WEBVTT 1 00:00:00.000 --> 00:00:04.320 Here's four reasons that I like affiliate relationships a lot. 2 00:00:04.320 --> 00:00:07.120 Welcome to the game where we talk about how to get more customers, how to make more 3 00:00:07.120 --> 00:00:10.360 per customer, and how to keep them longer in the many failures and lessons we have learned 4 00:00:10.360 --> 00:00:11.360 along the way. 5 00:00:11.360 --> 00:00:13.360 I hope you enjoy and subscribe. 6 00:00:13.360 --> 00:00:14.360 What's going on, everyone? 7 00:00:14.360 --> 00:00:15.360 Happy Thursday. 8 00:00:15.360 --> 00:00:18.820 I wanted to rock and roll with you and give you a little breakdown of one of the hard 9 00:00:18.820 --> 00:00:22.960 decisions they have to make early on in business, which is when do I start referring business 10 00:00:22.960 --> 00:00:28.760 out for services and products that my clients want from me? 11 00:00:28.760 --> 00:00:33.280 And so this is difficult because obviously it's a huge amount of time and money to start 12 00:00:33.280 --> 00:00:36.440 another business, which is different than having another product line. 13 00:00:36.440 --> 00:00:39.080 So I'll differentiate that first and then I'll give you the four kind of reasons that 14 00:00:39.080 --> 00:00:42.640 I do like affiliate relationships instead of starting a new business. 15 00:00:42.640 --> 00:00:48.040 So a product line is serving an existing customer at a higher or lower level, right? 16 00:00:48.040 --> 00:00:54.000 To solve a similar need, the same need in a different way, many times, right? 17 00:00:54.000 --> 00:00:57.840 And so this like an upsell, which is different than a cross on upsell is a higher, a higher 18 00:00:57.840 --> 00:00:59.680 version of the same thing, right? 19 00:00:59.680 --> 00:01:03.600 So if somebody was doing group training and then we solved them personal training, that 20 00:01:03.600 --> 00:01:04.600 would be a higher version. 21 00:01:04.600 --> 00:01:05.600 That's an upsell, right? 22 00:01:05.600 --> 00:01:09.880 A cross-sell would be going from, you know, group training to nutrition coaching, right? 23 00:01:09.880 --> 00:01:10.880 That's a cross-sell. 24 00:01:10.880 --> 00:01:14.600 It's a, it's the same person solving the same need of getting in shape. 25 00:01:14.600 --> 00:01:15.800 It's just another vehicle, right? 26 00:01:15.800 --> 00:01:18.800 So those are, that's the difference in upsells and cross-sells, right? 27 00:01:18.800 --> 00:01:27.040 Now let's say I wanted to really get into, I don't know, food prepping, right? 28 00:01:27.040 --> 00:01:28.920 Or a peril, something like that, whatever. 29 00:01:28.920 --> 00:01:32.160 That's like, that's like a couple, because one is, like, both of those, the first examples 30 00:01:32.160 --> 00:01:35.800 I gave are service-based businesses that use the same resources, right? 31 00:01:35.800 --> 00:01:39.360 And this is key, is that if I'm creating a new product line, right, I'm using the same 32 00:01:39.360 --> 00:01:41.360 resources I already have. 33 00:01:41.360 --> 00:01:46.600 Now when it becomes a new business, is when you have to have new people, right, new resources 34 00:01:46.600 --> 00:01:54.600 and new product lines or capital expenditures, meaning you spend money to start the new business, 35 00:01:54.600 --> 00:01:58.660 I mean, fundamentally, like a business becomes over time, the bigger it gets, a business 36 00:01:58.660 --> 00:02:01.400 within many smaller businesses within it, right? 37 00:02:01.400 --> 00:02:02.400 That's how it becomes. 38 00:02:02.400 --> 00:02:03.400 Bigger, right? 39 00:02:03.400 --> 00:02:06.040 Now that I'm talking more once you're, once you cross 10 million plus, but that is ultimately 40 00:02:06.040 --> 00:02:07.440 how it becomes. 41 00:02:07.440 --> 00:02:11.480 But the point of this is actually not about the product lines, but when should you do 42 00:02:11.480 --> 00:02:15.920 that versus when should you find a partner, and when I say partner, I mean like somebody 43 00:02:15.920 --> 00:02:19.880 already has a business, not getting into business together and becoming a referer of business 44 00:02:19.880 --> 00:02:21.480 and affiliate. 