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Grow Your Business's Customer Base With Joint Ventures

April 10, 2012 | Comments: 0 | Views: 105

Would you like to get more customers for your business while spending minimal amount on advertising? The best way to achieve this outcome is to setup Join Ventures with complimenting and non-competing businesses!

How can you partner with another firm, or create a joint venture, that is beneficial to both companies and helps you generate more sales and profits? The principle behind joint ventures is to provide you and your business with quick, cost-effective access to large pools of potential customers. Similarly, any JV partner you agree to do business with has the same interests - growing their customer base. Take the example of McDonald's. They have some brilliant JV partnerships and promotions.

For example, the toys in Happy Meals have many times been a set of movie characters or related products. There is a common audience or target market for both, usually young children and their parents. When the child sees the toy in the Happy Meal, the response usually is, "Mom, Dad, can we go see this movie, please?" Or, when the child goes to the movie and realizes that McDonald's Happy Meals have the toy, the response will be something like, "Mom, Dad can we go to McDonald's, please? And, by the way, I have to collect all 6 of these character toys from the movie we just saw." That is pretty smart marketing and a joint venture that brings new customers to both McDonald's and the movie theatres.

To develop an effective joint venture partnership for your business, there are several questions you can think about and answer.

  1. What businesses are servicing the same customer base as your business? Think about this in terms of your Top 10% of customers. If you can find another business that has a similar customer base, but one that you don't compete with, you can develop a JV that brings more new customers to both.
  2. What challenges do the other businesses face? Are they similar to yours? For example, if you have a hair salon and your top 10% of customers are women between the ages of 35 - 55, what other businesses could you develop a joint venture with? Ladies in this age group need other personal care items, such as nail treatments and care. You might be able to develop a JV with one or more local nail salons to refer customers if they will do the same.
  3. What script can you develop to "sell" the joint venture to the other business? For example, if you offer your customer database to the other business in exchange for access to their database, that kind of trade might be agreeable to you and the other business owners.
  4. How can you create a killer offer that works for both businesses? You should use all of the tools and best practices we described earlier about developing your best offer. But, now you can expand that offer to take into account the challenges and opportunities of the other business.
  5. Can you remove the risk for the other business's customers? In order to make it as easy as possible for the other business to agree to the "JV", you should try to make sure that they are not putting their customers or their reputation at risk. One simple way to do this would be to offer a 100% money-back guarantee for any customers they refer to your business.
  6. Will your joint venture partner endorse you as part of the deal? This type of arrangement works best for both businesses. Each one benefits from the promotions and endorsements of the other. And, each business has the opportunity to take advantage of the combined customer base. This is why it is so important to establish JV's where there are mutual benefits for each business from the same target market and customers.

Can you take care of all mailing costs? This is one way to make it easy on the business you are recruiting for the joint venture. If you pay for all mailing costs tied to promoting and marketing, it will be that much harder for your potential partner to say no. And, from a cost perspective the additional cost per customer for mailings and other direct marketing tools are very low compared to the potential sales and profit gains.

One simple way to think about potential JV partners is to consider all the businesses that you and your business deal with. For example, you have a business automobile and you have to buy products and services to maintain your automobile in good driving condition. Is there a way you can develop a joint venture with the tyre shop or auto electrician that works on your car.

Let's say you have a car wash and auto detailing business. If you develop a JV with these other two businesses, each of you stand to gain new customers from the other. The three businesses do not today have all the same customers. And, the target market and customer potential is nearly the same for all three.

Or, think about the businesses that you use to manage and run your business operations. For example, you work with an accountant, a printer, and a business broker. You may also have a law firm that handles all your legal needs and paperwork. Let's say you own a business that provides messenger and package delivery services in the city. These other three businesses have clients that need your services and you have clients that need their services. Developing a joint venture with any one or all of these companies will build your business and bring in new customers much more quickly than many other marketing methods.

There are also ways you can use JV's to develop profit centers with the suppliers and vendors you use. For example, if you have a web design firm that does all of you internet and website work, some of your customers may need those services as much as you do. The web design firm, in turn, may have clients and customers that need the services you provide. And, a similar situation could exist for any of several businesses that you buy services from. As you think about the best possible joint ventures, keep in mind that the objective is to find businesses that have a similar clientele or customer base but ones that you don't directly compete with. As part of the JV, you will need to approach the marketing and offer development just like you would for your own business. The same principles apply. By being part of a JV, though, the potential customer pool is much bigger and each participating business stands to benefit.

Let's consider some examples of joint ventures that have been successful and some that have not been very successful to illustrate some of these principles. For example, there are now hospitals that have developed successful JV's with groups of doctors. The hospitals refer patients to participating doctors for either primary care or specialty care. Doctors in turn refer their patients that need hospitalization or surgery to the joint venture facility. The JV was initially set up to provide access to new target customers for both the hospital and the doctors.

Another example from earlier this year... Lowe's formed a JV with Woolworths Ltd to form home-improvement stores. Woolworths has a large customer base and Lowe's has a targeted niche of home-improvement products and services. By combining operations, these two companies both stand to gain by entering the $24 billion (A) market for home improvement products. To deepen the joint venture, these first two companies also have a takeover bid placed for Danks Holdings Ltd, Australia's second largest hardware distributor. So, three large companies have combined their resources and access to target customers so that each can have new customers from the larger pool of potential buyers.

Dmitri Stern is the author, sales person, business owner and eternal student of marketing and selling.

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Source: EzineArticles
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