Affiliates of New Business Ep 285

Summary Notes


In a discussion about business growth strategies, the host emphasizes the value of affiliate relationships over starting new ventures. The host distinguishes between upselling and cross-selling, advocating for affiliate partnerships due to their lower opportunity costs, ability to stack offers, all-profit nature, and flexibility. They share personal experiences, like a less profitable meals company, to illustrate the benefits of negotiating deals with existing businesses that complement one's primary offerings. This approach allows the host to enhance their core services, increase overall package value, and ensure the best solutions for clients without the risks and costs associated with starting and running additional businesses.

Summary Notes

Introduction to Affiliate Relationships

  • Speaker A expresses a preference for affiliate relationships over starting new businesses.
  • Speaker B introduces the podcast's focus on customer acquisition, value maximization, and retention, including lessons from failures.

Here's four reasons that I like affiliate relationships a lot. Speaker A introduces the topic of affiliate relationships and expresses enthusiasm for them.

This quote sets the stage for the upcoming discussion about the benefits of affiliate relationships in business, indicating that Speaker A has positive views on the subject.

Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. Speaker B outlines the podcast's themes, emphasizing growth strategies and learning from past mistakes.

This quote provides an overview of what the podcast aims to cover, focusing on business growth and customer relationship strategies.

Differentiating Product Lines from New Businesses

  • Speaker A clarifies the difference between adding product lines and starting a new business.
  • Product lines cater to existing customers' needs, while new businesses require new resources and capital.
  • Upsells and cross-sells are explained as strategies to enhance customer value.

So a product line is serving an existing customer at a higher or lower level, right. To solve a similar need, the same need in a different way many times. Speaker A defines a product line as an extension of offerings to current customers to meet their needs differently.

This quote differentiates product lines from new businesses by highlighting that product lines aim to address the same customer needs through various means.

And so this is difficult because obviously it's a huge amount of time and money to start another business, which is different than having another product line. Speaker A discusses the challenges of starting a new business compared to expanding product lines.

The speaker emphasizes the significant investment of time and capital required to start a new business, as opposed to expanding within the existing structure.

Upselling vs. Cross-Selling

  • Upselling involves offering a higher-tier product or service to the same customer.
  • Cross-selling is about providing a different product or service that meets the same underlying need.

An upsell is a higher version of the same thing, right? So if somebody was doing group training and then we sold them personal training, that would be a higher version. That's an upsell, right? Speaker A illustrates upselling using the example of upgrading from group training to personal training.

This quote explains upselling by giving a concrete example of how a more premium service can be offered to the same customer as an upgrade.

A cross sell would be going from group training to nutrition coaching, right? That's a cross sell. Let's say it's the same person solving the same need of getting in shape. It's just another vehicle, right? Speaker A explains cross-selling through the transition from group training to nutrition coaching to meet the same fitness goal.

This quote clarifies cross-selling by showing how a different type of service can cater to the same customer's need, offering an alternative solution.

When to Partner Instead of Starting a New Business

  • Speaker A discusses the decision to refer business to partners instead of creating new ventures.
  • Partnerships involve working with established businesses rather than starting from scratch.
  • The distinction is made based on the need for new resources, personnel, and capital.

Now, let's say I wanted to really get into, I don't know, food prepping, right. Or apparel, something like that, whatever. Because one is, both of those first examples I gave are service based businesses that use the same resources, right? Speaker A gives examples of potential new ventures that would require different resources from current operations.

This quote presents hypothetical scenarios where starting a new business would necessitate separate resources, making the case for considering partnerships instead.

And when I say partner, I mean, like somebody already has a business not getting into business together. Speaker A clarifies that by "partner," they mean collaborating with an existing business, not creating a joint venture.

The speaker distinguishes between forming a partnership with an existing company and the more complex process of starting a new business with someone.

Affiliate Relationships

  • Affiliate relationships are preferred due to the high opportunity cost of starting new ventures.
  • Existing businesses may be more profitable than starting new ones, which can be less rewarding.
  • Partnerships with existing companies can offer benefits without the cost of providing the service or product.
  • Affiliates can stack offers from other businesses with their core offers to provide additional value to clients.

"And so the first reason that I like affiliate stuff is that I have no cost of providing the value."

This quote emphasizes the advantage of affiliate relationships in that they do not incur the costs associated with providing the product or service themselves.

"Number two is that I can benefit from the value by stacking a ton of offers of other people's businesses just for me, introducing them into my core offers."

The quote highlights the strategy of leveraging other businesses' offers by integrating them with one's core services, thereby enhancing value without directly providing the additional services or products.

Strategic Partnerships and Negotiations

  • Forming partnerships with other businesses can lead to better deals for clients through collective bargaining.
  • Businesses are willing to offer discounts or incentives to gain new customers, especially if it means acquiring multiple customers at once.
  • Negotiating deals on behalf of a group can guarantee better terms than what individuals could obtain on their own.
  • By bundling offers, affiliates can present significant value to their clients, enhancing the appeal of their core services.

"And so by doing that, I can guarantee get them a better deal than they would get on their own, right?"

This quote highlights the benefit of negotiating as a group, where the affiliate can secure deals for their clients that are more favorable than what the clients could negotiate individually.

"Let's say I got a massage therapist to give me two free massages for every just so that I can send someone over with an attractive deal, right?"

The quote illustrates an example of a strategic partnership where the affiliate secures a tangible benefit (free massages) from a massage therapist to offer as part of a package deal to clients.

Value Addition Through Bundling

  • Affiliates can create attractive packages by bundling offers from various businesses.
  • These bundled offers can represent a real and unquestionable value to the client.
  • By carefully selecting complementary services or products, affiliates can enhance their core offerings and provide a comprehensive solution to their clients' needs.

"Or half off, four massages who gives it whatever, right thing is, I can bundle that thing and say, that's a real, true $150 value, right?"

This quote explains the concept of bundling services or products to create a package that has a clear and definable value, making it an attractive proposition for clients.

Value-Added Affiliate Relationships

  • Affiliate relationships are a strategic way to offer additional value to customers.
  • They involve collaborating with other businesses to provide complimentary products or services.
  • These partnerships can enhance the overall package offered to the customer.
  • Businesses can negotiate to not only receive discounts for their customers but also get paid for referrals.
  • The speaker outlines a scenario where they secure free items, such as an orthotic pillow and moldable insoles, to include in their customer offer.
  • This approach increases the perceived value of the product or service being sold, which can justify a higher price point.

"Each of these things. And so now when I'm presenting my final offer to my customer, I have all of these things lined up that cost me nothing, right?"

This quote explains how the speaker strategically aligns various complimentary offers that cost them nothing, to enhance the final offer to the customer.

"Not only do my customers benefit, I can sell, my entire package is more expensive because of value, right? My customer, I then get paid from the business and my customer gets a discount. So it's literally just like, everyone wins, right?"

The speaker emphasizes the win-win nature of affiliate relationships, where the customer gets a discount, the business gets referrals, and the speaker can charge more for the added value.

Promoting Affiliate Content

  • The speaker mentions their podcast and suggests listeners check out the video version on YouTube for additional content.
  • Visual aids such as effects, graphs, and other visuals can provide a different learning experience and reinforce the content.
  • The speaker encourages engagement with their content across different platforms.

"Hey, guys, love that you're listening to the podcast. If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, you know, drawn out stuff, sometimes it can help hit the brain centers in different ways."

This quote is a promotional message inviting listeners to consume content in another format, which can offer a more enriched experience with additional visual elements.

Profitability of Affiliate Relationships

  • Affiliate marketing can be highly profitable, with potentially higher margins than traditional business operations.
  • The speaker notes that some businesses operate at 10-20% margins, whereas affiliate deals can yield 30-50% of the total revenue.
  • The speaker shares their own experience of making significant passive income through affiliate partnerships.
  • A balanced deal where both the customers and the affiliate benefit equally is preferred.

"And when you think about how much you make from your own business, sometimes it makes more sense to just be an affiliate and get that revenue."

This quote compares the profitability of owning a business versus earning through affiliate relationships, suggesting that sometimes the latter can be more lucrative.

"We make about a million dollars a year, pretty much passively just introducing businesses to partners that we would do anyways, right?"

The speaker shares a personal success story to illustrate the potential passive income that can be achieved through strategic affiliate partnerships.

"I like saying, let's say if we get 20% off, all my customers get ten, and I get ten too, and so everyone wins, right?"

The quote discusses a fair division of discounts and profits in an affiliate deal, ensuring that both the customers and the affiliate benefit from the arrangement.

Flexibility of Affiliate Relationships

  • Affiliate relationships offer adaptability in business partnerships.
  • Allows for switching to a better service provider without complications.
  • Prioritizes client needs by ensuring they receive the best product or service available.
  • Offers a contrast to owning a business where switching is not as simple.

Because I'm an affiliate, I can just switch where I'm pushing my clients and there's no problem.

The quote emphasizes the ease of redirecting clients to a superior service provider when involved in affiliate marketing, highlighting the flexibility it provides in business decisions.

Moral Conflict and Cognitive Dissonance in Business

  • Owning a business can lead to a moral dilemma when a better product is available elsewhere.
  • There's an internal conflict between wanting to offer the best and recognizing a superior option exists.
  • This conflict can affect the business owner's decision-making regarding client services.

You then have this kind of, like, moral conflict and this cognitive dissonance where you want to believe that what you provide is always the best, but you have tangible proof that there's somebody better down the street and you're not allowing your customers to do that.

The quote illustrates the psychological struggle business owners face when they know there is a better service available for their clients but are bound by their own offerings.

Cost-Benefit Analysis in Service Provision

  • Evaluating the costs and benefits of providing a service in-house versus through an affiliate.
  • Affiliate referrals can be more profitable and less burdensome than managing services directly.
  • Ensures clients receive the best service while minimizing the business owner's expenses.

Sometimes it just makes more sense to have the flexibility on top of having the best product, because it ensures that no matter what, you're always serving your clients in the best way.

This quote discusses the practicality of using affiliate relationships to serve clients' interests best while also considering the business's financial and operational efficiency.

Strategic Business Advice

  • Recommends forming partnerships over starting a new business for solving client problems.
  • Focus should remain on the core business while leveraging relationships to enhance value.
  • Exceptions exist when a new business venture could significantly increase enterprise value.

Don't start another business. Make a relationship, still solve your clients problems while still being able to focus on your core game.

The quote advises against diluting focus by starting a new business and suggests using partnerships to provide additional value to clients without incurring the costs of business expansion.

Enterprise Value Consideration

  • When a referred business generates substantial value, it may justify integrating it into one's business.
  • In most cases, accepting referral commissions is more advantageous than business expansion.
  • The decision to expand should be based on the comparative enterprise value created.

If you are sending a disproportionate amount of revenue, building a huge amount of enterprise value, where the amount of enterprise value from the new thing that you are sending surpasses your existing vehicle, then it makes sense at that point that you would want to swallow up that revenue stream.

The quote highlights a scenario where absorbing a new business venture could be beneficial if it significantly contributes to the overall value of the company, outweighing the benefits of simple affiliate relationships.

Final Thoughts and Encouragement

  • Summarizes the benefits of affiliate relationships and strategic partnerships.
  • Encourages maintaining focus on one's core business while still adding value for clients.
  • Concludes with a positive message and farewell.

Lots of love, keep being awesome and I'll catch you guys on the flip side. Bye.

This quote serves as a sign-off, offering encouragement and affirming the speaker's confidence in the advice provided throughout the conversation.

What others are sharing

Go To Library

Want to Deciphr in private?
- It's completely free

Deciphr Now
Footer background
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon
Crossed lines icon

© 2024 Deciphr

Terms and ConditionsPrivacy Policy