Christian Fea - Collaboration Marketing Strategist

Affiliate marketing, a strategy within the class of joint ventures, is a powerful marketing strategy that companies utilize as a platform to take their business to the next level. Whether you own a small or large business, affiliate marketing can significantly increase your revenues, often exponentially.

The fundamentals of affiliate marketing

Fundamentally, affiliate marketing is an incentive-based program to promote a product or service. Instead of spending significant portions of your budget on internet advertising and PPC, you build a massive sales force known as affiliates. In affiliate marketing, you will pay your sales force based on their performance or output. In short, you develop an absolutely risk-free and investment-free way to market your business. Indeed, the reason this marketing strategy is so powerful is because it is the affiliates’ best interest to promote your company.

Comparing affiliate marketing vs. traditional online advertising

There are several advantages of using affiliate marketing over online ads. Affiliate marketing can help you generate higher sales, without any additional risks or funding on your part. To capitalize upon this strong marketing strategy, you simply need to prepare the affiliate marketing materials and ensure your site is perfectly running. You then let the affiliates handle the sales lead generation and negotiations. The result? You gain higher sales, more customers in your mailing list, and a more cost-effective means of marketing your business in comparison with your in-house employees.

Conversely, affiliate marketing is not a perfect business model. Because this strategy works on a commission basis, some abuse the system by exaggerating product claims just to make a sale. If your affiliate marketing program becomes largely popular, it will be difficult to strictly monitor false ads about your products or services. This deception will lead to customer dissatisfaction, numerous complaints, high sales returns, and damage to your reputation.

How to manage an effective affiliate marketing strategy

To properly capitalize upon the potential of affiliate marketing, there are three major management issues you must consider:

1. Business objectives. Be specific about the purpose of your affiliate marketing program. Do you want it to simply generate more leads or close sales? The role of your affiliate marketing program must be clear and consistent with your marketing campaign. Moreover, you must decide on their limitations. Because affiliates will use different channels such as e-mails, article directories, search engines, or even offline tactics just to close a deal, you must be clear on their focus or channels. Otherwise, their actions may not be in line with your business goals.

2. Incentive program. Your commission structure must be lucrative to attract effective, professional affiliates. Remember, the better your incentive program, the more the affiliates will work to promote your company. The best way is to study the affiliate marketing programs of your competitors and other related companies, providing you with a competitive market perspective on current incentive offers.

You also need to decide how to pay your affiliates. The payment structure can be based upon clicks, leads generated, or sales closed. Review your business objectives to select the best payment structure.

3. Recruitment. Choosing the right people to promote your business is a crucial step in creating an effective affiliate marketing program. How you choose to promote your affiliate marketing program plays a large role in the affiliates you attract. You can post the program on your website, advertise in online magazines, or e-mail your client list and offer discounts to your customers if they become affiliates.

The growing popularity of joint ventures, powered by the significant revenue benefits it brings to businesses, has prompted many entrepreneurs to jump into the opportunities – without analyzing the situation carefully.

Unfortunately, improperly conceived decisions might lead to fatal mistakes, hurting both brand image and profitability of your small business.  If you are not familiar with the inner workings of joint ventures, it may be wise to consult with a joint venture expert – especially considering that the market dynamics in each industry are unique.  Here are some of the worst joint venture mistakes entrepreneur must avoid:

1.    Lack of research.  Like a marriage, finding the right partner is one of the most important elements in a successful joint venture.  You need to understand all the benefits you expect from the joint venture, as well as what you can bring on the table. You need to ascertain your prospective partner’s relative strengths, such as business reputation in the industry and quality of products or services, to ensure it matches your own business model.

2.    Penny-pinching. For a joint venture to succeed, the offers from both parties must be lucrative enough to strike a commitment. A meager incentive plan is a waste of time and money because it will not motivate your joint venture partner. Be reasonable all the time, and do not let greed ruin your business.

3.    Not testing the waters. Signing a long-term joint venture agreement can be a large mistake - for the simple reason that your strategies are not yet proven effective. If your joint venture flops, you have no choice but to continue at a loss or pre-terminate the agreement and pay for damages incurred to the other party. If you already signed the joint venture agreement, you may want to propose an escape clause in the event the joint venture is unprofitable.

