Joint Ventures are great ways to reach new customers. For example, suppose you sell powdered fruit juices, and further suppose you have designed a print advertisement to run in some magazines shortly. If you were to turn the print ad into say 1,000 flyers, and you were then to get some samples of your juice powders - let's say a one-serving sachet - then you could partner with another company to increase sales for both of you.

    Perhaps you could contact 3 or 4 companies that have the same audience, you might be able to persuade them to include the flyer and sachet in their next mailing. You will surely be confident if people try your product and venture to your website, you would have a good chance of converting each lead. You could throw in a promotion code for 10% off. This might cost you, say $5 per customer including the sachet, flyer and 10% deal. But if you have a good return buy rate, you could make this back on the initial sale, let alone repeat buys.

    You could offer the companies that do this a good incentive – perhaps pay them an amount per lead, offer them advertising on your websites, newsletters etc... You could even persuade people who do trade shows to offer these on their trade tables for a one off payment. The opportunies are endless.

    One mistake repeated time and time again in these sort of offerings is to make the offer of partnership unattractive. Partnership/joint venture/strategic alliance - whatever you call them - are 50/50 affairs. Offering a company or independent sales person 5% or 10% commission is insulting and counter-productive.

    If you are asking another company to send your product sample to their customers, for example, you are asking this company to invite their customers to spend money on your product rather than their own. It's a non-argument to say, well the other company doesn't have the same product so we are not taking anything away. Yes, you are. Money is a finite resource. Once their customers have spent their money on your product, the customer has less money left to spend with your partner. There is always competition, even between companies that do not seem to compete.

    In this case, you must set it up so that you both benefit equally - 50%. And if this exercise will bring good subsequent sales to you, you must make it so it brings good subsequent sales to your partner, too. If you will gain more benefit from follow-up sales, then give your partner a greater proportion of the first sale gains.

    See Jay Abraham's example of that arthritis rub - 'Icy-Hot' I think it was called. According to Jay, he paid a radio station $4.00 for every $3.00 sale they generated because there was no back-end for the radio station and all follow-up sales went to the company.

    It must be a win-win for both of companies.

    Regarding Backend?

    1. You want back-end (repeat) sales but you also want your partner company to have a back-end, if possible. Then you can share the front-end 50/50. If there is no back-end for them, that's when you must 'over' compensate them at the front.

    2. Partner companies will be wary of losing their customers to you. Protect them by letting their customers buy your product from the partner. Partner includes your promotion in their advertising or invoice enclosure, whatever. Customer sends money to partner, partner pays you 50% of money received and provides names and addresses of buyers for you to fulfill. Now you have a list of customers for follow-up sales but the buyers are still customers of your partner and you have no access to non-buyers. This protects the integrity of your partner's relationship with their customers. You get to follow-up directly with buying customers but not non-buying customers.

    What if, you may ask, a buyer wants to buy again? How can you make sure that repeat buyers don't buy through the partner?

    Repeat buyers won't be able to buy through the partner if it is a limited time offer. Also, because you fulfill that first order, it makes it clear to the buyer that you are the supplier and, of course, you include a re-order form with the product for them to re-order from you.

    Also, you might only sell one of your products through the partner and all other products directly on re-order. That way you can continue to allow your partner's customers to purchase that one product through him, even re-orders, knowing that every fulfillment is accompanied by a your own advertising for other products and a re-order form back to you.

    If you are thinking about using a coupon with your partner's name on it, your partner must trust you. He won't know how many of his customers place an order and he has no way of *knowing* that you will honor your committment to him. But if he collects the money, and pays you 50% for you to fulfill, he is guaranted that you will fulfill the order or he can send the customer's money back. He is also guaranteed his share because he gets to handle the money.

    You don't need to handle the money. As long as you get your share prior to fulfillment, you are fine. The way I have laid it out here, both of you are guaranteed and neither has to trust the other. Furthermore, in letting your partner handle the money, he gets to feel you trust him (even though there's no risk involved) and you get relieved of a certain amount of paperwork - thus, it is simpler.

    Also, you can include a personalised letter with each order fulfillment saying thanks for the order and offering 10% on their next order.

    The sort of objection I sometimes encounter for this arrangement is that the partner might not pay you. You would be putting all your trust in their hands, you might think, and that if you arrange to receive the money it would limit the risk for you.

    But that's not true...

• Partner sends your ad to his customers.
• Customer decides to buy and sends money to partner.
• If the partner keeps all the money, you don't ship any goods. In fact, you won't even know about it. But that's not your concern. The customer gets on to the partner saying, where's my product? You are not in the loop yet. The customer doesn't even know you exist yet. The customer has received an ad for a product from the partner. If the partner doesn't deliver, the customer gets on to him.
• But the partner pays you your 50% to supply the product, which you do directly to the customer. You don't ship until you get paid. In fact, you won't know a customer exists until you get paid.
• There is no risk for anyone but the customer. Nobody has to trust anyone - except the customer who has to trust the partner, with whom he has already done business and believes to be trustworthy.

    Another objection is, the customer would just be able to go and buy from the partner repeatedly.

    That is true, if it was not a limited time offer. But, as I said before, if you are only partnering with another company for one of your products and are sending a full catalogue with the fulfilled order, the customer cannot buy your other products from the partner, they must buy them from you. If a customer only wants that one product and consistently buys from the partner, consider your additional cost as extremely targetted (ie. more efficient) advertising for your other products.