JV Deals

joint ventures

It is probably not an exaggeration to say that JV’s (joint ventures) are the BEST way to build a large, successful business online. JV’s are a way to leverage other people’s talents and contacts against your product, talent and contacts. Simply put: you scratch their back and they scratch yours.

You can compare a JV to having agents working on your behalf – or to having outsourced specialists doing things for your promotional campaign. The better your JV setup, the bigger the scale of your campaign can be.

The simplest way to look at a JV deal is to imagine a situation where you have a book you want to sell, while John has a list of contacts that might like your book. Now, the deal you COULD make with John is simple: sell my book to your list, and get a commission for that.

And in fact, JV’s do work this way – to an extent. But that’s not the whole story.

The reality of today’s internet marketplace is that there are MANY people with product, MANY would-be marketers and only relatively few EXPERT joint venture specialists. As a result, just having a “hot product” is simply not enough to get in the good graces with a top JV guy. Or gal. You will need to offer much more than just your wonderful product. For example an increased commission. Or a special service that you can throw in for free. But all that is still but a part. The MOST IMPORTANT aspect is a relationship you build with your JV partner. It starts with you buying his or her product first, then slowly but surely establishing an HONEST dialog and – essentially – doing things for thim/her FIRST – well before you ask them to help YOU out.

JV deals between “beginner equals” are by all means also possible, and can indeed work very well sometimes – if you’re lucky. But in most cases beginners will be just as clueless as you, and a dozen of you won’t accomplish one-hundreth’s part of what just a single expert can accomplish.

There are many places on the web where you can join JV deals and learn the ropes the hard way. Red on for a more in-depth analysis of what this hugely important subject is all about.

JV Deals are a highly effective method for building your email list quickly and profitably (plus, there’s no marketing expense which means 100% profits)!

Once again, then, what is a joint venture or JV deal?

In its most basic form, a JV deal is when a product owner and list owner come together to promote a given product for a predetermined split of the profits. It’s great if you’re a product owner because it allows you to acquire new customers profitably. It’s also great if you’re a list owner – especially if you only have a handful of products of your own – because it allows you to create additional means for monetizing the names on your list.

Believe it or not, it’s possible to make more money by selling someone else’s products and collecting half the profits versus selling your own – even if you’re keeping 100% of the profits from sales of your own products.

Negotiating the JV Deal

The most typical financial arrangement is a 50/50 split of net profits. It’s generally left up to the product owner to propose how net profits are defined, meaning what costs need to be deducted from the gross sales to determine net profits.

For instance, net profits may be defined as gross sales including any shipping and handling collected minus refunds, the cost of goods sold and the fulfillment costs. JV deals work particularly well for email because the marketing costs to account for are often minimal. One exception to this might be if the deal has been brokered through a third party (more on that below).

Some factors that may play into a financial arrangement other than a 50/50 split of net profits include:

  • List size versus product performance or vice-versa – Sometimes one party just has more negotiating power in that their list is extremely desirable or their product is high in demand and selling like hotcakes. It might still be worth testing to see if it’s a good deal for you even if you’re receiving less than half the profits.
  • Price point of product – If the product or service is priced very high, as is often the case with conferences or financial trading products, the product owner may only offer a set amount per net order. That may still be worth it to you, as it’s generally a much higher amount you receive per net order anyway.
  • Continuity revenue – As the product owner, if you stand to gain enough residual income from the newly acquired customer, you may forego more than half of the profits from the initial sale. Remember, in most cases, you have to acquire qualified customers at a loss, so doing it for a smaller share of profits is still a win-win proposition for you.
  • Affiliate program – Some product owners have a set commission structure per gross sale that’s managed through a standard affiliate program. There may be no room for negotiation and you’ll just need to decide for yourself whether it’s worth a test.
  • Broker involvement – In the case where a third party is bringing together the product and list owners, both sides may have to give up a bit of the profits to cut a broker into the deal. This can still be a very lucrative arrangement for all parties that otherwise would have never met.

With all JV deals, it’s more about building the relationship and creating a long term stream of additional revenue or source of names. That means being flexible and keeping the finer details in perspective when negotiating.

Where to Find Partners

Now, you may be asking yourself, where does one go to find these like-minded product and/or list owners?

Well, the good news is that more than likely, they are just as excited and ready to make a deal with you as you are with them.