Ideally, you negotiate for a short-term contract and conduct test marketing to some of your customers to gauge their reaction and solicit feedback. If you can tweak the problems, then it is time to roll out the joint venture in the bigger population for a long-term commitment.

4.    Not developing backup plans. It is faulty to assume that a joint venture will succeed until it does. Even though your joint venture is seemingly impeccable, there will always be some glitches, misunderstandings, or series of unfortunate events that might befall on this partnership.

Always have a set of alternatives developed in case an unfortunate event happens. As they say, do not put your eggs in one basket – and this is especially true when it comes to joint ventures.

5.    Being too open. Joint ventures do not exist if there is no trust. However, it does not mean you have to bare it all and share your trade secrets to the other side.  For instance, some entrepreneurs share their whole hard-earned client list to their joint venture partners, hoping that it will help build relations.  Unknowingly, they are violating the privacy of their customers, as well as losing their leverage over the partnership.

These are just a few, yet very deadly, joint venture mistakes often committed by small business owners. The success of any joint venture lies in details, hard work, and careful analysis of your business industry.  By walking through your joint ventures carefully and intellectually, and potentially consulting with experts, your business can reap the significant benefits of joint venture partnerships.

With the fallout of the mortgage industry and smattering of the housing market, consumers are indeed shutting their wallets closed – and retailers are feeling the pinch.

As the indicators of an economic recession loom on the 2008 horizon, many people have asked me how they can continue to grow their sales.  With the economic hot streak of the last five years, consumers spent in over-exuberance, and the question now remains: how can you grow your business amidst a potential recession?

The answer is, my friend, through drumming up strategic alliances.  With marketing budgets limited by the potential flat line of growth in revenues, strategic alliances offer an instant way to increase your market share – without high advertising and PPC costs.  This translates into potentially higher revenues for you, while you enjoy lower operating costs.

Sounds great?  Well, keep in mind that not all strategic alliances live happily ever after.  In fact, it is important to conduct a thorough examination of your potential partner, and there are several characteristics to look for when you are conducting a strategic alliance line-up:

1.     Reputation.  Considered one of the most important factors of a strategic alliance, how is your potential partner’s reputation?  The last thing you want to do is get in bed with a company whose reputation is less than par – as this can damage your long-term public image.

2.    Client relations.  Continuing the thought, with a less than stellar reputation, the company most likely does not have a good rapport with their clients, defeating the fundamental purpose of a strategic alliance.  The only way a strategic alliance is effective is if your partner has a trusting, reliable, and credible relationship with their customers.

3.    Synergistic business models.  Finding a company that is synergistic to your goals is critical to developing a strong strategic alliance.  Would their customer base be interested in your product or service, and vice-versa?  If you are selling wedding dresses, but decide to partner with a dedicated web hosting company, this clearly does not have the same synergies as a partnership with an invitation printing company.

4.     Price point.  An ideal strategic alliance partner shares similar price points with your product or service.  This further confirms the synergies between both your businesses.  If your company sells adware software for $100, then you would want to partner with an anti-virus software company that sells their product in the similar price range – not for $15 or $300.

5.    X factor.  Even if all of the numerical and financial aspects of the strategic alliance are in good order, it is important to ensure that the human factors – or the X factor – are in place.  Indeed, it is the human management relations of the other company that will determine whether or not the alliance will be successful.  If your potential partner is difficult to communicate with, then that element negates all of the other financial factors.   They must have an open mind, be flexible, and communicate effectively to be a candidate for a strategic alliance.

Benefiting from a strategic alliance is easy, but finding the right partner is the difficult part.  Once you have passed a potential partner through the line-up, however, the probability that your strategic alliance will be economically fruitful increases significantly.

Smart entrepreneurs go completely against the herd mentality of business.  They don’t compete – and this is how they build highly successful businesses.  “How could they not compete?” you ask, arguing that competition is the core of an economically viable company and economy.  Interestingly enough, smart entrepreneurs do not compete – instead, they take advantage of their competition and make strategic alliances with them.

Keep your business enemies closer…

Indeed, smart business owners keep their partners close, but their economic enemies even closer.  Although this may seem counter-intuitive, developing strategic alliances with your competition to expand the overall pie, ensuring that you both get a larger slice of profits.