45 00:02:21.480 --> 00:02:26.560 And so here's four reasons that I like affiliate relationships a lot. 46 00:02:26.560 --> 00:02:32.520 One, many times the opportunity cost of starting that thing might be very high, right? 47 00:02:32.520 --> 00:02:37.200 As in like, I might be making more money from my existing thing than I might make from 48 00:02:37.200 --> 00:02:40.160 building out, you know, some new solution, right? 49 00:02:40.160 --> 00:02:42.760 And I've made mistakes with this in my life. 50 00:02:42.760 --> 00:02:47.760 Like for example, we have a meals company and it's really not that profitable. 51 00:02:47.760 --> 00:02:52.480 Like I mean, it's, it's, we make basically nothing. 52 00:02:52.480 --> 00:02:55.120 I mean, it's almost a nonprofit for us. 53 00:02:55.120 --> 00:02:58.720 And so, you know, I'm happy that we can provide that, you know, service to our gyms and 54 00:02:58.720 --> 00:03:00.520 their clients, which is great. 55 00:03:00.520 --> 00:03:04.240 But if I could do it all over again, I would have just said go find somebody local and just 56 00:03:04.240 --> 00:03:06.000 not try to solve that problem, right? 57 00:03:06.000 --> 00:03:09.880 Well, instead I would have partnered with a national company and said, you know, give 58 00:03:09.880 --> 00:03:14.520 us a discount or referral commission in order to make this introduction, right? 59 00:03:14.520 --> 00:03:19.360 And so the first one, the first reason that I like fill it stuff is that I have no cost 60 00:03:19.360 --> 00:03:21.280 of providing the value, all right? 61 00:03:21.280 --> 00:03:28.440 Number one, number two, is that I can benefit from the value by stacking a ton of offers 62 00:03:28.440 --> 00:03:32.200 of other people's businesses just for me introducing them into my core offers. 63 00:03:32.200 --> 00:03:33.280 Let me give you a different example. 64 00:03:33.280 --> 00:03:38.440 Let's say I was a chiropractor and I had a, you know, $2,000 pain, pain, you know, release 65 00:03:38.440 --> 00:03:43.160 thing that I sold people and they came in for, you know, 12 weeks or 18 weeks or whatever, 66 00:03:43.160 --> 00:03:44.160 right? 67 00:03:44.160 --> 00:03:47.120 Let's say I think to myself, well, what other things that someone naturally need? 68 00:03:47.120 --> 00:03:50.520 Well, they might need, let's say food prep stuff, they might want massage therapy, they 69 00:03:50.520 --> 00:03:53.800 might want orthotics, they might want a better mattress, they may have all of these different 70 00:03:53.800 --> 00:03:57.160 things that they would, that they would naturally buy as a consequence of starting to work 71 00:03:57.160 --> 00:03:58.320 with me, right? 72 00:03:58.320 --> 00:04:02.280 So what I do being the enterprising, you know, chiropractor that I am, I go to each of 73 00:04:02.280 --> 00:04:07.200 those businesses and I negotiate a favorable deal because then I take a group discount 74 00:04:07.200 --> 00:04:10.440 of all of my customers and negotiate on all their, their behalf. 75 00:04:10.440 --> 00:04:13.720 And so by doing that, I can guarantee you get them a better deal than they would get on 76 00:04:13.720 --> 00:04:14.720 their own, right? 77 00:04:14.720 --> 00:04:17.880 Because like most businesses would give something away just to get a customer, but I'm going 78 00:04:17.880 --> 00:04:18.880 to give a lot of customers. 79 00:04:18.880 --> 00:04:20.880 So I want something even more than that, right? 80 00:04:20.880 --> 00:04:22.760 And so there's two things that we can do here. 81 00:04:22.760 --> 00:04:26.760 One is I could say, I'm just going to use a simple example, let's say I got a massage 82 00:04:26.760 --> 00:04:31.240 therapist to give me two free massages for every, you know, just so that can send someone 83 00:04:31.240 --> 00:04:33.640 over with an attractive deal, right? 84 00:04:33.640 --> 00:04:37.040 Or half off for massages, who gives you know, whatever, right? 