Here's something business owners may not have considered: Do you own a business with clients of your own that sometimes need web development and/or marketing assistance? If so, why not consider forming a strategic partnership with a web development agency like Marketing Portland? I'd like to cover how this could represent a true "Win-Win-Win" scenario -- for us, for your business, and for the clients. (I'm also posting this in my "Business Development" blog because it's a pretty interesting BD idea for many businesses types, and a revenue-generating idea for others.
Strategic Partnership Background
Strategic partnerships can take on many forms. Back in my corporate marketing management days, I was approached regularly by niche companies interested in various partnerships. At CPA firms, for example, I received regular calls from payroll companies desiring to setup such relationships. The idea was that the CPA firm tells clients about XYZ Company when that client needs payroll services, and the firm receives some benefit from doing so. Investment companies also inquired a lot, and occasionally other niche companies did, too.
When I was in nonprofit management, the outside companies were usually service providers interested in access to the association's members. Nonprofits seem especially good target partners for outside companies because many nonprofits are built around specific demographics like trades or interest groups. When assessing the merits of such partnerships, we always asked ourselves what the benefit would be for the members. Providing members with additional value is always a priority for nonprofits, just as providing clients with extra value is important for for-profits.
In either case, I was never approached by an outside marketing company asking for such a partnership. But, I'm not sure why. I can't think of any good reason why such a partnership couldn't greatly benefit all involved. So, let's look at that for a bit, perhaps using Marketing Portland as the web development and marketing partner for your business.
The Partnership Structure
While it would seem that a flat commission on sales might represent the easiest type of partnership, this was rarely the proposal put to me. I suspect a lot of strange things happen when one throws money into an equation rather than the funny-money or soft-dollar type benefits often touted. Payroll companies, for example, used to promise referrals and/or free lunches for company staff. But, really, at the end of the day, it's all about the bottom line. To me, that's the simplest, and the most transparent for all parties. "Keep it simple" should be the mantra, in my view.
Now, when you look at various sales employment listings advertised online, you usually see something like a 15-30% commission on sales (lower end if it's a FT job with a salary, higher end if it's commission only). That's exactly the way I look at something like this. It means that this is what a sale is worth. If I build a $10,000 web site, and a commission-only sales professional brings that site to my company, then I should compensate this person $3,000. For my business, there is no difference as to whether that came from an individual or a partner company. And, since we do not staff sales people here at Marketing Portland, we never see sales expenses, anyway.
Where it gets strange is in a couple of areas: First, there are various potential client perceptions. For example, a client might react in a couple of ways if/when this ever comes up. For example: (1) "Well, if my site costs $10k, but this other party gets $3k, then the site really should cost $7k. Maybe the developer is just jacking the price up $3k in order to pay the sales person." or (2) "Well, if this is a $10k site, but Marketing Portland is paying someone $3k in commission, then I could have gotten a lower quote if I'd come to Marketing Portland directly rather than via that referral." There are probably other objection-type responses, as well.
Both of the above perceptions would be incorrect, though. In fact, the bid would have been the same no matter where it originated. Pricing, as many business owners know, is a dynamic equation. Numerous factors must be taken into account when setting pricing, including the cost of acquiring new business. For anyone with a sales force, they know very well the salaries of those sales professionals. Such salaries and the commissions (plus overhead costs like office space, office supplies, advertising, etc.) are all factored into the P&L at the end of the day. So, this type of objection is rarely brought by more experienced business owners.
The tough truth for almost all businesses is this: One way or another, one always pays for marketing and sales. Whether one pays a sales pro, a referral source, the media for advertising, a SEO company for more traffic, or some other expense related to business building, that expense is necessary for almost all companies (unless you luck out and "go viral" perhaps). So, a $7k site is never "jacked up $3k." In reality, it's just that, for that particular client, the marketing / sales / business development cost is allocated to one source versus another. So, it's a complete non-issue.
As a small business owner, I'll admit that $3k would still be a bit of a hit on a $10k job. I'd feel that much of an expense, for sure, especially considering the even greater hit Uncle Sam takes off the top of each engagement! But, there's also a value in establishing a long-term client. So, part of that initial expense gets amortized over time. But, enough about me. Let's talk about the other parties.
The Three Wins
Okay, so how do all parties benefit from this? Great question! Let's review:
- For Marketing Portland: Well, that's an easy one. We would benefit from the new and recurring business. Plus, being in an established partnership is an added extra incentive to go above and beyond for clients. After all, when a company refers you to someone, there's an added incentive in the consultant-client mix. It becomes a consultant-client-referrer mix, where the consultant needs to (1) knock the project out of the park for the client, thus (2) validating the referral, so that (3) additional referrals come in via this channel.
- For the Referring Company: First, there's the compensation. We discussed that, above. I'd likely set up the relationship contractually, with a 30% one-time commission on any project over some specified billable amount -- say $1,000 -- exclusive of expenses. I wouldn't offer residuals, as it would just get convoluted over time accounting-wise, and I'm not inclined to dream up sunset provisions for something that could be so basic like this. In my view 30% is fair. But, secondly, there's the satisfaction of connecting your clients to a company that will take action and help them succeed in the marketplace -- whether it's a website, an SEO project, a coding project, or something else. For PDX-based companies, I would likely offer something of additional value, such as an initial meeting with all three parties, if desired. But, there would be a satisfaction gaurantee in the mix for sure.
- For the Client: The client receives the service. Strictly speaking, it would be the same high level of service as we apply to all client relationships. But, Marketing Portland is distinguished in a few important ways. First, we cater to small- to mid-size business web sites desiring a state of the art Content Management System hosted, installed, and configured by dedicated professionals. Next, we marry that tech expertise with creative, experienced, practical solutions. The web business is a spectacular venue for marrying creative and analytical modalities, and this is our forte. We're also particularly good at connecting and communicating with clients, which is why so many of them request related services such as CMS training and ongoing maintenance.
How Strategic Partnerships Are Formed
Optimally, both sides of a partnership must see a clear benefit. So, it's not something any company would (or should) jump into blindly. Rather, it's something that should be discussed -- likely first via phone and then in a face-to-face meeting to discuss particulars, assess cultural fit, plot expectations, discuss how referrals should be given to ensure that they're tracked back, and more. After that, if everyone is behind it, the parties basically ink the deal and life goes on. Cultural fit is probably the most important. Not all companies will view client service the same as we do or as you do. So, that really has to click.
Once it's formed, within this specific scenario, Marketing Portland is the "receiving" party. So, there isn't too terribly much for us to do from there on out, other than to be there if/when called. On the other side of the table is the "sending" party, and it can go in numerous ways from that side. At a minimum, the company's staff should be made aware of the partnership. How the commission / referral fees are distributed by company staff would be up to each company to decide. From there, the company can decide how such services might be marketed. For example, integration with a web site, mentions in the company newsletter, or other means as deemed appropriate.
Well, that's the not-so-brief version of this. I'm happy to answer any questions anyone may have, and/or pursue something if any outside CPA firms, law firms, or other businesses may be interested in looking into this further. Click here to get started!