What’s in the List?
The best and most well-known example of a joint venture is when one brand endorses (recommends) someone else’s product or services to their audience or customer list with whom they have a relationship. Compensation models include fixed fees, royalties, commission, profit sharing, and equity partnerships.
Know what you’re getting.
Now it’s important to make a distinction between a customer list and an audience. Both are valuable, but we must understand what we’re dealing with. A customer list – generally email and phone contact information – is comprised of purchasers. This could be from past orders or paying subscribers, both inactive and current.
Determine your metrics and apply them consistently. As they say, followers don’t pay the bills.
Monetizing the Audience
An audience can be newsletter subscribers, social media followers, YouTube subscribers, podcast listeners, event attendees, and so on. If you have their attention, it’s an audience; if you have completed at least one transaction, it’s a customer.
Ideally, there is a strong overlap between the audience and the customer list. Smart business owners regularly send helpful information to their customer lists, thus building a relationship with them. And when they have a good relationship, it’s a lot easier to get them to buy more.
Goodwill & Value.
The relationship between a business and its customers is the most valuable asset it has, the value of which isn’t measured in dollars. However, if you know how to leverage it, it’s as good as gold. In fact, when a business is sold, this asset is valued on the acquirer’s balance sheet as “goodwill.”
It can cost six times as much to sell to a new buyer compared to an existing customer.
The cost of selling to an existing customer drops with each consecutive sale.
Therefor, repeat business is incrementally more profitable.
Bottom line profit is what gets multiplied when we sell the business.
Selling into other businesses’ lists allows you to nearly eliminate your customer acquisition cost. This is the true power of Joint Ventures — leveraging your partners’ resources and assets (or even your own) for a minimal upfront marketing investment.
That increasingly profitable growth directly impacts the overall value of your business.
By learning the advantages of joint ventures, you will understand how important they are for any organization. This empowers you to sell the opportunity effectively because you genuinely believe in what you’re promoting and speak with conviction.
As we continue this series, you will learn the details of how to identify partners, structure your deals, and see them through to profitable execution.