The need for strategic alliances is especially strong in industries where competition is fierce.  Many entrepreneurs can feel very isolated in their business, feeling as if the competition is closing in on them.  With that said, simply by altering your mindset, you can quickly begin to see the opportunities in your industry.  Indeed, you can quickly turn the competition lemons into sweet, profitable lemonade for all parties involved.

How to shift from competition to strategic alliance

For the vast majority of business owners, it is not easy to embrace the competition – and that is completely understandable.  However, once you begin seeing the beauty of your competition, you can capitalize upon their standing in the market place to further your exposure and profitability.  There are several modes of analysis that can help you make the jump from typical competitor to smart ally:

1. The closer you hold your competitors, the greater you will understand how to differentiate your niche – giving you an economic edge in both the short and long-run.  For example, although two competing companies may sell spyware software, upon closer evaluation, they are not the same.  Company A’s target audience are consumers, while Company B targets the technical directors of major corporations.  Having in-depth knowledge is incredibly powerful, both in terms of perfecting a branding strategy and generating higher levels of sales.

2. There are plenty of fish available in the sea, especially if you are targeting clients on the Internet.  The Internet provides an endless plethora of traffic, which means you have a nearly limitless supply of clients.  This eases potential conflict tensions, and instead, boosts the overall exposure for the entire industry.  The selection of blogs, all who quote, cite, and link to their competitors, is a testament to the power of strategic alliances within one industry.

3. With enough creativity, harsh competitors can turn into great strategic alliances that boost your revenues and help your business reach the next level of profitability.  For example, website design is an incredibly competitive industry, with new companies entering into the field every day.  However, it is still very effective for two competing companies to become partners.  Every single company – regardless of how competitive the industry is – has a specific niche.  In the case of website design, one company may be excellent in Flash, while the other company specializes in Java.  Thus, by referring clients to each other that are seeking a specific type of programming, both companies benefit.

The internet has changed the face of business and economic processes dramatically, and it is those smart businesses that can harness the power of strategic alliances that will be able to reach their full profitability potential.

Joint ventures are no longer reserved only for the powerful Fortune 500 companies. With the advent of the internet, both small and medium businesses alike can benefit from this powerful business strategy. The types of joint venture marketing partnerships you create are only limited by your imagination, and every industry has different dynamics that should be accounted for when creating the partnership. With that said, I have compiled three very effective joint venture marketing strategies that can take your business to the next level of earnings.

1. Utilize cross-promotion strategies with a synergistic client base.

As a traditional model of joint venture marketing, cross-promotion still reigns powerful as a strategy to increase your market share. Without having to spend any additional monies, you can instantly gain an exponentially larger client base simply by partnering with a business that has customer synergies. In addition, these synergies may not always be in the most obvious places – and some of the most powerful partnerships have come from creative thinking. For example, while a baby products website may not have obvious synergies with an electronics website, this could be a very successful joint venture partnership. Considering that research shows that women do the vast majority of shopping in the household, they are looking for both products for their babies – and their husbands. Thus, although the two products do not seem synergistic, the target audience certainly is.

2. Create an affiliate program.

Would you like an instant, powerful sales force – without any of the salary costs? By instituting an affiliate program, you do not risk any upfront costs, but instead gain a powerful sales force that can bring in customers outside of your typical marketing reach. However, it is important to keep in mind that if you do create an affiliate program that you provide your affiliates with the proper support. If they have questions or need samples of copy, make sure you can support your network of affiliates – and they will return your efforts twofold with increased revenues and market exposure to your business.

3. Create lead generating incentives.

Human psychology is triggered through incentives – which is why the big box retailers push Black Friday’s great sales as an incentive to get consumers in the holiday shopping spirit. Joint venture marketing strategies also need to employ the same psychological strategy. Provide incentives for your affiliates and partners to use, which will generate leads. For example, whenever an individual signs up for your newsletter, they get a bonus eBook filled with valuable information. Or, if they order through your affiliate within the next 24 hours, they enjoy free shipping. These incentives will turn leads into closed sales, and everyone benefits.

Joint ventures are one of the most powerful marketing strategies – yet it costs nothing for you to implement. You do not have to pay for hefty ad space, PPC dollars, or expensive sales staff salary. Instead, simply by harnessing the power of joint ventures, you can significantly boost the effectiveness of your marketing exposure.

