for showing up.
It turned out to be cold and rainy on that Saturday in November, but True Value still had its highest sales day ever - I mean ever!
And it was 48% higher than the next highest day that year.
The best part was that everyone who came found out about the service center.
Over 30 service requests and were tendered, with dozens more that came in the weeks that followed. The service center was an instant Success.
The next step was to advertise to the rest of the people in that city.
Chris took out an ad in the local newspaper, in the service directory of the classifieds.
His ad told readers that instead of picking and choosing through all of the service ads and calling an unfamiliar company, they could make one call to have all of their problems solved.
This headline/USP articulation summed up the service center:
“Before You Look In The Yellow Pages
For Anything Around The House,
Call Us First.”
Then Chris worked the back-end of his customer list...
Every two weeks he sent a 4-page newsletter to everyone on his customer list (which had added a couple hundred people by now).
Each issue contained a feature article about one of the businesses that was a participant in the service center. The best part was that the spotlighted business footed the bill for the mailing - and Chris still got his percentage from each resulting sale.
In the interest of time and space, I wont detail any of the other ways Chris leveraged his dollars though the joint ventures. But I will summarize...
MARKETING OFFERS YOUR BUSINESS THE ULTIMATE FINANCIAL LEVERAGE
Chris leveraged the entire operations of over 30 businesses. In essence, he became a landscaper, a drywall technician, a carpet cleaner, a fence builder, etc., etc. without having to make an investment in those areas.
His customers wanted those products and services, and they trusted Chris’ judgment.
If Chris said these were the companies to do business with, they were going to believe him.
The participating companies leveraged Chris’ entire customer list by entering into the joint venture.
Basically, they paid $50 plus a percentage to gain over 1,600 customers who would use them in good faith. Now thats leverage!
There are thousands of ways to construct joint venture deals. You have to be willing to break out of your comfort zone and just give it a try.
There really is not anything to lose and everything to gain.Share This Post: