Business owners have a multitude of marketing strategies at their disposal. The Internet and social media have added even more ways to market than ever before. One marketing tactic that is often overlooked is the joint venture. This is especially helpful to businesses starting out. If a new business can align itself with a non-competing business that has an established customer base that is largely made up of the same target market it can be a great boost to the new business.
We often see this concept in play when it comes to non-profits and charities teaming up with for profit businesses. One variation of this is when a for profit businesses will market and sponsor events and campaigns of non profits or charities. Recently I played in a golf tournament organized to help fund our local Junior Achievement branch. Many local businesses sponsored the event to gain exposure for their business and show their support. I am sure you have also seen where donations are attached to products. For example for every shirt you buy from company x a percentage is given to charity x.
One of the best and most successful joint ventures I have seen locally by two for profit companies is the Bi-Lo Grocery chain and the Spinx Gas Station chain. When you buy groceries at Bi-Lo you earn discounts on gas at Spinx based on how much you spend. So it compels many shoppers to buy groceries at Bi-Lo instead of other grocery stores in order to get a reduction on the cost of gas. And since Spinx is the partner in this deal they gain the consumers who not only will get their gas at Spinx but also purchase snacks and other items from the convenience store. Bi-Lo has been able to take this one step further by offering additional reduction in how much you pay for gas by buying particular items. My guess is that these items may have the highest profit margin. This is a Win-Win for both companies for sure. It may be that Bi-Lo has the larger advantage out of the two as they are not giving a discount and only an incentive but it is a home run for Spinx as well.
No that I have shown you some ideas on how this can work . Let’s see how this may be able to work for your business. First it is best to research possible joint venture partners based on if you serve the same target market. This is easy for Bi-Lo and Spinx as they both deal in items that people need on a day to day basis so their target market includes the vast majority of people. However many small businesses have a much smaller demographic of people they serve. Lets use an example lets say you own a auto repair shop. Now lets list some possible joint venture partners and then we will discuss how you may be able to work together to increase each others business.
- Tire store – Possible Joint Venture: Buy a set of tires and receive a free or discounted oil change and/or tune up at your auto repair shop. You may be losing out on the parts and labor from the oil change but gaining a possible new customer every time someone buys a set of tires from your partner.
- Body Shop – Possible Joint Venture: Often times a car that goes into a body shop needs mechanical work and vice versa – you could set up a paid referral system that works both ways.
- Auto Detail Shop – This also could work both ways as oil changes are probably the best thing to use as the relatively low cost of labor you could once again give away or discount an oil change in order to gain new customers from the auto detail shop. Or better yet a free inspection of the prospects car to see if any service is warranted. The detail shop could also possibly offer a free service when someone comes to your shop and gets a particular service. Promotion: Get your car running right and lookin great!
- Used Car Dealer – Many used car dealers have their own in house mechanics but if you are lucky enough to find one that does not you can offer your services at a discount. Many used car dealers like to have the cars inspected and tuned up prior to featuring them on the lot. The discount can be qualified as well. Possibly something along these lines a 15% discount if your company services 5 of the car lots cars a month. This can carry over as well as the oil change freebie /discount can come into play. Every time they sell a car they can give the customer a coupon to your shop for a free oil change. So 3000 or 3 months down the road you have a chance for that customer to become your customer as well.
- Car Stereo and Accessories Dealer – Many auto enthusiast love to add accessories to their automobiles. They also often not only like the car to look good but run well. In this scenario you can offer discounted tune ups/inspections or just pay a referral fee to the accessories dealer. You can also feature each others promotional material in your shops. A picture or poster of a suped up muscle car with both businesses logos on it comes to mind.
- Car/Motorcycle Clubs – These groups spend a lot of money on their cars and bikes. So it is a great idea to get to know them. Passing on special discounts to members is a great idea. What you lose with the discount can be more than made up for with the frequency of service.
- Auto Magazine/Website – Offer to write car care or other auto related articles in an auto magazine or website in exchange for discounted advertising.
I was going to include auto parts stores in the list but that can get a little tricky as it may hurt their business if the favor one shop over another.
It should be noted that you need to calculate the average lifetime value of a customer and the average cost to acquire a new customer to determine how much of your products and or service you can discount and come out ahead. Figure that out first before you broker any deals with other businesses.
Just after posting this I found out via facebook my friend Haro Setian (@haroavo on twitter) of The Haro Group – Real Estate Consultants – Greenville, SC has put together a joint venture marketing effort with a Davis Contracting. Check out the flyer below that anyone who buys a home from Haro Group receives. This is a win win for all parties. Davis contracting gets a new client every time Haro Group sells a home. The home owner gets a head start on any remodiling or additions they want to make on the house. Usually even if it has almost everything your family wants there is usually always something you would like to add or change. Haro Group gets an extra benefit to give to clients that sets them apart from their competition as well as a referral source in Davis Contracting. Great Job!
So I leave you with some homework. If you have not clearly determined your target market you need to do that first. Then determine the lifetime value of a customer and the average cost to acquire a new customer. You should then make a list of all the possible businesses you can cross market with. Don’t go crazy a list of 5 or less is a good start. If you are a small operation it will be hard to manage too many joint ventures at once. Then next to each of those brainstorm some ideas that represent a win-win relationship. Then pick the best one out of those and approach that business. Your success rate will be higher of course if you have a pre existing relationship with the business owner. Once you got that one off and running work on the next one until you are at the maximum number of joint venture your business can handle at one time.
And as always if you need any assistance with your marketing or design needs give us a call at 843-606-0336. Hire A Hero!
If you have any examples of any joint venture marketing you have done please post them in the comments.