Joint ventures are typically associated with Fortune 500 companies, where major players team up with other large corporations to further increase their share of the marketplace.

However, what if I told you that your business can also reap the same exponential rewards of joint venture marketing? Indeed, whether your company has one or 100 employees, joint venture marketing is the ultimate scalable business strategy, capable of exponentially increasing your current levels of revenue – without any additional investment of up-front costs!

To understand how a joint venture marketing partnership can take your revenues to the next level, let us break down the different components.

The conceptual foundation of joint venture marketing

Joint ventures, also known as JV, are a relationship between partnership organizations to enhance corporate activities, whether it is in research, development, or marketing. By pooling together their resources, the JV partners can split expenses (if any), and hopefully gain a larger market share through their dual efforts.

Essentially, by working together, joint ventures create a tangible strategy to the age old adage, “two minds are better than one” – except in this case, it is two businesses who work together to reach a better, larger target audience.

Determining how joint ventures fit with your business strategy

Regardless of the industry you operate your business in, the type of business you have, or the size of your business, you can significantly gain additional market exposure with joint ventures. By finding the right JV partnerships, you can significantly increase your revenues, while simultaneously adding new asset pools without any inventory or overhead costs – giving you streams of revenues that translate into 100% full profits.

Joint ventures may also be right for the new entrepreneur who would like to work for themselves, but may not necessarily want the financial burden of overhead costs, HR hassles, and administration management. Without having to invest in inventory or take in financial risks, a joint venture partnership allows the new entrepreneur to start a business that can quickly grow into full-time income. You simply connect the consumer demand with a supply – and get paid more than a pretty penny for your efforts.

Visualizing the economic power of joint ventures

Indeed, there are many entrepreneurs who have solely utilized joint ventures to make literally millions of dollars. The potential for joint ventures can be greater than the standard business model, which is limited by the number of products and services you can physically provide. On the other hand, with joint venture marketing, you can earn significant revenues simply by connecting the buyer and the seller – without any physical constraints or bottlenecks.

For example, you may run a website that sells supplies for wedding floral arrangements, but with the intense competition in PPC for the keywords “flowers,” you are limited by your budget for your advertising endeavors – and thus, your revenues do not meet their full potential. However, you find another website that sells wedding invitations – and voila – and joint venture marketing partnership is born. The synergy between the partners is perfect, as the two target audiences are completely in line with each other. Your partner sends out an email to their client base about your floral website, and you instantly gain tons of exposure without spending a cent! In addition, you have now increased your inventory offerings. You can earn a nice commission on all of the invitations your clients order. In the end, you get greater client exposure and two streams of revenue – significantly boosting your previous levels of sales.

The key in benefiting exponentially from joint venture marketing is to find the right partner, one who may share synergies with your target audience. However, the rewards are certainly worth the efforts. Joint venture marketing is not only a savvy business strategy, but an incredibly affordable one as well. Who says nothing in life is free?

With the 2007 holiday season ending, new statistics have been published, revealing the comfort level of consumers and shopping online. Indeed, not only have consumers increased their ease with shopping online, but also with their comfort with online advertising.

In the past holiday season, the comfort levels consumers displayed with rich online advertising were greater than ever before. Indeed, consumers increased their interaction with online advertising, converting over from these ads into sales. One of the greatest indicators of a sales conversion is related to how long a customer interacts with an ad; the longer the interaction, the higher the probability the interest will turn into a conversion.

Capitalizing upon consumer’s ecommerce ease

What does this mean for your business, either online or brick and mortar? For any business operating online, the increased comfort level of consumers shopping and viewing ads online brings tremendous potential for revenues. Whereas the internet economy was initially embraced by a targeted segment of the population, it has now grown into mass acceptance.

Whether you own a strictly virtual business, or one that is supplemented by a brick and mortar establishment, tapping into the tremendous full potential of internet commerce is made significantly easier with joint ventures.

Understanding the potential of joint ventures

Both small and big businesses can profit significantly from the power of joint ventures. Traditionally, Fortune 500 companies engage consistently in joint ventures, ranging from research to marketing efforts. However, with the power of the internet, small and mid-sized businesses can benefit from joint ventures.