85 00:04:37.040 --> 00:04:43.520 Thing is is I can bundle that thing and say that's, that's a real true $150 value, right? 86 00:04:43.520 --> 00:04:47.840 $150 that no one is going to question that it's worth that, right? 87 00:04:47.840 --> 00:04:52.000 And then if I take the, you know, a free pillow from the mattress place to get people to 88 00:04:52.000 --> 00:04:55.200 go in because they probably give something like that away, then I'll have this orthotic 89 00:04:55.200 --> 00:04:56.760 pillow that I get for free, right? 90 00:04:56.760 --> 00:05:00.960 And on top of that, I have the shoe company that gives me the, the insoles that are moldable 91 00:05:00.960 --> 00:05:03.240 but then they have better ones that are customized, whatever, right? 92 00:05:03.240 --> 00:05:06.760 Each of these things, and so now when I'm presenting my final offer to my customer, I have 93 00:05:06.760 --> 00:05:10.720 all of these things lined up that cost me nothing, right? 94 00:05:10.720 --> 00:05:14.680 And not only that, I can negotiate with them not only to get the discounts, but to also 95 00:05:14.680 --> 00:05:18.400 get paid for every person that I send their way using this promotion, right? 96 00:05:18.400 --> 00:05:22.840 So not only do my customers benefit, I can sell my entire package is more expensive because 97 00:05:22.840 --> 00:05:24.600 of value, right? 98 00:05:24.600 --> 00:05:28.240 My customer, I then get paid from the business, right? 99 00:05:28.240 --> 00:05:33.000 And my customer gets a discount, so it's literally just like everyone wins, right? 100 00:05:33.000 --> 00:05:36.120 And so that is the second reason that I like affiliate relationships. 101 00:05:36.960 --> 00:05:41.240 Hey guys, love that you're listening to the podcast. 102 00:05:41.240 --> 00:05:45.240 If you ever want to have the video version of this, which usually has more effects, more 103 00:05:45.240 --> 00:05:50.280 visuals, more graphs, you know, drawn out stuff, sometimes it can help hit the brain centers 104 00:05:50.280 --> 00:05:51.280 in different ways. 105 00:05:51.280 --> 00:05:52.280 You can check out my YouTube channel. 106 00:05:52.280 --> 00:05:55.920 It's absolutely free to check that out if that's what you are into and if not, keep 107 00:05:55.920 --> 00:05:59.480 enjoying the show. 108 00:05:59.480 --> 00:06:02.600 The third reason is that it's all profit, all right? 109 00:06:02.600 --> 00:06:05.760 And so if you think about how much you make from your business, right? 110 00:06:05.760 --> 00:06:08.400 Some businesses run at 10% or 20% margins. 111 00:06:08.400 --> 00:06:11.680 Many times you can negotiate far more than that for an affiliate relationship. 112 00:06:11.680 --> 00:06:16.920 A lot of times you can get 30, 40, sometimes even 50% of total revenue depends on the type 113 00:06:16.920 --> 00:06:20.160 of product and you cost the fulfillment, but for many times you can get that. 114 00:06:20.160 --> 00:06:22.640 And when you think about how much you make from your own business, sometimes it makes more 115 00:06:22.640 --> 00:06:25.600 sense to just be an affiliate and get that revenue. 116 00:06:25.600 --> 00:06:29.440 Like for us, we make about a million dollars a year pretty much passively just introducing 117 00:06:29.440 --> 00:06:32.600 businesses to partners that we would do anyways, right? 118 00:06:32.600 --> 00:06:36.080 We think they have the best product and so we just reach out and say, hey, before I go 119 00:06:36.080 --> 00:06:38.200 send all these people to you because I think you have a good product, like, what kind 120 00:06:38.200 --> 00:06:40.960 of deal can I get them and what kind of deal can you get me, right? 121 00:06:40.960 --> 00:06:42.120 And so I like meeting in the middle. 122 00:06:42.120 --> 00:06:46.560 I like saying, let's say if we get 20% off, all my customers get 10 and I get 10 too and 123 00:06:46.560 --> 00:06:47.560 so everyone wins, right? 124 00:06:47.560 --> 00:06:50.200 And this is very common, you know, practice. 125 00:06:50.200 --> 00:06:54.080 If you look at influencer marketing, when they say give 10% off, they also get kickbacks 126 00:06:54.080 --> 00:06:56.080 on that. 127 00:06:56.080 --> 00:06:59.040 And so that's the third reason that I like affiliate relationships. 128 00:06:59.040 --> 00:07:01.720 The fourth reason is that it's incredibly flexible. 129 00:07:01.720 --> 00:07:08.560 And so what I mean by that is, if for some reason something changes, let's say I was 130 00:07:08.560 --> 00:07:10.360 with the massage, you know, the massage person, right? 131 00:07:10.360 --> 00:07:14.520 They give me, you know, four massages for my clients and I find another massage person 132 00:07:14.520 --> 00:07:16.280 who's better, right? 133 00:07:16.280 --> 00:07:18.880 Because I'm an affiliate, I can just switch where I'm pushing my clients and there's 134 00:07:18.880 --> 00:07:21.400 no problem and I keep my clients needs first. 135 00:07:21.400 --> 00:07:23.680 And so it makes it really easy for me, right? 136 00:07:23.680 --> 00:07:30.320 Now, counter that with an imaginary situation where I owned massage, you know, subclinic 137 00:07:30.320 --> 00:07:32.760 underneath of my car tractor, I use one of the offices for that, right? 138 00:07:32.760 --> 00:07:34.240 There's just an example. 139 00:07:34.240 --> 00:07:38.680 Now if I didn't have the best product, which happens sometimes because maybe the massage 140 00:07:38.680 --> 00:07:42.440 therapist that you hire doesn't that good or whatever, right? 141 00:07:42.440 --> 00:07:48.600 You then have this kind of like moral conflict in this cognitive distance where you want 142 00:07:48.600 --> 00:07:51.920 to believe that what you provide is always the best, but you have tangible proof that 143 00:07:52.000 --> 00:07:55.200 there's somebody better down the street and you're not allowing your customers to do that. 144 00:07:55.200 --> 00:07:58.920 And if I think about how much I'm paying the massage therapist that I've got cost and 145 00:07:58.920 --> 00:08:01.860 got insurance and all that stuff, compared to what I could just get from getting, from 146 00:08:01.860 --> 00:08:05.760 referring the business down the street and getting paid on that, sometimes it just makes 147 00:08:05.760 --> 00:08:09.440 more sense to have the flexibility on the top of having the best product because it ensures 148 00:08:09.440 --> 00:08:12.120 that no matter what you're always serving your clients the best way. 149 00:08:12.120 --> 00:08:17.760 And so those are the four reasons that I really like having affiliate relationships. 150 00:08:17.760 --> 00:08:22.760 I can provide more value, it gives me more flexibility, it's all profit, and ultimately 151 00:08:22.760 --> 00:08:29.520 I can provide more to my customer than I otherwise could at no cost to me, and that's the beauty 152 00:08:29.520 --> 00:08:30.800 of this, right? 153 00:08:30.800 --> 00:08:37.240 And so any who, I say all that to say, don't start into the business, make a relationship, 154 00:08:37.240 --> 00:08:41.280 still solve your clients problems while still being able to focus on your core game and 155 00:08:41.280 --> 00:08:44.440 more times than not, that will be to your benefit. 156 00:08:44.440 --> 00:08:48.960 I'll give you the one quick exception, which is like if you are sending a disproportionate 157 00:08:48.960 --> 00:08:52.480 amount of revenue, building a huge amount of enterprise value, where the amount of enterprise 158 00:08:52.480 --> 00:08:56.400 value from the new thing that you are sending surpasses your existing vehicle, then it makes 159 00:08:56.400 --> 00:08:59.800 sense at that point that you would want to swallow up that revenue stream. 160 00:08:59.800 --> 00:09:03.800 But many times that is not the case, and it just would benefit you to just simply take 161 00:09:03.800 --> 00:09:09.120 the small kickbacks and commissions that they send your way for making the introduction. 162 00:09:09.120 --> 00:09:12.280 So otherwise, hope that made sense, lots of love, keep being awesome, and I'll catch you 163 00:09:12.280 --> 00:09:13.280 guys in the future. 164 00:09:13.280 --> 00:09:14.280 Bye!