The challenge is where to start… That’s where we as the marketing masters come in. Here are just a few tips:

  • Approach your competitors – While a competitor may seem like the last person you want to approach, you may find that they are receptive to the idea and may become a most valued ally.
  • Research complementary product owners – Another avenue is to brainstorm companies who may offer a complementary product to your same audience. If you’re in the supplement business, try someone who publishes a health newsletter.
  • Shrewd Web research – Start with a good old fashioned Google search to see who’s out there. Once you’ve identified potential sources, use resources like Spyfu.com and Alexa.com to find out as much as possible before approaching the prospective JV partner. Researching site traffic, what sites they are affiliated with, what sorts of Pay-Per-Click advertising they do… all of this data will you give an idea of the size and scope of their business.
  • Trusted brokers – Last but not least, you may want to entrust your search to somebody who is more closely connected to the players already in your space. A trusted broker will likely be able to bring you several deals in the time it would take to secure one on your own. Plus, their good word may get you in the door with someone who wouldn’t have done business with you otherwise.

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The 4 Most Common Mistakes When Beginning to Build Joint Ventures:

  1. Dwelling too much on theory. The important thing is simply this: DOING IT. Learn the ropes working actual deals.
  2. Allowing yourself to be cowed, allowing self-doubt and uncertainty, or fear of failure or embarrassment, to hold you back.
  3. Chasing after deals that are too big too soon. You need to start small, learn the ropes, develop your self-image. You have to learn to build deals through practicing putting deals together. Start small and work your way up to bigger and more advanced deals. You do it again and again”until you become subconsciously proficient,” until making things happen is simply second nature. It’s not sufficient to understand this stuff in your head; you must develop a feel of how it all works in the real world. You have to achieve proficiency.
  4. Mistaking consultative marketing (or venture marketing) opportunities for JV deals. They’re totally different. In consultative marketing, you are bringing some unexplored marketing idea to the table, with the hope that, if it works, you’ll earn some money from it. But in reality, that’s just a job. And you don’t want a job. Instead, you want to be creating real joint ventures, orchestrating deals between two or more businesses, giving it a CREATIVE TWIST of some kind, and setting up something that will work without your direct continued involvement, generating a residual income for years to come. That’s a real joint venture. And that’s what you should be learning to put together.

Those are the main ones to avoid. But here are some others to be sure to think through and steel yourself against …

Other Common Mistakes When Learning to Put Together Joint Ventures Deals:

  1. Trying to build joint ventures with the wrong people. These may be companies who are simply too close to offering the same kind of product, or who have a market, but maybe it’s not the right market. They might be companies with insufficient margin or scaleability for it to create suitable profits. They might just be bums, or crooks, or losers.
  2. Quitting. You must PERSIST even when your early deals fall apart or go wrong. You just have to keep going. You just have to believe that with time you will learn this and become proficient at it.
  3. Failing to dissect your “failures” and learn from them. You need to tackle each deal forensically, really pick it to pieces and figure out what worked and what didn’t and what could have been handled more effectively or approached in a superior way. And analyze your wins as well! What were the key components? Where could they be reworked and made better?
  4. Giving up too quickly when trying to bring two companies together. Most serious sales take 9 to 11 progressive communications to wrap up. You simply cannot take”No” for “No.” A joint venture is an intangible high-ticket sale, and you have to expect it to take more than one conversation, phone call, or email. Never forget: it’s a process, not a one-shot deal. Work the process and refine your approach as you progress in developing your skills.
  5. Forgetting to search out Naturally Existing Economic Relationships you can tap into with the greatest likelihood of succeeding.
  6. Not knowing how to communicate. You can’t put this together while hiding behind the internet or a bunch of emails. Either you need to get in there and sell it, or you need to partner up with someone who can sell it for you.
  7. Not having a clue how to make it all work. Again, this comes from practice and acquired proficiency. You need to figure out how stuff actually works. How to move it forward and make it work. And it could also be that you simply need to locate others you can joint venture with who are interested in (and skillful at) managing the deals you are setting up.
  8. Not taking the time in advance to overcome their possible objections and resistances. Most prospective clients have the same worries or concerns. You need to hammer these and remove their obstacles to doing business with you.

Five Key Factors in Successfully Getting Started in Putting Together Joint Ventures:

  1. Start with easy(no-brainer) deals and smaller companies. And remember: you’re not promising anything.
  2. Set a goal to being putting together a deal a day or at least one or two a week.
  3. Target about$500 to $1000 each month per deal. ( Which is to say, on a 25% split, you want to be able to create new profits in the neighborhood of two to four thousand a month for the companies you are bringing together. Typically you will come in on one side or the other, but it’s certainly possible to get a commission from each side.)
  4. Avoid offering up your own cash if you can, and avoid tying yourself to the actual running of it over the long haul. What you really want to do is, bring in a partner to actually do the work, either for a fee or for a piece of your cut.
  5. Come up with some simple controls so as to put the clients at ease and show that they’re taking no risk, that what you’re bringing to the table is found money.

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2 Comments

  1. Pretty nice post. I just stumbled upon your blog and wanted to say that I have really enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!

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