One of the most popular forms of joint ventures online is affiliate marketing. Growing tremendously in revenues and profits, affiliate marketing has become its own industry in the internet ecommerce, spreading through different industries, services, and products. Essentially, the affiliate works to spread the marketing campaign to a wider customer base, and the affiliate partner earns a percentage of all recommended sales.

Affiliate joint ventures work well for every business structure, ranging from individuals to multinational corporations. As the partner, it is a great way to gain instant exposure for your business beyond your traditional customer base. As the affiliate, you earn additional income without having to bear the responsibility of inventory and structures. It is a great win-win situation for both parties involved.

Taking advantage of the burgeoning opportunity

The trend for consumers gaining additional comfort and ease with shopping online will only continue to grow. In addition, lured by the competitive pricing and services offered online, more and more consumers are turning to the internet as a means of finding the best deal, both for products and services. With that said, considering that 2008 is predicted to be a potential recessionary year, more consumers – restricted by tight spending – will move their spending online, where their dollar stretches more.

Indeed, there are many “super affiliates” that have built very powerful businesses strictly by finding strong joint ventures – and then matching those companies and services up with a related customer base. The earlier you start building your joint venture partnerships, the stronger you build the strength of your business earnings.

The age old adage pertaining to “word of mouth” advertising still holds true: make a customer happy, and he will tell one other person; make the customer unhappy, and he will tell 20 others. However, with the power of the internet, this impact has grown exponentially, as “word of mouth” published in blogs, websites, and community bulletin boards are read by millions of eyes – far exceeding the physical limitations of actually verbally telling someone about a company.

Buying the power of word of mouth

With that said, corporations continue to tap into word of mouth advertising, but on a larger, World Wide Web level. According to PQ Media’s word of mouth marketing forecast, companies are continuously increasing their spending on citizen marketing, growing from $980 million in 2006 to $1 billion in 2007. With the weakening of the economy and potential signs of a recession for 2008, expect this spending number to continue to grow, potentially at greater rates. In fact, by 2011, it is anticipated that this marketing figure will grow to approximately $4 billion.

Fortune 500 companies are cashing in on the power of citizen marketing through brand ambassadors. Formerly considered a spokesperson or token PR individual, today’s brand ambassador is equipped with the power of Web 2.0, thus reaching an exponentially larger audience.

Just to name a few, Jet Blue, Macy’s, and Sony have launched rigorous marketing campaigns based upon brand ambassadors, who are everyday citizens armed with word of mouth recommendations. For example, Sony named 25 brand ambassadors to promote their new digital cameras. Armed with the technology, these brand ambassadors were given the digital cameras, encouraged to take photos of their every day activities and blog their perspectives.

Citizen marketing levels the playing field

This unique marketing strategy is not limited to the big corporations. In fact, a small business can take advantage of this marketing strategy as effectively as Fortune 500 companies. With the internet and power of viral word of mouth marketing, a small business can make as much of a splash as Sony.

However, while brand ambassadors can be a tremendous asset to a corporation’s marketing efforts, managing them is not necessarily an easy task. In order to successfully execute a citizen marketing campaign, a company must fully select, train, and manage individuals who will be effective brand ambassadors – instead of simply paid endorsers.
In addition, not all business models are suited for the brand ambassador strategy.

Collaboration Marketing: Hassle-free brand ambassadors

With that said, any business can take the fundamental benefits of brand ambassadors, word of mouth advertising, and citizen marketing – but apply them to a collaborative marketing strategy. A collaborative marketing strategy shares the fundamental core of citizen marketing, but is much easier to implement and manage. You still achieve the same benefits of having brand ambassadors, which provides credibility and knowledge to the marketplace - without the hassles of training and managing a team of citizens.

To find a collaborative marketing partnership that will offer you the same rewards as a brand ambassador / word of mouth campaign, it is important to locate a company that has credibility and sway with its customer base. Without a credible, interactive relationship with their clients, their “word of mouth” recommendations are likely to fall to the wayside, which does not necessarily bode well for your company’s reputation. Yet, the effort is certainly worth the results, as a synergistic collaborative marketing relationship is likely to open your business to exponentially larger customer base – and revenues.

When two companies are considering a collaborative marketing or joint venture partnership, there is a precise recipe for success. Negotiating a joint venture is very different than other types of business negotiation. Instead of splitting the pie, where one companies vies for a larger piece, the key to joint venture negotiations is expanding the pie – where both parties walk away in a “win – win” situation.

Approaching a collaborative marketing or joint venture partnership requires a fine balance between negotiating for your own self-interests, while keeping in mind that this is an “interaction implementation” partnership – not a one time transaction where you shake hands and walk away from the table forever. If negotiations are conducted poorly, then the joint venture is doomed from the beginning.

Traditional vs. implementation negotiation

Traditional negotiation methods call for “trump cards,” where one party withholds as much information as possible. Since “knowledge is power,” negotiating parties perceive the sharing of information as a weakness during the negotiation process. Negotiators will not reveal what is most important to them – this may “cost” them more in the negotiation. Instead, through smoke and mirrors, negotiators mask what is important to them and the information they hold. In addition, the negotiators believe that the other party should conduct their own due diligence research to reveal the reality.

If traditional negotiations extended into a joint venture partnership, then the collaboration risks a high probability of failure. Like any relationship, it is open communication and information exchange that keeps the partnership healthy. However, with traditional negotiations, information is inherently kept secretive – which spells disaster when it comes time to implement the partnership. To keep a long-term collaboration and joint venture partnership healthy, it is important to disclose vital pieces of information, as this will determine whether the partnership will function effectively. Talk about your priorities, what factors must be in place in order to make the relationship fruitful for your business. Likewise, keep an open ear to your potential partner’s needs. By speaking openly during the negotiation process, you can develop a creative solution that will relatively expand both pieces of the pie – instead of simply attempting to negotiate for the bigger piece.

Moving from the negotiation table to the working room

Once the negotiations have closed, it is time to transition into the working relationship. Interestingly enough, it is important that both partners in the joint venture relationship have an understanding of flexibility. With the rapid changes in the marketplace and emerging internet technologies, the specific details that were hammered out in the initial negotiation may not be relevant in six months. Therefore, in order to make the transition from the negotiations table into the working relationship, it is important that both parties can work together – in all market conditions – to continue the fruitfulness of the relationship.

The key to negotiating joint venture or collaboration marketing partnerships is open communication, ensuring that the relationship’s implementation will be meet with smoothness – not surprises.

The incredible popularity of social networking sites, such as FaceBook, MySpace, and Yelp, demonstrate that individuals are collectively looking for ways to connect with each other. Yelp, a popular social networking recommendation site, is based solely upon individuals sharing their own opinions, experiences, and insights regarding local businesses and activities.

Businesses are social too.

And businesses are jumping in on the social networking trend. According to the Institute for Corporate Productivity, 65% of business professionals utilize social networking websites, while 55% of business professionals utilize social networking web sites to share their “best practices” and experiences with their colleagues.

Thus, the question remains - how does social networking relate to collaboration marketing?

Collaboration marketing: the sibling to social networking

An effective collaboration marketing strategy is akin to the fundamental popularity of social networking websites. Individuals, as well as small businesses, are looking to utilize the internet as a wealth of knowledge. The best way to research a company, product, or even supermarket is to ask someone who has experienced it. Thus, social networking sites, such as Yelp, are abounding with individuals asking for advice and recommendations.

This is where collaboration marketing comes in powerfully – it strikes the core need for individuals to garner “first hand” advice regarding the products and services they should purchase. Therefore, any successful collaboration marketing campaign utilizes the trust built between the company and its client base to promote with credibility.

Successfully bridging the business and community relationship

However, there is a fine line that must be walked in collaboration marketing, which is parallel to marketing efforts through social networking sites. In a relationship where trust and credibility play important roles in the end user’s buying decision, it is critical that the sense of “community” is developed. If the customer believes that the company is not contributing to the relationship – or worse yet, are exploiting the customer – then the efforts become negative.

Therefore, when you are formulating your collaboration marketing strategy, it is absolutely essential to ensure that the “recommendation” does not appear exploitative or too aggressive. In fact, the more “real” the recommendation sounds, such as the use of minor critiques, the more likely the customers will trust the recommendation and convert into a paying client. Another effective strategy is to couple the recommendation with a discount – which prompts the end users to believe that indeed, the “recommendation” is in their very best interest.